Payroll in Turkey: A Complete Guide for US Businesses

Turkey is one of the most strategically positioned countries in the world, connecting Europe, Asia, and the Middle East. Its unique location, combined with a large, youthful, and highly educated workforce, has made it an increasingly attractive destination for businesses looking to expand internationally.

This guide provides a detailed breakdown of payroll in Turkey. It covers essential topics such as Turkey minimum wage per hour, gross salary calculations, income tax rates, unemployment insurance contributions, social security obligations, stamp tax, and more. We'll also talk about how BatchTransfer can help your team do international payroll.

Understanding Employment Laws That Govern Payroll in Turkey

Payroll in Turkey starts with compliance with national employment laws, which are rooted in the Turkish Labor Code.¹ Every employee must have a written employment contract that outlines their job role, salary, working conditions, and benefits. This document protects both the employer and the employee by establishing legal clarity from day one.

The standard working week is legally capped at 45 hours, typically spread over six working days. Overtime beyond this limit must be compensated at no less than 1.5 times the employee’s regular hourly rate.¹

The annual maximum for overtime work is restricted to 270 hours, although collective bargaining agreements may establish different conditions for specific sectors. Employers should also be aware of sector-specific regulations, especially in industries like construction or healthcare, which often have supplementary rules around working hours and pay structures.

Payroll Cycle in Turkey: Monthly Payments and Reporting Deadlines

Turkey operates on a calendar-year fiscal system, starting from January 1 and ending on December 31. The payroll cycle is predominantly monthly. Salaries are usually processed by the end of each month, with payment deadlines often falling on the third business day of the following month.

Employers must prepare and submit monthly tax and social security reports to the relevant authorities. Late filings can trigger fines and interest charges, making it critical to maintain a precise payroll calendar.

Turkey Minimum Wage per Hour

Turkey’s minimum wage is revised at least once annually, sometimes twice, to adjust for inflation. For 2025, the gross minimum wage is set at TRY 26,005.50 per month, which equals approximately TRY 115.58 per hour based on a standard 45-hour week.²

The minimum wage applies universally across industries. Collective bargaining agreements in specific sectors may establish higher minimum wage levels or additional allowances. Failure to comply with minimum wage rules can result in penalties and back-pay obligations for employers.

Income Tax and Stamp Tax in Turkish Payroll

Income tax in Turkey is progressive, meaning higher earners pay a higher tax rate. Employees pay between 15% and 40% depending on their gross salary level. Employers are responsible for calculating and withholding income tax from salaries in line with the Turkish Income Tax Law.

In addition to income tax, Turkey imposes a stamp tax on employment contracts and salary payments. The standard stamp tax rate is 0.759% of the gross salary, and this amount must be deducted before payment is made to employees.

Social Security and Unemployment Insurance Contributions

Employers in Turkey must register each employee with the Social Security Institution (SGK)³ before the employment relationship begins. SGK oversees the country's pension, health insurance, and unemployment benefit systems. Employers who fail to register employees correctly can face heavy penalties, including fines and back-payment of contributions with interest.

Social security contributions are split between the employer and employee. The employer’s share amounts to approximately 20.5% of the gross salary, while employees contribute 14%. Unemployment insurance premiums are deducted at 2% for employers and 1% for employees. These funds provide critical coverage for employees in case of job loss, illness, or retirement.

Certain industries, such as manufacturing, enjoy a reduced employer contribution discount of 5 points until the end of 2026, while other sectors benefit from a 4-point reduction. Employers must regularly monitor these rates as government incentives and deductions are subject to frequent updates.

Paid Leave, Maternity Leave, and Public Holidays

Payroll in Turkey must accurately reflect statutory paid leave entitlements, which are based on length of service. Employees are entitled to a minimum of 14 working days of annual paid leave if they have completed one year of service. This allowance increases progressively:

• 20 working days for employees with 5 to 15 years of service
• 26 working days for employees with more than 15 years of service

Paid leave policies in Turkey are employee-friendly, with specific provisions for maternity leave (16 weeks, fully paid), paternity leave (5 days), and bereavement leave. Female employees may also qualify for additional unpaid leave following maternity leave.

Turkey recognizes 15 public holidays per year, all of which are fully paid and must be reflected in payroll calculations. Employers must include these leave periods in gross salary calculations, ensuring legal compliance and fair treatment of workers.

