Contractor or Employee in Turkey? Misclassification Risk for Foreign Companies

If you set a Turkish contractor’s hours, manage them day to day and they work only for you, Turkish law can treat them as an employee, whatever the contract says. A reclassified contractor can claim severance, notice pay, leave pay and SGK social security for up to 5 years back, and SGK can fine 66,060 TL per unreported worker in 2026.

Checked October 2026. This page is for a US or German founder or hiring manager deciding how to engage one person in Turkey. It is general information, not legal advice. For costs see Turkey payroll and employer cost; for paying a contractor see how to pay freelancers in Turkey.

How does Turkish law decide if someone is an employee?

Turkish courts look at the facts of the work, not the name of the contract. A contract called “consultancy agreement” or “freelance agreement” does not protect you if the day-to-day reality is employment.

Labour Law 4857 Art. 8 defines an employment contract as one party working dependent on the other, for a wage. Social Security Law 5510 Art. 4/1-a uses the same idea for SGK. The key word is dependency (bağımlılık): who controls how, when and where the work is done.

A real independent contract is usually a contract for work (eser sözleşmesi, Code of Obligations Art. 470): the person delivers a result and decides how to get there.

Signs Turkish courts treat as employee or contractor (checked 7 October 2026)

Question	Points to employee	Points to contractor
Who sets working hours?	You do; fixed hours, daily stand-ups required	They do; deadlines only
How are they paid?	Same amount every month, whatever the output	Per project, milestone or invoice for delivered work
Do they have other clients?	No, only you, often by contract	Yes, or free to
Who manages the work?	Your manager gives daily instructions and reviews	They decide the method; you check the result
Whose tools and accounts?	Your laptop, company email, internal systems	Their own equipment and business accounts
Leave and holidays?	They ask you for permission	They plan their own time
Tax registration in Turkey?	None; you pay a person	Own sole proprietorship (şahıs şirketi) or company, issues invoices or receipts
How long?	Open-ended, full time, for years	Defined project or limited period

No single sign decides it. The more boxes in the left column, the higher the risk. Legal basis: Labour Law 4857 Art. 8, Law 5510 Art. 4, Code of Obligations 6098 Art. 393 and 470.

What happens if a contractor is reclassified as an employee?

Reclassification usually starts when the relationship ends. The person files for mediation, which is required before a labour court case, then sues for what an employee would have received. They can also ask the court to confirm their service for SGK (hizmet tespiti).

What a reclassified contractor can claim, 2026 (checked 7 October 2026)

Claim	Amount or rule	Legal basis and source
Severance (kıdem tazminatı)	30 days’ gross pay per full year of service, after at least 1 year; paid if you end the contract (except for just cause)	Law 1475 Art. 14
Severance ceiling	73,729.87 TL per year of service, 1 July to 31 December 2026	Treasury circular No. 5, via RSA Danışmanlık; ÇSGB ceiling page
Notice pay (ihbar tazminatı)	2 weeks (under 6 months), 4 weeks (6 to 18 months), 6 weeks (18 months to 3 years), 8 weeks (over 3 years)	Labour Law 4857 Art. 17
Unused annual leave	Paid out at the end. Minimum 14 days a year (1 to 5 years of service), 20 days (5 to 15), 26 days (15+)	Labour Law 4857 Art. 53, 59
Time limit for these money claims	5 years	Labour Law 4857 Add. Art. 3
SGK service confirmation	Worker can sue within 5 years from the end of the year the work was done	Law 5510 Art. 86
Back SGK premiums	Employer and employee premiums for the confirmed period, plus late interest	Law 5510; rates on our payroll cost page
SGK fine, worker not registered	66,060 TL per worker (2 × 2026 minimum wage)	Law 5510 Art. 102; amount via CottGroup
SGK fine, repeated within 1 year	165,150 TL per worker (5 × minimum wage)	Same

The 2026 minimum wage behind these fines is 33,030 TL gross a month (ÇSGB). Overtime and unpaid public-holiday claims can also follow if the person worked fixed long hours; we left them out because they depend on records, not a fixed rate.

What we could not confirm: the current SGK late-interest rate, and how often SGK actually collects from a foreign company with no Turkish entity. Ask a Turkish labour lawyer about both before relying on them.

Example

A developer works full time for your US company for 3 years and 2 months as a “contractor”. You end the contract. Their monthly invoice was 80,000 TL, which a court treats as gross pay.

• Severance: 3 full years × the 73,729.87 TL ceiling = 221,189.61 TL (80,000 TL is above the ceiling, so the ceiling applies; the 2 extra months add a pro-rata share)
• Notice pay: 8 weeks of pay, roughly 149,000 TL (8 × 7 days × 80,000 ÷ 30)
• Plus unused leave pay, and SGK premiums for the whole period if the court confirms their service

That is before lawyers’ fees and interest. The figures are an illustration from the rules above, not a calculation a court would copy.

Can a Turkish court act against a foreign company?

Yes. Under Law 5718 Art. 44, employment disputes can be heard by the court where the worker usually works. If they work from Istanbul, an Istanbul labour court can hear the case.

A contract under Delaware or German law does not fully help. Art. 27 says the chosen law cannot take away the protection the worker has under the mandatory rules of the country where they usually work. Turkish severance and notice rules are mandatory.

Collecting a Turkish judgment from a company with no assets in Turkey is harder. But the claim does not go away. It can become a problem when you later open a Turkish entity, bill Turkish clients, raise money (it shows up in due diligence) or sell the company.

A long-term worker in Turkey can also raise a separate tax question: whether your company has a taxable presence (permanent establishment) there. That depends on what the person does, for example signing contracts for you. Ask a tax adviser; it is outside this page.

What are the safe ways to work with someone in Turkey?

Setup	Fits when	Who carries the employment risk
Real contractor	They have their own registered business, several clients, bill per project and choose how they work	You, if the reality drifts into employment
Employer of record	One to a few full-time people you manage day to day, no Turkish company	Mostly the EOR (check the contract); see employer of record in Turkey
Agency or outsourcing firm	You buy an outcome or a team, not a person	The agency, which employs its staff; see outsourcing to Turkey
Own Turkish company	A larger, long-term team	You, as a normal employer

If you keep a contractor, keep it real:

• Pay against invoices for delivered work or milestones, not a flat monthly salary.
• Let them set their own hours. Do not require them in every internal meeting.
• Do not block other clients. Avoid exclusivity clauses.
• Make sure they are registered for tax in Turkey and issue proper invoices or receipts. Many qualify for the service-export tax deduction, which is one reason good contractors prefer this setup.
• No company email signature, title in your org chart or “employee” perks.
• Review the setup once a year. A 3-month project that became a 3-year full-time job is the classic case.

If the person already works like an employee, switch them to an EOR or your own payroll before the relationship ends, not after. Moving them while things are good is cheaper than a mediation claim later.

Is it legal to hire a Turkish freelancer at all?

Yes. Working with an independent Turkish freelancer is legal and common. The risk is not the contract type; it is calling an employee a contractor. For setting rates, see Turkish developer salaries.

We are not lawyers. For a specific case, a Turkish labour lawyer can review the contract and the day-to-day setup in one session. We recheck the figures on this page every six months, when the severance ceiling and minimum wage change.