20 April 2020
Short-Term Employment Fund
The short term employment fund may act as a valuable tool to decrease pressure on cash-flow and provide access to regular income for employees. The recent announcements regarding implementation of the short-term employment fund for the mitigation of COVID – 19 have significantly eradicated the uncertainty on whether the outbreak will be accepted as reason for utilization of the fund. This has ensured that the fund should be a priority for the consideration of employers around the country.
Activities in a significant number of workplaces have slowed down and some workplaces have closed due to the COVID – 19 outbreak. Although employees may not be working full time or at all, employers have been accumulating full time salary payments. These circumstances causing stress on cash flow which is extremely difficult to compensate for.
What is Short Term Employment Fund?
The short-term employment fund is an instrument which covers salaries and general health insurance of employees in the event that working hours are reduced or the activities are temporarily suspended due to force majeure event such as pandemics.
Through the use of the short term employment fund, employers will not be responsible for the payments of salaries and general health insurance premiums for employees who are qualified to benefit from the fund, in proportion to the reduction of working hours. The payment of the portion of salaries and general health insurance premiums suspended by the employer will be covered by the Unemployment Insurance Fund.
What are the Conditions to Apply to the Short-Term Employment Fund?
Due to the COVID - 19 outbreak, employers which: (i) temporarily reduced weekly working hours in the workplace by at least 1/3; or, (ii) suspended the activity in the workplace completely or partially for at least 4 weeks, may apply to the short-term employment fund.
The application will be made to the General Directorate of Turkey Employment Organization ("İSKUR") and evaluated by the labor inspectors of the MoL. Accordingly, the applications which are evaluated to be satisfactory will benefit from the fund.
Are there any Limitations with respect to Industry?
Industrial restrictions are not imposed against application to the short-term employment fund. Employers who fulfill the conditions specified in the legislation can apply regardless of the industry in which they operate.
Which Employees Can Benefit?
In order to benefit from the short-term work fund: (i) employee should be employed for at least 120 days before the date of the application and (ii) unemployment insurance premium of the employee should be paid for at least 600 days in the last 3 years. Employees who do not fulfil these conditions are not entitled to receive any payment within the scope of short-term employment fund.
Will Employees Receive Full Salary?
The implementation of the short-term employment fund does not enable employees to receive full salaries. The legislation has determined upper limits, both with respect to a universal ceiling limit and percentage of individual salaries.
The monthly short-term employment fund to be paid to the employee cannot exceed 150% of the gross amount of statutory monthly minimum salary. Therefore, a ceiling limit corresponding to a net TRY 4,380.99 shall be applicable for this year. This means that regardless of the salary that an employee is receiving, once they are within the scope of the short-term employment fund, the maximum amount the respective employee will receive from the Unemployment Insurance Fund is limited to a net amount of TRY 4,380.99.
Moreover, the amounts to be paid to employees shall be limited to 60% of the average daily gross earnings calculated by taking into consideration the income of the 12 months, subject to social security premiums. In other words, employees shall receive 60% of their salaries if they are below the ceiling limit.
Is Employee Approval Required?
The employer does not need to obtain employee consent before applying to the short-term employment fund. Employees who satisfy the conditions of benefiting form the fund shall be considered within its scope without the need for prior approval. However, it is important to note that the obligations of the employer with respect to the employees who are not qualified to benefit from the short term employment fund will continue. The employer’s obligation and other possibilities with respect to these employees should be evaluated separately.
How Payments Will Be Made?
The payments will be made directly into the accounts of the employees on a monthly basis on the 5th of each month by İŞKUR via PTT bank.