Termination Payments and Severance Pay in Turkey

Termination in Turkey requires proper notice periods, which vary by tenure. Upon dismissal, employees may also be entitled to severance pay.

Severance pay is calculated at one month’s gross salary per year of service, subject to a government-set ceiling updated annually. Employers must also pay any unused leave and ensure the final payroll includes all legally mandated amounts to avoid labor disputes.

Payroll Compliance and Withholding Tax Responsibilities

Payroll compliance in Turkey requires employers to withhold and remit several key deductions from employee wages. These include income tax, stamp tax, social security contributions, and unemployment insurance premiums. The employer’s responsibilities include accurate monthly declarations to the tax office and SGK.

Compliance errors, such as miscalculations, late payments, or missed filings, can trigger significant penalties. This includes financial fines, late interest charges, and the possibility of a government audit. Businesses with multiple employees must also comply with mandatory bank transfer requirements and additional reporting obligations. Proactive payroll management and internal controls are essential to prevent these risks and maintain proper documentation in the event of an inspection.

Payroll Processing Options: In-House vs. Employer of Record

Companies entering the Turkish market must choose between handling payroll internally or outsourcing it to an Employer of Record (EOR)⁴ or a payroll provider. Here’s how these two options compare:

Payroll Method	In-House Payroll	Employer of Record (EOR)
Setup Requirements	Requires registering a legal entity in Turkey, tax ID and SGK registration	No local entity needed, EOR acts as the legal employer
Compliance Risk	High: company is responsible for all legal compliance and reporting	Low: EOR ensures full compliance with Turkish labor laws
Administrative Load	High: requires internal HR, payroll, and legal resources	Minimal: EOR manages employment contracts, payroll, tax, and social security
Flexibility	Suitable for companies establishing a long-term presence	Ideal for short-term hires or market testing without entity setup
Cost Efficiency	Lower costs in the long run for large teams	Higher per-employee costs but lower upfront investment for small teams
Best For	Businesses with established operations and local expertise	New market entrants or companies with small remote teams

Paying Salaries in Turkey: Banking Rules and Payment Methods

In Turkey, salary payments must be made through licensed banks in Turkish lira (TRY) for any employer with three or more employees. This rule ensures proper tax and social security contributions while preventing under-the-table payments.

Employers are required to open a payroll bank account and pay salaries via Electronic Funds Transfer (EFT).⁵ Each payment must include a payslip detailing gross salary, income tax, stamp tax, social security, unemployment insurance deductions, and the net salary. These records must be kept for at least ten years.

Alternative payment platforms like Troy,⁶ BKM Express⁷ and Papara⁸ are allowed for personal use but cannot be used for payroll. Companies paying cash or using foreign currency face fines and potential legal action.

Foreign companies often use local payroll providers or EOR services to handle salary payments, tax filings and compliance. This avoids common issues with currency conversion and local banking rules.

Best Practices to Ensure Payroll Compliance in Turkey

Running payroll in Turkey requires attention to detail and strict adherence to regulations. Employers can avoid common mistakes and reduce compliance risks by following these proven best practices.

Monitor Changes in Payroll Law

Payroll rules in Turkey change frequently, especially regarding minimum wage adjustments, gross salary thresholds, income tax brackets, and social security contribution rates. Employers should stay updated on these changes throughout the year to avoid outdated calculations and penalties. Monitoring official government announcements and consulting local payroll advisors can help businesses stay compliant.

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Use Payroll Software or Local Payroll Providers

Manual payroll processing increases the risk of errors, especially with Turkey’s complex tax and social security system. Using specialized payroll software tailored for Turkish compliance helps automate calculations, generate accurate payslips, and ensure correct tax filings. Businesses without internal expertise can partner with local payroll providers who manage payroll end-to-end, including salary payments, income tax withholdings, and social security reporting.

Conduct Regular Payroll Audits

Regular internal payroll audits are essential to catch errors early. Audits should verify that gross salary amounts, income tax withholdings, social security contributions, and unemployment insurance payments are calculated and paid correctly. Reviewing payslips and monthly declarations helps identify discrepancies before they trigger penalties or employee disputes.

Maintain Accurate Payroll Records

Turkish labor and tax authorities require companies to maintain detailed payroll documentation. This includes employment contracts, payslips, tax declarations, and social security payment records. All records must be kept for at least ten years and be readily available in case of audits. Proper record-keeping protects businesses during inspections and resolves any legal claims efficiently.

