Essential Labor Law Requirements for Foreign-Run Companies in Türkiye

Operating a foreign-run company in Türkiye presents unique opportunities in one of the world’s most dynamic emerging markets. However, navigating the country’s comprehensive labor law framework requires specialized knowledge and careful attention to detail. As employers increasingly establish operations in Türkiye, understanding the mandatory labor law requirements becomes critical to maintaining compliance and avoiding costly penalties.

At Finlexia Turkish Accounting Firm, we have guided international businesses through Turkish labor regulations since 2017, helping foreign-run companies establish robust employment frameworks that protect both employers and employees while ensuring full regulatory compliance.

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Understanding the Turkish Labor Law Framework

Turkish labor law is primarily governed by Labor Law No. 4857, which came into effect in 2003 and has undergone several amendments to align with international standards and European Union directives. Foreign-run companies must comply with these regulations regardless of their ownership structure, making it essential to understand the fundamental requirements from the outset.

The law applies to all employment relationships within Türkiye, covering both Turkish nationals and foreign employees. This comprehensive framework addresses employment contracts, working hours, leave entitlements, termination procedures, and workplace safety standards.

1. Applicability of Turkish Labor Law to Foreign-Run Companies

Turkish labor legislation applies equally to domestic and foreign-owned companies operating within Türkiye. Once a foreign investor establishes a legal presence—whether through a subsidiary, branch, or liaison office with employees—the employer becomes subject to Turkish Labor Law No. 4857 and related secondary regulations.

Foreign shareholders, foreign directors, or overseas parent companies do not alter the applicability of local employment rules. Employment relationships performed in Türkiye are governed by mandatory Turkish law provisions, regardless of the governing law selected in internal company policies or global HR manuals.

2. Employment Contracts and Mandatory Terms

All employment relationships must be documented through compliant employment agreements. While verbal contracts are legally valid for indefinite-term employment, written contracts are strongly recommended and mandatory for fixed-term, part-time, remote, and foreign employee arrangements.

Employment contracts must clearly specify:

• Job title and duties
• Working hours and location
• Salary and payment terms
• Contract duration (if fixed-term)
• Notice periods and termination conditions

Improperly drafted agreements may expose foreign-run companies to reinstatement lawsuits and compensation claims. For this reason, employment documentation should be aligned with Turkish labor standards and integrated with broader contract drafting strategies to ensure enforceability.

3. Working Hours, Overtime, and Leave Entitlements

Standard working hours in Türkiye are capped at 45 hours per week. Any work beyond this threshold qualifies as overtime and must be compensated at a rate of at least 150% of the employee’s hourly wage or converted into paid time off upon mutual agreement.

Foreign-run companies must also comply with statutory leave requirements, including:

• Annual paid leave (ranging from 14 to 26 days based on seniority)
• Weekly rest days
• National and public holidays
• Maternity, paternity, and sick leave

Failure to comply with working time and leave regulations frequently results in labor inspections and retroactive payment liabilities.

4. Social Security and Payroll Obligations

All employees working in Türkiye must be registered with the Social Security Institution (SGK) from the first day of employment. Employers are responsible for monthly premium declarations and payments covering social security, health insurance, and unemployment insurance contributions.

Foreign-run companies often underestimate the consequences of improper payroll management. Unregistered employment or underreported salaries can lead to administrative fines, criminal exposure, and restrictions on future work permit applications for foreign staff.

Payroll compliance should be integrated into the company’s overall corporate governance framework to ensure internal accountability and audit readiness.

5. Employment of Foreign Nationals and Work Permits

Foreign-run companies frequently employ expatriates, regional managers, or technical experts. However, foreign nationals may not work in Türkiye without a valid work permit issued by the Ministry of Labor and Social Security.

Key considerations include:

• Work permit applications must be filed before commencement of work
• Certain minimum capital, revenue, or employee thresholds may apply
• Work permits are employer-specific and position-specific

Unauthorized employment of foreign nationals triggers significant fines and may jeopardize future immigration applications. Strategic workforce planning is therefore essential, particularly in multinational restructurings and mergers and acquisitions involving cross-border employee transfers.

6. Termination of Employment and Severance Rights

Termination of employment is one of the most sensitive areas of Turkish labor law. For employees with at least six months of service in workplaces employing 30 or more employees, termination must be based on a valid reason related to performance, behavior, or business necessity.

Key termination obligations include:

• Notice periods or payment in lieu
• Severance pay (for qualifying employees)
• Unused annual leave compensation

Unlawful termination may result in reinstatement lawsuits, back pay awards, and additional compensation. Foreign-run companies often face heightened scrutiny in termination disputes, making proactive legal structuring essential—especially during downsizing or company liquidation processes.

7. Workplace Policies, Health and Safety Compliance

Employers in Türkiye are required to implement occupational health and safety (OHS) measures proportional to workplace risk classification. This includes appointing certified OHS professionals, conducting risk assessments, and providing regular employee training.

Foreign-run companies must localize global compliance policies to meet Turkish OHS standards. Failure to do so can lead to operational shutdowns, administrative penalties, and employer liability in workplace accidents.

8. Labor Inspections and Administrative Sanctions

The Ministry of Labor and Social Security conducts routine and complaint-based inspections. Inspectors have broad authority to examine employment records, payroll documents, work permits, and OHS compliance.

Common inspection triggers include:

• Employee complaints
• Work permit irregularities
• Mass terminations
• Workplace accidents

Disputes arising from inspections or employee claims may escalate into court proceedings, requiring specialized representation in corporate litigation to protect the company’s legal and commercial interests.

9. Collective Labor Law and Union Relations

Foreign-run companies operating in sectors with active trade unions must also consider collective labor law obligations. Employees have the right to unionize, and employers must refrain from anti-union practices.

Collective bargaining agreements may impose additional obligations beyond statutory minimums, particularly regarding wages, benefits, and termination protections.

Contact us for Labor Law Requirements in Türkiye

In 2026, compliance with Turkish labor law remains a cornerstone of successful foreign investment in Türkiye. From employment contracts and payroll to terminations and inspections, labor law obligations are deeply interconnected with corporate structuring and risk management. Foreign-run companies that approach employment compliance strategically—rather than reactively—are far better positioned to operate sustainably and avoid costly disputes.

At Finlexia Turkish Accounting Firm, we provide comprehensive labor law and corporate advisory services tailored to foreign-owned businesses. Our multidisciplinary approach ensures that employment compliance aligns seamlessly with your broader corporate objectives. We invite you to contact Finlexia Turkish Accounting Firm to discuss how we can support your operations in Türkiye with clarity, confidence, and legal certainty.