The Employer of Record (EOR) Structure in Turkiye

How Turkish labour and immigration law actually treats the EOR model, and what foreign companies must structure correctly before relying on it

The Employer of Record (EOR) model has become a familiar tool for foreign companies expanding into new markets without establishing a local entity. Much of what is written about EOR hiring in Turkey, however, comes from commercial platforms describing the model in operational and sales terms: faster onboarding, lower upfront cost, a single invoice. That framing is not wrong, but it is incomplete, and in our view it understates the legal substance of what an EOR arrangement actually is under Turkish law.

At Bayraktar Attorneys, we approach the EOR question as what it fundamentally is: an employment law and immigration law structure, governed by Turkish Labour Law No. 4857, the Social Insurance and General Health Insurance Law No. 5510, and the International Labour Force Law No. 6735 where foreign nationals are involved. This guide sets out the legal architecture of the EOR model in Turkey, the statutory obligations it does and does not transfer away from the client company, and, most importantly, the foreign employee ratio rule that determines whether an EOR strategy is legally sustainable in the first place.

1. The Legal Nature of an Employer of Record Arrangement

An Employer of Record is, in legal terms, a Turkish company that enters into a direct employment relationship with a worker, while a separate client company directs that worker's day-to-day activities under a commercial services agreement with the EOR. The worker has one employer of record under Turkish law, the EOR entity, regardless of who manages the work on a practical level.

This structure must be distinguished from labour leasing (gecici is iliskisi), which is separately regulated under Article 7 of Law No. 4857 and is subject to its own licensing regime through temporary employment agencies certified by the Ministry of Labour and Social Security. A properly structured EOR arrangement is not the same as a temporary employment agency relationship, and the two should not be conflated when assessing legal risk, though the line between them can become blurred in practice if the underlying contracts are not drafted carefully.

1.1. What the EOR Legally Assumes

Where the structure is properly drafted, the EOR entity, as the formal employer, assumes the following statutory obligations under Turkish law:

• Registration of the employee with the Social Security Institution (SGK) and ongoing premium payments
• Execution of a written, Turkish-language employment contract compliant with Law No. 4857
• Withholding and remittance of income tax and social security contributions
• Maintenance of statutory personnel records and payroll documentation
• Primary exposure to claims for wrongful termination, unpaid wages, or worker misclassification

1.2. What Does Not Automatically Transfer

From a legal due diligence perspective, it is important to understand that engaging an EOR does not eliminate every form of exposure for the foreign client company. Depending on how the commercial agreement between the client and the EOR is drafted, and depending on the degree of direction and control the client exercises over the worker in practice, Turkish courts and labour inspectors may, in certain circumstances, look beyond the formal EOR structure to assess who the true employer is. This is a fact-specific inquiry, and it is precisely the area where we see the most legal exposure arise in poorly structured arrangements.

1. Setting Up a Local Entity: The Legal Alternative

The alternative to an EOR is incorporating a Turkish entity, most commonly a limited liability company (LLC) or a joint stock company (JSC), and becoming the direct employer of record yourself. From a legal standpoint, incorporation involves trade registry filing, notarization of the articles of association, capital deposit, tax registration, and the establishment of statutory accounting and payroll infrastructure.

Once incorporated, the company bears full and direct legal responsibility for compliance with Turkish labour law, social security law, occupational health and safety law, and, where foreign staff are involved, immigration law. There is no intermediary absorbing statutory liability; the company is the employer of record in the fullest legal sense.

2.1. Comparative Legal Exposure

The choice between these two structures is, at its core, a question of where statutory liability sits and how directly the client company is exposed to Turkish administrative and judicial enforcement. The following considerations are central to that analysis:

• Liability allocation: under a properly structured EOR, primary liability for employment law compliance sits with the EOR entity. Under a local entity, the client company carries that liability directly and in full.
• Regulatory exposure: a local entity is directly subject to SGK audits, labour inspections, and tax authority review from the outset. An EOR arrangement interposes a layer between the client and these processes, though this layer is only as strong as the EOR's own compliance standing.
• Termination exposure: wrongful termination claims under Turkish labour law can result in reinstatement orders or compensation awards. Where an EOR is properly structured as the formal employer, this exposure is borne by the EOR. Where the structure is weak, or where the client company has exercised excessive operational control, this exposure can revert to the client.
• Wind-down complexity: exiting an EOR arrangement is generally a contractual matter resolved between the client and the EOR. Dissolving a local entity is a formal legal process under Turkish company law, often requiring liquidation procedures that can take several months.

1. Statutory Employment Obligations That Apply Regardless of Structure

Whether a foreign company hires through an EOR or its own local entity, the underlying statutory obligations under Turkish labour law are the same. The structure determines who is legally responsible for fulfilling them, not whether they apply. The principal obligations include the following.

