With the Law on the Amendment of the Social Security and General Health Insurance Law No. 5510 and Decree No. 375 (“Law“) published in the Official Gazette on 3 March 2023, which is also known as The Law on Early Retirement Despite Failing to Meet the Age Requirement (“EYT” — Emeklilikte Yaşa Takılanlar in Turkish), the conditions for the individuals who were deemed registered with the Social Security Institution before 9 September 1999 to be eligible for retirement have been rearranged.
We would like to provide you with this quick guide for employers, dealing with the questions that employers may face in light of EYT. You may use this guide for information purposes, but note that as this situation evolves, there may be changes in the secondary legislation that concerns employers as well as this guide. The information in this guide is presented as of 3 March 2023; the high-level guidance in this document is not intended to be comprehensive legal advice.
1. Who will be able to retire under the relevant legal legislation?
Individuals who were deemed registered with the Social Security Institution (“SSI”) before 9 September 1999 will benefit from the relevant legal legislation. To qualify for retirement within the scope of the Law, those who work under the 4/1-(a) status of the Social Security and General Health Insurance Law No. 5510 must (i) complete a 20-year social security period if female, or a 25-year social security period if male, and (ii) fulfill the conditions of having paid 5000-5975 days of statutory social security insurance, which vary gradually according to the insurance start date.
According to the relevant Law, the following individuals will be entitled to retirement without any age requirement:
- Individuals who started working before 8 September 1999 (inclusive) within the scope of long-term insurance branches (disability, old age, and death insurance)
- Individuals who started working after 9 September 1999 (inclusive) within the scope of long-term insurance branches, but whose insurance start date has been brought back to a date before 8 September 1999 (inclusive) with the service debt they incurred, as per the provisions of the legislation that allows it
Insured individuals will be able to retire under the Law regardless of whether they are subject to 4/1-(a), 4/1-(b), or 4/1-(c) status.
2. What should the employer demand from the employee who will benefit from the Law and what actions should the employer take?
In order to retire within the scope of EYT, the employee must submit a resignation letter to the employer together with a letter obtained from the SSI regarding eligibility for statutory seniority compensation and preferably a letter stating that he/she has applied to the SSI for old age pension pay.
The employer must notify the SSI within at most ten days following the termination of the employment agreement. In this case, the employer must make the SSI notification regarding the termination of the employment with the code “08 – Due to retirement (old age) or lump sum payment”.
3. What are the employer’s payment obligations for the employees who will retire and terminate their employment within the scope of EYT?
The Law does not have a specific regulation in relation to the employer’s current payment obligations regarding employee receivables and compensation per Labor Code No. 4857 and the relevant legislation. In this context, the current practice regarding the items to be paid by the employer to the employee who terminates their employment relationship upon retirement will continue to be applied. Accordingly, the employer’s payment obligations regarding the employee receivables and compensation towards the retired employee are as follows:
- Statutory seniority compensation
- Accrued and unpaid salary
- Accrued contractual benefits (e.g., premiums, bonuses, commissions, etc.)
- Accrued and unused annual leave pay
- Accrued and unpaid overtime/exceeding time pay
- Accrued and unpaid pay for work on national and public holidays and weekly holidays
4. Can these payments be made in installments?
When the employment agreement is terminated, all of the employee’s entitlements must be paid in full. Therefore, the rule is that all receivables must be paid to the employee by the date they retire. However, if there is a mutual agreement between the employer and the employee, the relevant receivables may be paid in installments.
5. Is the employer obliged to rehire the employees who retired within the scope of EYT?
The rehiring of an employee who benefits from EYT depends on the mutual agreement of the parties. The employer may rehire the employee taking into account its needs and the employee’s position, knowledge and qualifications. However, the employer is not obliged to rehire the retired employees.
In any case, the employer is obliged to refrain from discriminatory behavior, including during the recruitment process. Otherwise, the employer may face risks of compensation and administrative fines due to discrimination.
6. Does a period need to elapse before an employee who retired within the scope of EYT is rehired?
There is no obligation for a certain period to elapse before the reemployment of an employee who retired within the scope of EYT. The employer may rehire the retired employee the day after they terminated the employment, but may also reemploy them at a later date.
7. Will there be a difference in the social security support premium under the EYT legislation?
With the EYT legislation, employees who retire within the scope of EYT will also be subject to social security support premium if they work for the same employer or a different employer.
The EYT legislation stipulates that if employees who are deemed registered with the Social Security Institution before 8 September 1999 (inclusive) start working subject to social security support premium in the same workplace they last worked in, within 30 days following the date the employee terminated the employment, the amount corresponding to five points of the employer’s share of the social security support premium will be covered by the treasury.
However, if an employee who continues to work in the same workplace after retirement subject to the social security support premium terminates the employment relationship, it is not possible to benefit from this incentive for the relevant employee.
The employer will not be able to benefit from the five-point incentive for the employees who benefit from EYT and continue to work in another workplace after terminating their employment within the scope of the EYT legislation.