Employment & Labour


What is the Legal Basis of the Payroll Arrangement Obligation?

Article 37 of the Labour Law No. 4857 stipulates that the employer must give a signed pay slip showing employees wage account or bearing a special sign of the establishment for the payments made at the establishment or through a bank. At the same time this pay slip is called payroll. The obligation to arrange payroll in Article 37 of the Law is mandatory.

The principles regarding to the arrangement of payrolls are included in the provision 37/2 of the Labour Law No. 4857. Pursuant to the relevant provision; this slip must indicate clearly the date of payment, the pay period, all supplements to basic wages such as overtime earnings, payments for weekly rest days and national or general holidays, and all deductions such as taxes, insurance contributions, reimbursement of advance payments, payments for alimony and sequestrated deductions.


What Does “Payroll Fraud” Mean?

In the case of the employee has a supplement progress payment to the basic wage, it is not legally possible for the Employer to avoid payments related to these progress payments. As it is understood clearly from the 37/2nd provision of the Law; remunerations included in the payroll should only relate to the payment period for which they are earned. Against this regulation; a practice has been situated for the employers to pay the amounts to which the employee is entitled in pieces and to record them in this way; this practice is named as “payroll fraud” in judicial decisions.


In What Ways “Payroll Fraud” Can Come to the Fore?

Time to time in practice, it can be seen from that the wages shown on the payrolls do not reflect the truth in order to pay less tax or insurance premium. In order to eliminate this situation, the situated practice of the Supreme Court; to go to precedent wage research and to apply to witness statements.

As a matter of fact, as in many precedent decisions of the Supreme Court, this issue is also mentioned in the recent decision of the 9th Civil Chamber of the Supreme Court, Merit No. 2021/6585, Decision No. 2021/10651; emphasizes that the “real wage” should be determined in case of wage disputes. As provided exactly in the relevant decision, the method to be followed in this regard is ; “When taking into consideration the issues such as the seniority of the employee, the business title, the actual job, the qualities of the workplace, and the wages paid to the precedent employees, in case the suspicion arises that the fee provided in the signed payrolls does not reflect the truth, information can be obtained from trade unions, relevant workers’ and employers’ organizations, especially from the relevant trade association considering the witness statements regarding this matter and by notifying the time spent by the employee while carrying out the profession, the dates employee worked at the workplace, the job title, and the actual job,  and/or researching what the precedent fee might be by considering that the ’emolument information inquiry’ section on the official website of the Turkish Statistical Institute can also be used.


Afterall, overtime accruals, which are indicated on the payrolls every month, but which are suspected to not reflect the truth, are also cautiously approached by the judiciary. In this regard, it would be appropriate to refer to the precedent decisions of the Supreme Court. For instance; In the concrete case, which is the subject of the decision of the 9th Civil Chamber of the Supreme Court, Merit No. 2015/18042 and Decision No. 2017/9182, dated 29.05.2017, it has been observed that the monthly payrolls that do not include the signature of the plaintiff but include accruals such as overtime, weekdays, national holidays and general holiday wages other than the actual wage. However, since it was understood that the defendant employer divided the basic wage into other accruals and the relevant items did not reflect the truth, the basic wage of the plaintiff worker was determined by considering the work done by the plaintiff, seniority, witness statements and precedent wage research, and it was concluded that the payrolls did not include overtime accruals.


What Are the Sanctions under the Labour Code and Code of Tax Procedure?

In addition to all these explanations, in the event that unrealistic data participates on the payroll; Pursuant to the Article 359-a/2 of the Tax Procedure Law, it can be accepted that a misleading document has been prepared due to its content, and 18 months to three years penalty of imprisonment may be imposed for this act.

Furthermore, it should be kept in mind that failure to arrange payroll in accordance with clause b of Article 102 of the Labour Law, titled “Breach of provisions related to the wage”, will in itself cause an administrative fine to accrue against the employer.

In the provision 102/a of the relevant article, the consequences of deliberate non-payment or incomplete payment of wage payments are stipulated; Administrative fines against employers may also be imposed if remuneration such as wages, premiums and bonuses are not paid to the bank account. The relevant penalties will be applicable depending on the nature of the concrete case, and it would be useful to review the current practices by considering the possible sanctions by the employers.


Ekin Kocaman- İpek Güney

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