3.1. Work Permits for Foreign Employees

Every foreign national working in Turkey must hold a valid work permit, issued by the Ministry of Labour and Social Security under Law No. 6735, unless a specific exemption applies. Whichever entity is the formal employer, whether the client's own Turkish entity or an EOR, that entity must act as the sponsoring employer for the work permit application. Processing typically takes two to six weeks, and this is a hard regulatory dependency that cannot be circumvented by structure alone.

3.2. Written, Compliant Employment Contracts

Under Article 8 of Law No. 4857, employment contracts exceeding one year, and certain other categories, must be in written form, and must be in Turkish to be enforceable before Turkish courts. A contract that is merely translated, without legal review against the specific requirements of Turkish labour law, particularly provisions on probation, notice, and termination grounds, carries real enforceability risk. We regularly see contracts drafted for other jurisdictions and superficially localized for Turkey that fail to meet these requirements.

3.3. Probation, Notice, and Severance

• The probation period may not exceed two months under an individual employment contract, or four months where established under a collective bargaining agreement.
• Statutory notice periods for termination range from two to eight weeks, calculated by length of service, and must be given in writing.
• Severance pay becomes due after one full year of continuous service, calculated at 30 days of gross salary per completed year, subject to an annually updated statutory cap, and is exempt from income tax.
• Accrued but unused vacation entitlement must be paid out upon termination, alongside any other statutory benefits owed.

1. The Decisive Legal Constraint: The Foreign-to-Turkish Employee Ratio

Beyond the general comparison above, there is a specific statutory rule under Turkish work permit legislation that, in our assessment, is the most important legal factor in deciding whether an EOR strategy is viable in Turkey at all. Under the work permit framework, an employer seeking to sponsor a foreign national's work permit must maintain a minimum ratio of five Turkish employees for every one foreign employee on its payroll.

This ratio is not advisory. It is a hard eligibility threshold applied by the Ministry of Labour and Social Security when reviewing work permit applications, and it scales proportionally: sponsoring two foreign employees requires ten Turkish employees; three requires fifteen, and so forth.

4.1. Why This Rule Undermines a Pure EOR Strategy

The commercial appeal of an EOR is precisely that it allows a foreign company to avoid building out Turkish operations or headcount. The foreign employee ratio rule sits in direct tension with that proposition. An EOR entity, or any Turkish company, established with no underlying business purpose other than employing foreign nationals on behalf of overseas clients, has no realistic legal path to maintaining the Turkish headcount required to sponsor a meaningful number of foreign work permits.

4.2. When the Structure Can Be Made to Work

The ratio rule does not make the EOR model unusable in Turkey; it makes it conditional on genuine commercial substance. Where an EOR entity conducts real, independent business activity in Turkey, generating its own revenue, employing a genuine and growing Turkish workforce unrelated to any single client's foreign hiring needs, that entity may have legitimate headroom under the ratio to sponsor foreign work permits as an ancillary part of its operations. The legal distinction is between an entity built around foreign sponsorship and an entity that happens to be capable of foreign sponsorship because of its underlying scale.

This distinction also matters for Turkish nationals only hiring. If a company is only employing Turkish staff with no foreign headcount at all, the ratio rule is simply irrelevant to that engagement, and the EOR analysis becomes a more conventional comparison of liability allocation, cost, and administrative convenience as set out in Section 2 above.

1. Data Protection and Intellectual Property Considerations

Employment relationships in Turkey, whether structured through an EOR or a local entity, are subject to Law No. 6698 on the Protection of Personal Data (KVKK). Employee consent mechanisms, the legal basis for processing personnel data, and any cross-border transfer of employee data to a foreign parent company must be structured in compliance with KVKK, including, where applicable, the explicit consent or other lawful basis required for transferring data outside Turkey.

Where the work performed involves the creation of intellectual property, whether software, design work, or other proprietary output, the employment contract must include an enforceable IP assignment clause under Turkish law. A contract drafted under a foreign jurisdiction's default work-for-hire assumptions will not necessarily achieve the same result under Turkish intellectual property law, and this is a frequent gap we are asked to correct in EOR-issued contract templates.

1. Legal Due Diligence Before Engaging an EOR Provider

Where a client proceeds with an EOR structure, we recommend the following legal due diligence steps before signing any commercial agreement:

• Confirm the EOR operates a wholly owned Turkish entity, rather than a network of subcontracted local agents, and request its trade registry number and active SGK employer registration.
• Review the EOR's standard employment contract template for compliance with Law No. 4857, with particular attention to probation length, notice periods, and termination grounds.
• Assess the EOR's existing Turkish headcount against the foreign-to-Turkish employee ratio, where the engagement involves sponsoring a foreign national's work permit.
• Review the commercial services agreement between the client and the EOR for provisions allocating liability for misclassification, wrongful termination, and regulatory non-compliance.
• Confirm KVKK-compliant data processing and cross-border transfer mechanisms are in place if employee data will be shared with the client's foreign systems.
• Verify that intellectual property assignment provisions are enforceable under Turkish law where the role involves the creation of proprietary work product.