File Reports and Make Payments on Time

Timely reporting is non-negotiable in Turkey. Employers must submit monthly tax and social security declarations on time and pay all contributions before the due date. Delayed filings or payments lead to financial penalties, interest charges, and reputational risks. Establishing a strict payroll calendar and using automated reminders can help prevent missed deadlines.

By following these best practices, companies can maintain accurate payroll processes, minimize legal exposure, and build a compliant, efficient payroll system in Turkey.

Frequently Asked Questions About Payroll in Turkey

What Is the Turkey Minimum Wage per Hour in 2025?

For 2025, the gross minimum wage in Turkey is TRY 26,005.50 per month. Based on a standard 45-hour workweek, this translates to approximately TRY 115.58 per hour. Employers must monitor official announcements, as minimum wage rates are frequently updated, sometimes more than once per year.

How Much Income Tax Is Deducted From Employees in Turkey?

Income tax in Turkey is calculated on a progressive scale ranging from 15% to 40%, depending on an employee’s gross salary. Employers are responsible for withholding this tax in line with the Turkish Income Tax Law and remitting it to the tax authorities each month.

Are Employers Required to Pay Unemployment Insurance?

Yes, unemployment insurance contributions are mandatory. Employers must contribute 2% of the employee’s gross salary, while employees contribute 1%. These payments are made through the Social Security Institution and help fund unemployment benefits.

How Are Overtime Payments Calculated?

Overtime work is paid at a minimum of 1.5 times the employee’s regular hourly rate. The maximum number of overtime hours permitted by law is 270 hours per calendar year. Any overtime beyond this must be compensated at higher rates or substituted with time off as agreed.

What Happens if Employers Don’t Follow Payroll Compliance in Turkey?

Employers who fail to comply with payroll regulations can face administrative fines, mandatory back-pay orders, interest charges on delayed payments, and in severe cases, audits or suspension of operations. Non-compliance with salary payment methods, tax withholding, or record-keeping requirements can also lead to labor disputes.

Do Companies Have to Pay Salaries in Turkish Lira?

Yes, by law, all salary payments must be made in Turkish lira (TRY) through licensed banks. This applies to all companies employing three or more individuals, regardless of ownership structure.

Are Payslips Mandatory for Employees in Turkey?

Payslips are legally required and must clearly show the gross salary, all statutory deductions such as income tax, social security, unemployment insurance, stamp tax, and the net salary. Employers must provide payslips monthly and retain copies for at least ten years.

Is It Mandatory to Open a Local Bank Account for Payroll?

Yes, employers must have a local payroll bank account in Turkey. All salaries must be paid via electronic bank transfer from this account to comply with national payroll regulations.

Can Foreign Companies Outsource Payroll in Turkey?

Foreign companies can outsource payroll to local payroll providers or Employer of Record (EOR) services. This is especially useful for businesses without a local legal entity, as EORs handle salary payments, tax deductions, and social security filings on the company’s behalf.

How Are Bonuses and Benefits Treated in Turkish Payroll?

Bonuses, commissions, and non-cash benefits are considered taxable income in Turkey. These must be included in gross salary calculations and are subject to income tax, social security, and other mandatory deductions, just like regular wages. Companies should account for these extras when calculating total payroll costs.

Final Thoughts

Payroll in Turkey is a structured but complex system, requiring employers to navigate an evolving mix of labor laws, income tax brackets, and social security obligations. Companies must stay informed about minimum wage updates, adhere to legal banking and payment requirements, and submit timely reports to government bodies.

For businesses new to Turkey, outsourcing payroll to a trusted Employer of Record can offer peace of mind by ensuring compliance without the need to open a local entity. Companies with established operations should invest in dedicated payroll teams or reliable software to manage in-house payroll efficiently.

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Sources:

1. Labour Law No. 4857 – ISMMMO (PDF)
2. Minimum Wage Amount Announced – CottGroup
3. Social Security Institution (SGK)
4. Employer of Record in Turkey – Deel Blog
5. Payment Types in Turkey – Turkish Tax and Accounting
6. TROY Payment System
7. BKM Express – Interbank Card Center of Turkey
8. Papara – Digital Wallet Turkey