Posting of Employees and Social Security: The Turkish-German Agreement

Where a German company temporarily posts its employees to its affiliated company, construction site or a particular project in Turkey, it is important to determine which country's social security legislation the employee will be subject to. Social security relations between Turkey and Germany are governed by the Social Security Agreement between the Republic of Turkey and the Federal Republic of Germany. Under certain conditions, the Agreement determines which country's legislation applies, for social security purposes, to employees temporarily sent to the other country, and how periods of insurance are to be taken into account. The social security agreements concluded by Turkey with other states likewise lay down rules on the protection of the social security rights of persons working between the countries concerned. In this context, the duration of the posting, the social security system to which the employee is subject and the procurement of the necessary documents in particular should be assessed before the posting.

Contents

• What basic rule would apply if there were no Agreement?
• What does the Turkish-German Social Security Agreement regulate?
• Which branches of insurance does the Agreement cover, and which does it not?
• How does a posting work under the Agreement?
• What applies to long-term postings and in special cases?
• How do periods of insurance affect retirement?
• What applies with regard to health insurance and benefits during the stay in Turkey?
• What should be considered in the case of locally employed staff?
• What steps should the employer take in practice?
• Conclusion

What basic rule would apply if there were no Agreement?

In Turkish social security law, the principle that the legislation of the country of work applies (lex loci laboris) is fundamental for dependent employees. Persons working in Turkey under a contract of service are, as a rule, subject to the Turkish social security system under Social Insurance and General Health Insurance Law No. 5510, and the employer is obliged to pay the relevant social insurance premiums. For foreign nationals who are posted by an employer established abroad to work temporarily in Turkey and who document that they are covered by social insurance in their own country, Social Insurance and General Health Insurance Law No. 5510 provides for a specific exemption. For countries with which there is no social security agreement, this exemption is limited to three months under the Regulation on Social Insurance Procedures (Sosyal Sigorta İşlemleri Yönetmeliği). The social security agreements in force between Turkey and other states, by contrast, determine, under the conditions laid down, which country's social security legislation applies to the employee in the case of temporary postings and for what period the posting is limited. In this way, for the branches covered by the Agreement, the obligation to pay premiums in both countries for the same work is avoided, while it is also ensured that the employee does not remain outside social security coverage.

What does the Turkish-German Social Security Agreement regulate?

The Social Security Agreement between the Republic of Turkey and the Federal Republic of Germany was signed on 30 April 1964 and entered into force on 1 November 1965. The Agreement acquired its current form through subsequent supplementary arrangements. The Agreement regulates matters such as equal treatment of the nationals of the contracting states in social security, the taking into account of periods of insurance completed in the other country for the acquisition of certain social security rights, the export of certain social security benefits to the other country and the determination of which country's social security legislation is to apply. For employees, the basic rule is that they are subject to the social security legislation of the country in which they work. However, employees temporarily posted from Germany to Turkey may, under certain conditions, remain subject to German social security legislation for the branches covered by the Agreement.

Which branches of insurance does the Agreement cover, and which does it not?

The Social Security Agreement between the Republic of Turkey and the Federal Republic of Germany contains provisions on sickness and maternity insurance (Krankenversicherung und Mutterschaft), insurance against occupational accidents and occupational diseases (Unfallversicherung) and invalidity, old-age and survivors' insurance (Rentenversicherung). There are also certain provisions concerning family benefits (Familienleistungen). Unemployment insurance (Arbeitslosenversicherung) and German long-term care insurance (Pflegeversicherung), however, fall outside the scope of the Agreement. The social security areas in which the Agreement applies should be assessed separately according to the nature of the posting and of the benefit concerned. For this reason, in postings, the relevant national legislation and, where necessary, supplementary private insurance options should be assessed separately with regard to the social security areas not covered by the Agreement.

How does a posting work under the Agreement?

Where an employee is temporarily posted by his or her German employer to work in Turkey, the employee remains, under certain conditions under the Social Security Agreement between the Republic of Turkey and the Federal Republic of Germany, subject to German social security legislation for the branches covered by the Agreement. In that case, no additional obligation to pay premiums arises in Turkey for the social security branches covered by the Agreement. The basic conditions are as follows:

• The employment relationship with the German employer continues, and the employee does not, by reason of the posting, enter into a new employment relationship directly with the employer in Turkey. The posting further requires that the employee normally works in Germany and that he or she performs the work in Turkey on behalf and for the account of the German employer.
• The posting is limited from the outset to a specific and foreseeable period. Although the Agreement contains no provision on the duration of a posting, under the minutes signed in Ankara in 2001 the initial posting period is a maximum of 24 months; where a posting exceeds this period, the overall duration may be extended, on an application made before the assignment period expires, by the period agreed between the competent institutions of the two countries.
• The insurance in Germany is documented. The T/A 1 certificate issued by the competent German institution shows that the employee remains subject to German social security legislation and is used in SGK procedures in Turkey. The application for the T/A 1 is made electronically to the statutory health insurance fund (Krankenkasse) to which the German pension insurance contributions are paid or, if there is no such fund, to the GKV-Spitzenverband, DVKA. The certificate issued must be submitted to the Social Security Provincial Directorate (SGİM) or Social Security Centre (SGM) responsible for the workplace in Turkey to which the employee is posted.

The same rules also apply to the temporary posting to Germany of employees insured in Turkey. For certain groups of employees, such as transport and air transport personnel, seafarers, employees of diplomatic missions and public officials, the Agreement contains special connecting rules. In the case of a temporary posting from Turkey to Germany, the A/T 1 certificate is used, which shows that Turkish legislation continues to apply.

What applies to long-term postings and in special cases?

Where the posting does not meet the usual conditions or these conditions subsequently cease to be met, an exemption agreement (Ausnahmevereinbarung) may be concluded at the request of the parties under Article 9 of the Social Security Agreement between the Republic of Turkey and the Federal Republic of Germany. This method may be used, for example, to ensure that German social security legislation continues to apply where a separate local employment contract is concluded with the affiliated company in Turkey. An exemption agreement requires the consent of the GKV-Spitzenverband, DVKA in Germany and of SGK in Turkey, and is assessed on a discretionary basis in each specific case. Under the current practice of the DVKA, an exemption agreement is as a rule concluded for a total of up to five years, taking previous posting periods into account; where there are special reasons, an additional period of no more than three years may be considered. The application should, if possible, be made approximately four months before the start of the relevant period, and it should be checked separately whether the employee falls within the personal scope of the exemption agreement.

How do periods of insurance affect retirement?

For the purpose of determining whether a pension entitlement has been acquired, periods of insurance completed in Germany and Turkey may be aggregated, provided that they do not coincide. Once it has been determined through the aggregation of these periods whether a pension entitlement arises, the competent institution of each country applies its own legislation, takes as its basis the periods completed under its own legislation and calculates the pension accordingly. For this reason, periods of employment in Turkey and Germany may, where the conditions are met, be taken into account in determining pension rights in both countries. Provisions on the payment of pensions to beneficiaries residing in the other contracting state are also laid down in the Social Security Agreement between the Republic of Turkey and the Federal Republic of Germany.

For Turkish nationals who return to Turkey after working in Germany for many years, the possibility of buying back periods spent abroad (yurt dışı borçlanması) under Law No. 3201 on the Assessment of Periods Spent Abroad by Turkish Citizens Residing Abroad for Social Security Purposes may also come into consideration. Turkish nationals, as well as persons who were Turkish nationals by birth and lost Turkish nationality by obtaining permission to renounce it (Blue Card holders, mavi kartlılar), may benefit from this possibility if they meet the other statutory conditions. The conditions for buying back periods should be assessed separately on the basis of the nationality status during the period to be bought back and the documented periods.

What applies with regard to health insurance and benefits during the stay in Turkey?

Temporarily posted employees who remain subject to German social security legislation may receive health benefits during their stay in Turkey under the Social Security Agreement between the Republic of Turkey and the Federal Republic of Germany. In order for health services to be provided in Turkey, the T/A 11 certificate issued by the competent institution in Germany must be submitted to the relevant SGK office and the necessary procedures must be completed. Health benefits are provided through the competent institution in Turkey within the framework of the provisions of the Agreement. In practice, the T/A 11 certificate must be submitted to the relevant SGİM or SGM before health services are sought, and a YUPASS number must be obtained for the employee and the insured family members accompanying him or her.

For an employee who remains subject to German legislation, the competent institution for occupational accident and occupational disease insurance continues to be the German accident insurance institution (Unfallversicherungsträger; in practice often the Berufsgenossenschaft). An occupational accident occurring in Turkey must be reported to this institution without delay. In addition, any recording, investigation and notification obligations that may arise under Turkish occupational health and safety legislation in respect of the workplace where the accident occurred must also be fulfilled.

