As international companies grow their footprint and tap into new markets, understanding local hiring laws and employment structures becomes vital to building sustainable operations. In this 17-part series, we guide foreign businesses through the legal and strategic aspects of employment in key global jurisdictions.
This installment brings us to Turkey – a strategic bridge between Europe and Asia with a young, dynamic workforce and a fastdeveloping economy. While direct employment is the most common hiring model, Turkey also allows for alternatives such as subcontracting, engaging freelancers, or working with payroll service providers. Each option must be carefully evaluated to ensure compliance with Turkish labor laws, which place strong emphasis on worker protections, severance rights, and social security obligations. For foreign companies entering the market, choosing the right hiring structure is critical to managing risk, controlling costs, and building a compliant longterm presence.
Authored by Merve Orkun
Aliant+ Law Firm in Turkey
1. Is it necessary to set up a local entity to hire an employee?
- For formal employment, establishing a legal entity is required. There are several types of companies depending on the investor’s needs and the targeted market.
- The registration process involves submitting documentation to the Chamber of Commerce and can take a maximum of one week, once documents from abroad and necessary translations are provided.
- Employment cannot begin until the newly established company is registered with the Social Security System. This process is fast and can be completed electronically once all necessary documentation is in place.
Direct Employment Details: Social Security and Taxation
- Types of employment contracts include fixedterm, indefiniteterm, fulltime, parttime, seasonal, temporary, oncall, remote work, and trial period contracts. A formal agreement with the employee is mandatory. Salaries cannot be lower than the minimum wage set by the government for the relevant calendar year.
- Employers must follow strict regulations regarding working hours, wages, benefits, and working conditions. All jobs are classified by the government, each with its own rules, requirements, and—in some cases—incentives related to social security premiums and tax payments.
- Employers are required to make social security contributions on behalf of employees, covering pensions, health insurance, and unemployment benefits.
- Income tax is withheld from employee salaries, declared to the Revenue Administration, and paid monthly.
- The total cost of an employee is approximately 1.55 times their gross salary.
- Shareholders must also pay their own social security premiums if they wish to qualify for a governmentbacked retirement plan.
2. Are there alternatives to direct employment?
- Types of employment contracts include fixedterm, indefiniteterm, fulltime, parttime, seasonal, temporary, oncall, remote work, and trial period contracts. A formal agreement with the employee is mandatory. Salaries cannot be lower than the minimum wage set by the government for the relevant calendar year.
- Employers must follow strict regulations regarding working hours, wages, benefits, and working conditions. All jobs are classified by the government, each with its own rules, requirements, and—in some cases—incentives related to social security premiums and tax payments.
- Employers are required to make social security contributions on behalf of employees, covering pensions, health insurance, and unemployment benefits.
- Income tax is withheld from employee salaries, declared to the Revenue Administration, and paid monthly.
- The total cost of an employee is approximately 1.55 times their gross salary.
- Shareholders must also pay their own social security premiums if they wish to qualify for a governmentbacked retirement plan.
3.Direct employment vs. independent contractor: what about costs?
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Direct employment involves fixed costs, including salary, social security contributions, and income tax.
Independent contractor costs are typically based on invoiced amounts and include deductible VAT.
Expense slips must be issued with 20% withholding tax. There are two important limitations:
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The individual must declare income tax if total earnings exceed 280,000 TL (approximately EUR 6,500) in 2025.
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The Social Security Agency may impose penalties if expense slips are issued repeatedly, as this may be interpreted as an attempt to avoid paying social security premiums.
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4. Other Issues?
Work Permits and Visas:
Foreign employees must obtain a work permit. Approval is not guaranteed, and many applications are denied. The process must be managed carefully, as poor guidance from unqualified consultants can result in delays, additional costs, or negative outcomes.
Recruitment, Pay-roll System and other issues:
Online job portals, recruitment agencies, and professional networks are effective channels for sourcing talent.
Payroll processing and compliance are typically included in accounting service packages in Turkey, especially when there is no inhouse HR team.
There are many government incentives that should be closely monitored. Tech startups, in particular, can benefit from significant advantages available through Technology Centers.
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