Letter from the SSI regarding Sanctions to be Applied in Illegal Temporary Employment Relationships

The general letter dated 22 November 2023 (“General Letter“) published by the Social Security Institution (”SSI”) sets forth certain regulations to be applied if the reports prepared by the labor inspectors indicate that the temporary employment relationship established between private employment agencies, as well as real and legal persons acting as private employment agencies, and the employers receiving services from them is not established in accordance with the regulations set forth in the Labor Code (“Labor Code“) and Law No. 4904 on the Turkish Employment Agency and Certain Regulations (“Code No. 4904“), and the individuals notified as employees by these agencies in the reports will be considered employees of the employers receiving services from them, as well as if certain additional conditions are met.

What does the regulation bring?

Pursuant to the letter dated 3 November 2023 published by the Ministry of Labor and Social Security, it was stipulated that if the temporary employment relationship established between private employment agencies and real and legal persons acting as private employment agencies and the employers receiving services from them is not established in accordance with the regulations set forth in the Labor Code and the Code No. 4904, the individuals notified as employees by these agencies should be considered employees of the real and legal persons receiving services from them.

Pursuant to the General Letter, if it is found by the reports issued by the labor inspectors after 1 November 2023 that the temporary employment relationship between the private employment agency and the persons from whom they receive services is not established in accordance with the regulations set forth in the Labor Code and the Code No. 4904, and in these reports, the employees notified by the agencies will be considered the employees of the real and legal persons receiving services from them, and that the works are actual, and that no unfair benefit is detected regarding the situations and circumstances specified in Annex 7 of the Regulation on Social Insurance Transactions and that therefore there is no situation to be recorded as revenue and no change in the earnings, and days based on the premium of the employees whose works are determined to be actual, it is stated that:

• No administrative fines, delay penalties and late fees will be imposed on the workplace where the employees are transferred for the obligations fulfilled by private employment agencies and real and legal persons acting as private employment agencies within the legal periods,
• Since insurance premiums are also paid indirectly by the real and legal persons who receive services with the service fee paid to private employment agencies and real and legal persons acting as private employment agencies, the employees’ services and the collections related to these services should be transferred to the workplace that is registered or that will be registered in the name of the real and legal persons receiving services, and no premium refund transaction should be made regarding the transferred collection amounts.

For example, if the labor inspectors’ report find that the temporary employment relationship between private employment agency (A) and employer (B) is not established in accordance with Article 7 of the Labor Code titled “Temporary Employment Relationship” and the regulations in the Code No. 4904, and a provision/recommendation is stated that the employee should be the employee of employer (B), if the obligations regarding the employee are fulfilled by private employment agency (A) within the legal periods, the employee’s services and the collections made for these services, if any, will be transferred to the workplace of employer (B) without applying administrative fines, delay penalties and delay increases.

However, if the insurance premium accruals for the employees whose services are transferred to the file belonging to the private employment agency and the real and legal person acting as a private employment agency are more than the collections made for these services, or if a debt arises due to the emergence of a situation in which an additional monthly premium and service document must be submitted for the employees whose services are transferred to the file belonging to the employer, a late payment penalty and a late payment increase will be calculated from the due date until the date of actual payment. Administrative fines will also be applied for the additional monthly premium and service certificates.

As stated in the first example, assuming that employer (B) is requested to submit an additional monthly premium and service certificate/withholding tax and premium service declaration for the salary difference arising from the fact that the employee is considered to be the employee of employer (B), which has been receiving services from the private employment agency since the beginning, and it is stated that the employee should benefit from the rights specified in the collective bargaining agreement, a late payment penalty and late payment increase will be calculated for the debt arising from the submission of the additional monthly premium and service certificate/withholding tax and premium service declaration from the due date until the date of actual payment. In addition, an administrative fine will be applied for the additional monthly premium and service document/withholding and premium service declaration.

Likewise, assuming private employment agency (A) has not paid the debt arising from the monthly premium and service document/withholding and premium service declaration for December 2023 from the periods transferred to the workplace of employer (B) due to the employee being considered as the employee of employer (B), who has been receiving services from the private employment agency since the beginning, a late payment penalty and late payment increase will be calculated for the debt arising from December 2023 from the due date until the date of actual payment, and the debt will be collected from employer (B).

Conclusion

In order to avoid the sanctions mentioned above, we recommend that employers employ employees within the scope of temporary employment relationship in accordance with the legislation and closely follow all legal obligations within this scope.