Turkey Payroll and Benefits Guide
What global businesses need to know about payroll in Turkey
It might not be the most exciting subject in the world, but if you’re looking at expanding your international business into Turkey, then the first thing you need to know about is inflation. Over the second half of 2024 and through 2025, it has substantially decreased, having peaked at over 75% in May 2024.
But at over 30%, it remains extremely high and is leading to sustained weakening of its currency, the Turkish lira. This is having a major effect on every employer and employee in the world’s 16th-largest economy.
As you’ll read in this guide, the minimum wage rate is soaring, income tax thresholds are changing regularly, and there are also regular revisions to the severance pay cap. But if you can handle the admin that all this entails, then there’s lots to love about doing business in Turkey: great trade links at the meeting point of Europe and Asia, a large and youthful workforce, and a low cost of hiring that is reducing all the time.
Getting Started
The key online platform to use when setting up a business in Turkey is MERSIS, which is the central registry number system. It’s here where articles of association and memorandum (once notarized) should be submitted, and also where a tax number can be obtained. Before doing so, a name for the business must be chosen and registered, and a corporate bank account opened.
Once your bank account is opened, then you can register for VAT, social security, and any relevant business permits and licenses you might need. Although the whole process is relatively straightforward, having access to local expertise and help can smooth out any potential bumps in the road.
The minimum share capital requirements are 50,000 Turkish lira for a limited liability company (approximately £890; $1,180; €1,020) and TRY 250,000 for a joint-stock company (approx. £4,450; $5,900; €5,100). However, the continual weakening of the Turkish lira in the foreign exchange markets means that the true cost of this for foreign enterprises is reducing all the time.
Employment Considerations
Contracts are required in writing for employment that will last for one year or more. Contracts need to state the terms of employment, including the duration of employee services. Foreign workers must present a work permit obtained by the local authorities, unless the company has arranged for an exception.
Turkey’s standard working week is 45 hours. How these are distributed is flexible: it can be either five days of nine hours each, six days of 7.5 hours each, or any other combination as long as an employee doesn’t work more than 11 hours on any one day.
Anything over and above these parameters counts as overtime, which is limited to 48 hours per week and 270 hours per year. Overtime is paid at 150% of regular salary on a weekday, or 200% at the weekend, although time off in lieu can be given instead.
Notice periods start at two weeks for employees who have passed probation, increasing to four weeks with six months’ service, six weeks after 18 months’ service and eight weeks after three years’ service. Probation periods can vary: although the general standard is two months, collective bargaining can extend this to as much as four months. There is no notice period applicable during probation, either for the employee or the employer.
Compensation and Severance
Due to Turkey’s high inflation, the minimum wage rate has risen regularly in recent years, and by large amounts each time. For 2025, the gross minimum wage is TRY 26,005.50 per month (approx. £460; $610; €530), which is more than seven times what it was at the end of 2021. Increases usually take effect either on January 1 or July 1 each year, so you should pay close attention to developments in this area.
Pay cycles are normally monthly, and pay slips can be electronic statements. Employees are entitled to rest breaks, the length of which is determined by the number of working hours. There are no legal restrictions around the awarding of bonuses in Turkey.
Severance pay is one month per year of employment, although a maximum cap on the monthly salary calculation applies. As with the minimum wage, this cap frequently changes, as it’s based on the retirement bonus value of Turkey’s best-paid civil servant. As of the second half of 2025, the cap is TRY 53,919.68 (approx. £960; $1,270; €1,100). Any partial months and years worked are paid at the same ‘one-month-per-year’ rate on a pro-rata basis.
Tax and Social Security
Income tax in Turkey is levied on a progressive scale across five bands: 15%, 20%, 27%, 35% and 40%. Due to the high rates of inflation in the country, the thresholds between each band have changed substantially over the last few years, and are therefore liable to change again regularly in the future.
As of 2025, the lowest rate of 15% currently applies to the first TRY 158,000 earned each year (approx. £2,800; $3,700; €3,200), and the highest rate of 40% applies to all earnings over TRY 4.3 million (approx. £76,500; $101,000; €87,000).
Corporation tax in Turkey is levied at 25%, or 30% for businesses in the financial sector. The general rate of VAT is 20%, but there are some reductions for some goods and services, to as little as 1% in some cases.
Social security contributions are made in four different areas. All of them are only applied on the first TRY 195,041 earned each month (approx. £3,470; $4,590; €3,960).
- Short-Term Insurance Premium: 2.25% employer
- Pension & Disability fund: 11% employer, 9% employee
- Health insurance: 7.5% employer, 5% employee
- Unemployment insurance: 2% employer, 1% employee
Taxes are always withheld from paychecks according to payroll regulations. Non-residents are taxed on income made only in Turkey, while residents are taxed on their total income earned worldwide.
Holidays and Leave
Once employees have completed a year of service, they’re entitled to 14 days of paid leave each year, increasing to 20 days after five years of service and 26 days after 15 years. However, employees under 18 or over 50 are entitled to 20 days after one year. There is a requirement to take at least ten days per year in one block.
Employees are also entitled to paid time off on Turkey’s 15.5 days of public holidays each year. There are three holidays each year where employees also get the afternoon of the previous day as a half-day public holiday: Eid al-Fitr, Eid al-Adha and Republic Day.
Fully paid maternity leave entitlement is 16 weeks: eight before the birth and eight after it, paid at normal rate by social security. In the case of multiple births, or when complications arise, an extra two weeks are granted. Mothers also have the option to shift their maternity leave later, and start it as late as three weeks before the due date if they wish.
There is also the option to take up to six months additional unpaid maternity leave, and mothers also have the right to apply for part-time work for a set period after the birth, depending on the number of children they have: 60 days for the first child, 120 days once the second is born, and 180 days after the birth of the third and any subsequent children.
Paternity leave entitlement is one week, also at full pay but covered by employers.
Sick pay for medically certified absences is covered by social security after the first two days, although employers are required to pay the employee and then claim the money back from the authorities. If an employee has been absent through illness or injury for the length of their notice period plus six weeks, an employer has the right to terminate their contract.
Payroll in Turkey: A summary
As this guide demonstrates, the high level of inflation in Turkey and the sustained weakening of the Turkish lira means that payroll and employment compliance can be something of a moving target. Minimum wage and income tax levels are changing regularly and substantially, and it can be a lot of work keeping on top of your requirements and on the right side of the law. Working with a global payroll provider that has Turkey-specific expertise can lighten this load and ensure your payroll processes are always kept up-to-date.
This article is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional.