Turkey, now officially recognized by the United Nations as Türkiye, is a transcontinental country located partly in Asia as well as in Europe. Thanks to its prime location and strong economic indicators, Turkey is increasingly capturing the attention of global investors and multinational companies (MNCs), with foreign direct investment (FDI) growing in recent years in agrofood, automotive, aerospace, energy, information communication technology (ICT), life sciences, machinery and more.
- Turkey’s economy has been particularly resilient against the headwinds of the COVID-19 pandemic, boasting the fastest pace of growth among G20 countries according to data from the World Bank.
- Turkey offers a skilled and competitive workforce of over 33 million people, the largest talent pool among European countries.
- Turkey’s growing, young and dynamic population is the driving force behind Turkey’s strong labor pool and lucrative domestic market, signaling years of prosperity ahead.
- The government of Turkey has been implementing sweeping reforms since the early 2000s, aiming for a qualified workforce, innovative production, long-term growth, a sustainable environment and international cooperation.
- Turkey – favorably situated at the nexus of Europe, Asia and Africa with easy access to major markets – serves as an efficient and cost-effective regional hub or global headquarters for MNCs.
What are some key principles multinational companies (MNCs) should be aware of when hiring in Turkey for the first time?
Turkey’s labor framework is derived from multiple sources including the Turkish Constitution, Turkish Labor Code (No. 4857), Turkish Code of Obligations (No. 6098), Social Insurance and General Health Insurance Code (No. 5510), Code of Work Permits for Foreigners, Code on Trade Unions and Collective Bargaining and the Workplace Health and Safety Code. MNCs should be aware of the key provisions within these laws when hiring locally.
Although Turkey’s labor laws do not enforce different regulations for “blue-collar” and “white-collar” employees, company rules often distinguish between these two categories of workers. Company rules may also enforce a distinction between regular employees and executive managers, with the latter being regarded as representatives of the employer.
MNCs should also be mindful of nuanced regulations in Turkey. For example, an employer is often required to employ one or more medical professionals onsite and set up a health unit to provide first aid, urgent treatment and preventive health services.
Employers should note that personal income tax in Turkey is calculated on a cumulative basis. An employee’s tax rate will effectively increase throughout the year as the employee’s cumulative income tax base increases. This stipulation can be challenging for HR teams to stay ahead of, especially if they are not familiar with this type of tax system.
The hiring of foreign nationals is heavily regulated in Turkey, with some industries – including legal, medical and mining – largely being off limits to foreigners. On the other hand, there are various types of visa schemes international workers can take advantage of. For example, the Turquoise Card is a special work permit for employees who have highly sought after credentials and can contribute to the economy of Turkey.
Why is demand growing in Turkey for Employer of Record (EOR) services?
Turkey has jumped to the top of the list for many international investors and MNCs, thanks to its productive workforce, young population, ideal location, sophisticated logistics infrastructure and high production capacity. When a company sets up a presence in Turkey, they gain access to a tremendous market of 1.3 billion people within a four hour flight.
While many businesses want to explore burgeoning opportunities in Turkey, there are still numerous challenges that emerge when directly hiring employees in the country for the first time. If an overseas HR team is unfamiliar with these requirements, the company can find itself in violation of local labor laws and compromise its global expansion goals. Furthermore, administering cross-border payroll can be difficult for a fast-growing company to manage.
MNCs often find the EOR to be a suitable option for testing out and entering the Turkish market, allowing them to build a team locally without having to mind burdensome administration tasks or worry about regulatory compliance.
What makes GoGlobal’s Employer of Record services in Turkey unique?
If a company offers a positive workplace in their home country, we can help them seamlessly transport it to Turkey so they can start building a local team.
Most importantly, our dedicated team on the ground has a great deal of experience in hiring and managing workforces in Turkey. We know the business and cultural landscape in-depth, which ensures a positive end-to-end hiring experience for both our clients and their workers.
We start the relationship with an introductory phone call to the worker, explaining how the EOR relationship will work. This same dedicated team then remains as the point of contact throughout the arrangement. Our job is to handle all payroll functions and requirements, including contributions to statutory benefits, taxation and benefits. This way, our clients can focus on core business-growth initiatives while they scale new opportunities in Turkey.