Employee cost to the employer refers to the total of the employee’s gross salary plus employer contributions for social security, unemployment insurance, taxes and other obligations. The cost to the employer is always higher than the net salary paid to the employee.
This cost varies depending on whether the employer benefits from incentives, the employee’s working hours, salary level and insurance status. In this article you will find answers to questions such as how to calculate the employee cost to the employer, how to perform SOCIAL SECURITY (SGK) cost calculation 2024, and what the employer’s cost is for a minimum-wage worker.
HOW IS EMPLOYER COST CALCULATED?
Employer cost is calculated by adding taxes and other items the employer must pay on top of the gross monthly wage. The employer cost is found by adding the SGK employer contribution and the employer unemployment insurance contribution to the gross monthly wage. The SGK employer contribution is 20.5% of the gross wage, while the employer unemployment insurance contribution is 2% of the gross wage.
For example;
For an employee with a gross wage of 25,000 TL:
- SGK employer contribution: 25,000 x 0.205 = 5,125 TL
- Employer unemployment insurance: 25,000 x 0.02 = 500 TL
- Employer cost: 25,000 + 5,125 + 500 = 30,625 TL
NOTE: Employer cost can change depending on incentives the employer receives. For example, under Article 5 of Law No. 5510, employers who pay contributions regularly, have no outstanding past-due debts and benefit from a 5-point premium reduction see their SGK employer contribution reduced to 15.5%.
SGK EMPLOYER COST CALCULATION 2024
SGK employer cost calculation 2024 is based on the employee’s gross salary. With the gross and net minimum wage amounts announced as of January 1, 2024, the employer cost for minimum wage workers has been clarified. As known, the minimum wage cost varies depending on whether the employer benefits from incentives.
WHAT IS THE EMPLOYER COST FOR A MINIMUM-WAGE WORKER?
The minimum wage is the salary paid for a normal working day intended to cover an employee’s basic needs such as food, housing, clothing, health, transportation and cultural requirements at a minimal level.
The minimum wage is determined each year by the Minimum Wage Determination Commission and announced in the official gazette. For 2024 the minimum wage was set at a net 16,002 TL and gross 20,002.50 TL. The employer cost for a worker earning minimum wage depends on whether the employer benefits from incentives.
NOTE: Detailed calculations for incentive and non-incentive scenarios are provided below.
CALCULATING EMPLOYER COST (5-POINT INCENTIVE)
The 5-point incentive is a support provided under Article 5 of Law No. 5510 for employers who pay contributions on time, have no past debts and qualify for the 5-point premium reduction.
For employers benefiting from this incentive the SGK employer contribution is reduced to 15.5%. Between January 1, 2024 and December 31, 2024, the employer cost for the minimum wage is calculated as follows:
- Gross minimum wage: 20,002.50 TL
- SGK employer contribution (15.5%): 3,100.39 TL
- Employer unemployment insurance (2%): 400.05 TL
- Total employer cost: 23,502.94 TL
CALCULATING EMPLOYER COST (WITHOUT INCENTIVE)
For employers who do not qualify for the 5-point incentive the SGK employer contribution is 20.5%. Between January 1, 2024 and December 31, 2024, the employer cost for the minimum wage is calculated as follows:
- Gross minimum wage: 20,002.50 TL
- SGK employer contribution (20.5%): 4,100.51 TL
- Employer unemployment insurance (2%): 400.05 TL
- Total employer cost: 24,503.06 TL
WHAT IS THE 1-YEAR COST FOR A MINIMUM-WAGE WORKER?
The one-year cost to the employer for a worker on minimum wage varies based on whether the employer benefits from incentives.
For employers benefiting from the 5-point incentive, the one-year employer cost is calculated as follows:
- Gross minimum wage: 20,002.50 TL x 12 months = 240,030 TL
- SGK employer contribution (15.5%): 3,100.39 TL x 12 months = 37,204.68 TL
- Employer unemployment insurance (2%): 400.05 TL x 12 months = 4,800.60 TL
- Total employer cost: 23,502.94 TL x 12 months = 282,035.28 TL
For employers not benefiting from the 5-point incentive, the one-year employer cost is calculated as follows:
- Gross minimum wage: 20,002.50 TL x 12 months = 240,030 TL
- SGK employer contribution (20.5%): 4,100.51 TL x 12 months = 49,206.12 TL
- Employer unemployment insurance (2%): 400.05 TL x 12 months = 4,800.60 TL
- Total employer cost: 24,503.06 TL x 12 months = 294,036.72 TL
Employee cost to the employer for 2024 is detailed above. If you have questions, please leave them in the comments section.