In practice, in addition to the health benefits provided under the Agreement, taking out private international health insurance (Auslandskrankenversicherung) may also be considered, in particular for additional costs that may be incurred at private healthcare institutions.

What should be considered in the case of locally employed staff?

Where an employee, even a German national, is employed locally by a company in Turkey, the social security rules on temporary postings do not, as a rule, apply. In that case, the employee is subject to the Turkish social security system under Social Insurance and General Health Insurance Law No. 5510, and the employer's relevant social security obligations arise. For foreign nationals working under International Labour Force Law No. 6735, the social security obligations and the obligations relating to the work permit must be fulfilled separately.

If it is intended to maintain insurance in the German social security system, the local employment model must be assessed separately in the light of the Social Security Agreement between the Republic of Turkey and the Federal Republic of Germany and, in particular, the provisions on exemption agreements. It is important that such a structure be planned before the start of employment, taking into account its effects on the employee's future German pension and health insurance rights. Remaining in the German system for social security purposes does not relieve the foreign national of the obligation to obtain a work permit in Turkey. Under International Labour Force Law No. 6735, foreign nationals who will work in Turkey must, subject to the exceptions provided for by law, obtain a work permit or a work permit exemption before starting work.

What steps should the employer take in practice?

• Clarifying the structure before the assignment begins: Whether there is a genuine temporary posting, local employment or a mixed structure, and the duration of the posting, should be determined in advance.
• Obtaining the posting certificate: For an employee temporarily posted from Germany to Turkey, the T/A 1 certificate issued by the competent German institution should be obtained and submitted to the relevant SGK office in Turkey. In the case of long-term postings or situations that do not meet the usual posting conditions, it is also important to file applications for an exemption agreement (Ausnahmevereinbarung) at an early stage. The application should be made electronically to the relevant German statutory health insurance fund or to the DVKA, as the case may be; the certificate should be submitted to the relevant SGİM or SGM in Turkey before the posting begins.
• Assessing coverage and health protection: Social security areas not covered by the Social Security Agreement between the Republic of Turkey and the Federal Republic of Germany should be assessed separately. With regard to the scope of the health services to be provided in Turkey, the necessary documents and supplementary private insurance options should also be examined in advance. In particular, German unemployment and long-term care insurance, which fall outside the scope of the Agreement, and obligations that may arise in Turkey should be examined separately. In order to receive health benefits, the T/A 11 certificate should be submitted to SGK and a YUPASS number should be obtained.
• Handling work permit, residence and tax procedures in parallel: The foreign national's work permit and residence status in Turkey should be assessed within the framework of International Labour Force Law No. 6735 and the related legislation. Independently of social security, the tax position should be examined separately, in particular with regard to the Agreement between the Republic of Turkey and the Federal Republic of Germany for the Avoidance of Double Taxation with respect to Taxes on Income and on Capital.
• Concluding the posting agreement in writing: The applicable law, salary and additional payments, the duration of the posting, the allocation of costs, the return to Turkey or Germany at the end of the assignment and the other obligations of the parties should be clearly regulated.

Conclusion

The Social Security Agreement between the Republic of Turkey and the Federal Republic of Germany makes it possible, under certain conditions, for persons temporarily posted to Turkey to remain subject to the German social security system for the branches covered by the Agreement and for the payment of social security premiums in both countries for the same work to be avoided. Periods of insurance completed in Turkey and Germany may be taken into account, within the framework of the relevant legislation and the provisions of the Agreement, in determining whether a pension entitlement has been acquired. What is decisive is the correct characterisation of the specific situation, the fulfilment of the conditions required for a posting or an exemption agreement, the timely procurement of the relevant documents and the separate assessment of the areas not covered by the Agreement.

Since social security, work permit and tax law issues in postings are interconnected, it is important to carry out comprehensive structuring before the posting begins. Subsequent corrections may be more complex and costly, particularly with regard to social security. A similar assessment is made for postings carried out under the social security agreements in force between Turkey and the Republic of Austria and the Swiss Confederation; however, the specific provisions of each agreement must be examined separately.

GEMS Schindhelm advises German, Austrian and Swiss companies on structuring postings to Turkey in terms of social security, work permits and employment law, and on structuring local employment and exemption agreements. This article is for general information purposes only and does not constitute a legal opinion or legal advice; each dispute must be assessed separately according to the circumstances of the specific case and the legislation in force.