Law No. 7256 on the Restructuring of Certain Receivables and Amendment of Certain Laws has been published in the Official Gazette No. 31307, dated 17 November 2020 (“Law“), and has entered into force. The Law introduces new incentives and supports relating to working life.
What Does the Law Regulate?
1. Insurance premium support for individuals benefiting from unemployment allowance
Unemployed individuals will have all of their long-term insurance premiums, calculated for the last period during which they benefited from unemployment allowance before their date of employment, covered by the Unemployment Insurance Fund. This is conditional on the individuals benefiting from unemployment allowance finding a job in the private sector within 90 days following their unemployment date and meeting the other conditions stipulated in the Law. Individuals can benefit from this opportunity only once for the same unemployment allowance entitlement.
2. Extension of incentives for the employment of young individuals, women and individuals with professional qualification certificates
Pursuant to the Unemployment Insurance Law No. 4447 (“Unemployment Insurance Law“), an incentive for the employment of young individuals, women and individuals with professional qualification certificates was put in place, which would expire on 31 December 2020. The Law authorizes the President to extend this incentive until 31 December 2023.
3. Extension of additional employment incentive
In line with the Unemployment Insurance Law, an insurance premium incentive has been provided to private sector employers for the additional number of individuals they employed between 1 January 2018 and 31 December 2020, when compared to the average number of employees they employed in the last year. This incentive would be provided for a period of 12 months, but would be extended to 18 months if the additionally employed individuals were female, young or disabled, and would ultimately expire on 31 December 2020. The Law authorizes the President to extend this incentive until 31 December 2023.
4. Extension of short-term working allowance
Within the scope of the measures taken due to the COVID-19 pandemic, short-term working was implemented and it was regulated that the President could extend this practice until 31 December 2020. The Law authorizes the President to extend the application date for short-term working and/or the duration of short-term working allowance, either separately for certain business lines or as a whole, until 30 June 2021.
5. Extension of insurance premium support
Within the scope of the measures taken due to the COVID-19 pandemic, it was regulated that an insurance premium support would be provided for a period of three months and not later than 31 December 2020, to employers that have implemented short-time working or sent their employees on unpaid leave during the pandemic. The President could extend the three-month period up to six months. The Law authorizes the President to extend the date from 31 December 2020 until 30 June 2021.
6. Support for those who have been terminated between 1 January 2019 and 17 April 2020 and for unregistered employees
In case individuals, whose employment agreements have been terminated between 1 January 2019 and 17 April 2020 for a reason other than Article 25/1/II of the Labor Code, and unregistered employees apply to their last workplace within 30 days, insurance premium support will be provided to the employer or cash wage support will be provided to the employee based on whether (i) the employees are actually employed by employers, (ii) the employees are recruited by employers but sent on unpaid leave or (iii) the employees’ applications are not accepted by employers. This regulation will enter into force on 1 December 2020.
7. Support for each additional employee to be employed when compared to the period between January 2019 and April 2020
Insurance premium support will be provided to employers for each employee they employ in addition to the least number of employees they employed between January 2019 and April 2020. This support will be provided by making monthly deductions from all premiums due by employers to the Social Security Institution. If the employer sends the employee on unpaid leave, the employee will be given cash wage support. This regulation will enter into force on 1 December 2020.
8. Return of excess and unwarranted short-term working allowances
Excess and unwarranted short-term working allowances, caused by incorrect transactions of employers with respect to short-term working applications filed due to COVID-19 for October 2020 and before, will not be reclaimed from employers if the state has not reclaimed them as of 17 November 2020. On the other hand, the state will not return to employers or deduct allowances it has reclaimed.
The COVID-19 pandemic has substantially affected Turkey and the working life practices in Turkey. The state continues to implement certain practices to support employers and protect employees. We recommend that employers closely monitor all legal changes regarding the COVID-19 pandemic.