1. Our Recommendation

The choice between an EOR and a local entity in Turkey is not primarily a cost or speed decision; it is a legal structuring decision with direct consequences for who bears statutory liability, and, where foreign nationals are involved, whether the structure is even eligible to sponsor work permits under the applicable ratio rule. Our general guidance to clients is as follows:

• Where the engagement involves only Turkish employees, an EOR can be a legitimate and lower-friction route to market entry, provided the underlying contracts and the EOR's own compliance standing are properly reviewed.
• Where the engagement involves sponsoring foreign nationals, the foreign-to-Turkish employee ratio must be assessed and verified against the EOR's actual headcount before any commitment is made; this is not a matter that can be resolved after the fact.
• Where the company intends to build a long-term, substantial Turkish presence, particularly one involving multiple foreign hires over time, establishing a genuinely operational local entity is generally the more durable structure, since it places the company in direct control of its own compliance position rather than depending on a third party's standing.
• In either case, the underlying employment contracts, data protection mechanisms, and IP assignment provisions should be reviewed by Turkish counsel rather than relied upon as generic templates.

We advise foreign companies and investors on both pathways: reviewing and negotiating EOR service agreements, structuring and incorporating local entities, securing work permits, and ensuring that employment contracts and termination processes are fully compliant with Law No. 4857 and related Turkish labour and immigration regulations.

Frequently Asked Questions About the EOR Structure in Turkey

1. Is the Employer of Record model recognized as legal under Turkish law?

There is no statute that names or directly regulates the EOR model as such. It operates as a contractual arrangement built on ordinary Turkish employment and commercial law principles. It must be distinguished from temporary labour leasing under Article 7 of Law No. 4857, which is separately licensed, and the underlying contracts should be drafted to maintain that distinction.

1. Can a foreign company avoid Turkish employment liability entirely by using an EOR?

Not entirely. A properly structured EOR arrangement places primary statutory liability on the EOR as the formal employer. However, where the client company exercises a level of control over the worker that goes beyond ordinary service direction, a Turkish court may, depending on the facts, look beyond the formal structure when assessing liability. The drafting of the services agreement and the actual conduct of the parties both matter.

1. Does the EOR model allow a company to bypass the foreign employee ratio rule?

No. The ratio of five Turkish employees per foreign employee applies to whichever entity is sponsoring the work permit, including an EOR. An EOR with insufficient genuine Turkish headcount cannot legally sponsor foreign work permits beyond what that ratio allows, regardless of how the arrangement is marketed.

1. Who is responsible for obtaining a work permit when using an EOR?

The EOR, as the formal employer of record, is responsible for sponsoring and filing the work permit application with the Ministry of Labour and Social Security, in the same way a client's own local entity would be if hiring directly.

1. What happens if an EOR-employed worker is dismissed without proper legal grounds?

The EOR, as the formal employer, bears primary exposure to a wrongful termination claim under Turkish labour law, which may result in reinstatement or compensation depending on the outcome of mediation or litigation. This is one of the central reasons the EOR's own compliance standing and contract quality should be reviewed before engagement, since the client company's risk is only as well insulated as the EOR's own legal soundness.

1. Is it legally safer to incorporate a local entity than to rely on an EOR?

Not necessarily safer, but different in nature. A local entity places compliance directly in the client company's own hands, which some companies prefer for long-term control. A properly vetted EOR shifts much of that direct exposure to a third party, but the client must still confirm that the EOR is genuinely compliant, since a poorly run EOR transfers risk in name only.

Conclusion

The Employer of Record model is a legitimate structuring tool in Turkey, but it should be evaluated as what it is: an employment law and, where foreign nationals are involved, an immigration law arrangement, not merely a commercial convenience. The statutory foreign-to-Turkish employee ratio in particular sets Turkey apart from many jurisdictions where EOR hiring has become routine, and it means that the underlying substance of the EOR entity, not just its platform or pricing, is a genuine legal precondition to a workable strategy.

Foreign companies considering an EOR arrangement in Turkey, particularly for the employment of foreign nationals, should treat the legal due diligence steps set out above as a prerequisite, not an afterthought, and should have the underlying contracts reviewed against Turkish labour, social security, data protection, and immigration law before relying on the structure.

If you are evaluating an EOR arrangement, structuring your own local entity, or reviewing an existing EOR relationship for compliance, the team at Bayraktar Attorneys is available to advise on the legal structuring, contract review, and work permit aspects of your engagement.