07March2016

INSURANCE PREMIUM SUPPORT STIPULATED BY THE INTERIM ARTICLE 15 OF LAW NO 4447

 

SSI Circular no 2016/01 was issued regarding to the Insurance Premium Support stipulated by the Interim Article 15 of Law No 4447.

The Circular sets forth; the procedures and principles regarding to the enforcement of Article 28 of Law No 6645 published in the Official Gazette No 29335 dated 23/4/2015 and Interim Article 15 of Law No 4447 on Unemployment Insurance.

The highlighted points regarding how to make use of the incentive are as follows:

In respect of the Insured:

  • Completion of the "On-the-job Training Program" launched by Turkish Labor Agency by 31/12/2016,
  • Recruitment by private sector employers within the scope of Article 4, first paragraph , clause (a) of Law No 5510 in the professional field relevant to the completed program within maximum three months following the completion of the program.
  • Being older than 18 years age and younger than 29 years age.

In respect of Workplaces:

  • Being a private sector entity,
  • The insured should be added in the average of the number of insured listed in the monthly premium and service documents submitted by the employer in the previous calendar year before their recruitment,
  • Submission of the monthly premium and service documents within the prescribed legal term,
  • Absence of overdue debt of premium fines or administrative fines,
  • Employment of no uninsured workers.

Incentive Term and Enforcement:

After the application of Article 81 (ı) of Law No 5510 for a period of 42 months if the workplace of employment operates in the manufacturing industry sector and for a period of 30 months for other sectors, the amount calculated in accordance with the employer's contribution in the balance of the insurance premiums and the lower threshold of the income taken as basis for the premium determined pursuant to Article 82 of Law No 5510 shall be covered from the fund.

Furthermore, in respect of the insured who are within the scope of insurance premium support benefit, it is required to make identification from the "On-the-Job Training Incentive Management" Menu which is found in the e-Declaration system.

Calculation of the Incentive

Minimum wage workers ( 1 day )

Applicable Premiums (4/a Normal) 2016-02 Percentage (%) Worker Employer Total
Premium-Short Term 2   1.10  (2%) 1.10  (2%)
Premium-Social Security Premium Support (Retired)        
Premium-Long Term 20 4.94  (9%) 6.04  (11%) 10.98  (20%)
Premium-Unemployment Insurance 3 0.55  (1%) 1.10  (2%) 1.65  (3%)
Premium-General Health Insurance 12.5 2.75  (5%) 4.12  (7,5%) 6.86  (12,5%)

(15%) (22,5%) (37,5%)
SSI-Premium Total 37.5 8.24 12.35 20.59
SSI-Premium Incentive (54.90 (5%): 2.75 + 54.90 (15.5%): 8.50 ) = -2.75 & -8.50 -11.25
SSI-Premium Amount (Payable) 1.10 9.34
         
SSI Days   1
SSI Gross Income Basis   54.90
Total Gross Income     54.90
Employer's Cost-{Without} Incentive (-)  (1.225%)   67.25
Employer Premium Incentive-Total [5510 (5%) + 6645 Discount] -11.25
Employer's Cost-With Incentive (+)   56.00

Discount amount for 1 day: 8,50 TRY which sums up to a decrease of 8,50 * 30 = 255 TRY in the monthly cost.

Amount which can be benefited from per person; in the event that the employer entity operates in the manufacturing industry sector, it shall be 42 months x 255 TRY = 10.710 TRY, whereas in other sectors it shall be 30 months x 255 TRY = 7650 TRY.

Amount which can be benefited from for 30 persons; in the event that the employer entity operates in the manufacturing industry sector, it shall be 42 months x 255 TRY x 30 = 321,300.00 TRY whereas in other sectors it shall be 30 months x 255 TRY x30 = 202,500.00 TRY.

* What is On-The-Job Training Program?

General Information

The program, which intends to increase the employability of the people without any professional or job experience who are registered with the Agency by providing them the essential professional and work experience, provides on-the-job learning of a specific work at workplaces again registered with the Agency, in order to enable them to strengthen their professional knowledge.

Eligibility requirements to participate On-The-Job-Training Program:

  • To have turned 15 years old,
  • To be registered with the Turkish Labor Agency,
  • To be unemployed,
  • To be a university student including two-year degrees,
  • Not to be first or second degree relative or spouse of the employer,
  • Not to be listed on the e-declaration of the employer who organizes the program during the three-month period prior to the start date of the program.

The employers who are willing to organize the program can either select the participants to the program directly themselves or request participants from Turkish Labor Agency among whom they can select the eligible participants bearing the specific requirements set forth by them.

On-The-Job Training Program:

  • It can be arranged for a maximum of 160 actual days.
  • The duration of the program can be minimum 5, maximum 8 hours per day.
  • It can be planned in the way not to exceed 6 days and 45 hours per week.

In the event that in addition to the payments made by the Turkish Labor Agency to the program participants, the employer which is hosting the program also makes payment thereto, it shall be possible to deduct such portion of these actual payments which does not exceed half of the monthly gross minimum wage from the tax basis, pursuant to Income Tax Law.

It shall also be possible for the participants to earn an income corresponding to net minimum wage (1.300 TRY) depending on the duration of the program.

Requisite daily expenditure payment of 50 TRY is made by the Turkish Labor Agency

Provided that the employer makes no additional payment, there shall be no additional cost to the employer in respect of the participants during the program. Therefore, during the term of the on-the -job training program, the employer doesn't bear the daily cost of 64,50 TRY.

Taking into consideration the payment to be made over the minimum wage by Turkish Labor Agency, the cost which shall not be borne by the employer per one trainee (i.e. if one worker had been employed instead of a trainee) shall be:

Max.160 actual days* 64,50 = 10.320 TRY ( per person ).

In the event that the employer has 700 employees and accepts trainees up to 10/1 of the number of employees;

The indirect cost benefit provided to the employer due to 700 / 10 = 70 trainees shall be: 10.320 TRY * 70 = 722,400 TRY.

If a new worker had been employed instead of a trainee, the cost per day would be:

Applicable Premiums (4/a Normal) 2016-02 Percentage % Worker Employer Total
Premium-Short Term 2   1.10  (2%) 1.10  (2%)
Premium-Social Security Premium Support (Retired)        
Premium-Long Term 20 4.94  (9%) 6.04  (11%) 10.98  (20%)
Premium-Unemployment Insurance 3 0.55  (1%) 1.10  (2%) 1.65  (3%)
Premium-General Health Insurance 12.5 2.75  (5%) 4.12  (7,5%) 6.86  (12,5%)

   (15%)    (22,5%)    (37,5%)
SSI-Premium Total 37.5 8.24 12.35 20.59
SSI-Premium Incentive (5%) -2.75 -2.75
SSI-Premium Amount (Payable) 9.60 17.84
         
SSI Days   1
SSI Gross Income Basis   54.90
Total Gross Income     54.90
Employer's Cost-{Without} Incentive (-)  (1.225%)   67.25
Employer Premium Incentive-Total [5510 (5%)] -2.75
Employer's Cost-With Incentive (+)  (1.175%)   64.50

Written by Gökhan Büyük, Posted in Taxation Law

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About the Author

Gökhan Büyük

Gökhan Büyük
Boss Governance, Payroll Chief.
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