The Act No. 7524 on Amendments to Tax Laws and Certain Laws, which also includes important regulations regarding employment and labour life, is being published in the Turkish Official Gazette dated August 2, 2024, and has entered into force.
With the aforementioned law, the premium rate of the short-term social insurance branches paid by employers has been increased from 2% to 2.25% of the earnings subjected to social insurance premium, as of September 2024 period.
This new regulation has increased Turkish employers’ labour costs. In this article, the increased amount of labour costs of Turkish employers due to increase of the premium rate of the short-term social insurance branches is being explained.
The Short-Term Insurance Premium refers to the insurance premium covering “Work accident and occupational disease, sickness and maternity insurance branches” within the framework of the Article 3 of Social Insurance and Genersal Healthcare Insurance Code No. 5510. In the Article 81, paragraph one, subparagraph c) of the Code No. 5510 the following provision is existing: “Short-term insurance branch premium rate is 2% of the insured’s premium-based earnings. The employer pays this premium in its entirety. The President is authorized to reduce this rate to 1.5% or increase it to 2.5%.”
The entire short-term insurance branch premium included in the Article 81, paragraph one, subparagraph c of Law No. 5510 is paid as the employer’s share.
With the latest amendment, an additional burden has been created on employers’ labor costs. The additional cost to the employer will vary between 50.01 TL and 375.04 TL, depending on the amount declared by the employer for the employee as to be between the minimum wage and the ceiling wage.
The difference premium amount to be paid according to the old and new rates is as follows:
Additional cost to the employer after the last regulation for an insured working at the Lower Limit of Earnings Subject to Insurance Premium:
Premium amount paid according to the old rate: 20,002.5 x %2 = 400.05 TL
Premium amount to be paid according to the new rate: 20,002.5 x %2.25 = 450.06 TL
Additional Premium Cost: 450.06 – 400.05 = 50.01 TL
Additional cost to the employer after the last regulation for an insured working at the Upper Limit of Earnings Subject to Insurance Premium:
Premium amount paid according to the old rate: 150,018.75 x %2 = 3,000.38 TL
Premium amount to be paid according to the new rate: 150,018.75 x %2.25 = 3,375.42 TL
Additional Premium Cost: 3,375.42 – 3,000.38 = 375.04 TL (Fractions are rounded).
