Determination of the Applicable Law Regarding the Social Security of the Foreign National Employees*

(Excerpt from forthcoming book chapter. All rights reserved.)

In principle, the principles regarding the Social Security legislation to which the foreign national employees will be subject are determined according to lex loci laboris principle.[1] In general, the foreign national employees working with an employment contract in the territory of another country are subject to the legislation of the country in which they are working. According to this principle, applicable law has been determined as the law of the place of business in which the employee is performing his routine task. Under normal conditions, the common point of the international agreements is that the nationals of a contracting party working in the territory of any other contracting parties are subject to the legislation of the country in which they are employed regardless of the principal places of business or places of residence.  On the other hand, there are exceptions of this principle within the framework of bilateral or multilateral agreements. And the most important requirement of these exceptions is the secondment of any foreign national employee employed in the territory of a contracting party by the place of business located in the territory of another contracting party as to perform a certain task on behalf of the employer. In accordance with sub-paragraph (c) of Article 4 of the Social Security and General Health Insurance Law numbered 5510, ‘Except for the nationals of the contracting parties of the international social security agreement based on the rule of reciprocity, the foreign national employees working with an employment contract[2] are deemed insured. As an exception of this principle, in accordance with sub-paragraph (e) of Article 6 of the Social Security Law numbered 5510, the employees who are send to Turkey for a task by any undertaking established in a foreign country and on behalf of the relevant undertaking and certify that they are subject to social security in a foreign country and self-employed individuals working on behalf of themselves in Turkey and reside abroad and are subject to the social security legislation of the relevant country[3] are not deemed insured in our country.

The current regime determining the social security of the foreign national employees in our country has been formed following the amendment of sub-paragraph (d) of Article 10 of the regulation with the amendment of the Social Security Transactions Regulation dated August 21, 2013[4]. The Regulation[5] has caused significant changes especially with respect to the insurance of the foreign national employees coming to our country with secondment from countries signing bilateral or multilateral agreements with our country. In the following parts, the insurance of the foreign national employees within the framework of sub-paragraph (e) of Article 6 of the Social Security Law in our country before and after the amendment of the Social Security Transactions Regulation dated August 21, 2015 will be discussed.

Secondment Concept

In case of the secondment of a foreign national employee in the territory of another country for the performance of a task, especially as to prevent double social security costs, both through international agreements and with the regulation of the domestic laws of the countries, measures are taken as to keep the employee assigned in the territory of another country in the social security system of the country in which the relevant employee is normally employed (assigning country). In general, when the applications of various countries are examined, the provisions regarding the durations of international secondment are limited with a certain period and in case the relevant durations are exceeded, the foreign national employee is subject to the legislation of the country to which he is assigned as to perform his task.

In accordance with sub-paragraph (e) of Article 6 of the Social Security Law numbered 5510, international assignment (secondment) refers to ‘assignment for a task in Turkey by any undertaking established in a foreign country and on behalf of the relevant undertaking.’ It should be stated that within the framework of our social security legislation the “temporariness” of these types of assignments has not been emphasized. On the other hand, especially with the articles regarding the determination of the social security legislation applicable within the framework of most of the international social security agreements signed by our country, this concept becomes “temporary” with the indication of time limitation requirement for these types of assignments.

SECONDMENT IN TERMS OF THE LEGISLATION APPLICABLE

  1. a) Legislation Applicable for the Foreign National Employees within the framework of the European Convention on Social Security

The European Convention on Social Security formed in Paris on December 14, 1972 in accordance with the principle of equality of treatment for the nationals of the contracting parties, refugees, and stateless persons under the social security legislation of each contracting party[6] has been ratified on March 01, 1977 with the Law numbered 2023 and entered in force.[7]

The legislation applicable within the framework of the European Convention on Social Security is determined in accordance with the provisions of Article 14 of the relevant Convention. The Convention clearly states that, within the framework of the above mentioned lex loci laboris principles, the legislation of the contracting party in which the task is performed is applicable. In accordance with Article 14 of the Convention,

“The employees working in the territory of a contracting party are subject to the legislation of the contracting party in which they are working even if their places of residence or the place of business of the undertaking employing them or the place of residence of the employer are in the territory of another contracting party.[8]” The exception for Article 14 regarding the determination of the legislation applicable has been determined with the requirement of “secondment”. In accordance with Article 15 of the Convention, the employees employed in the territory of a contracting party by an undertaking which is their regular employer are sent to another contracting party by the relevant undertaking for the performance of a task are subject to the legislation of the first contracting party. The duration of secondment has been limited with 12 months[9]. Therefore, the foreign national employees coming to our country with secondment from the contracting parties of the European Convention on Social Security are not deemed insured in Turkey on condition of not exceeding the duration of 12 months and are subject to the social security legislation of their countries.

CONTRACTING PARTIES OF THE EUROPEAN CONVENTION ON SOCIAL SECURITY

 

Contracting Parties of the European Convention on Social Security

Date of Signature Date of Ratification Enforcement Date
Austria December 14, 1972 June 10, 1975 March 01, 1977
Belgium November 26, 1976 January 21, 1986 April 22, 1986
Czech Republic June 21, 2002
France December 14, 1972
Greece April 21, 1977
Ireland February 23, 1979
Italy December 14, 1972 January 11, 1990 April 12, 1990
Luxembourg December 14, 1972 November 13, 1975 March 01, 1977
Moldova May 22, 2002
Netherlands November 05, 1975 February 08, 1977 May 09, 1977
Portugal November 24, 1977 March 18, 1983 June 19, 1983
Spain November 11, 1984 January 24, 1986 April 24, 1986
Turkey December 14, 1972 December 02, 1976 March 01, 1977

Resource: Council of Europe, Treaty Office (February 12, 2012)
http://conventions.coe.int/Treaty/Commun/ChercheSig.asp?NT=078&CM=1&DF=&CL=ENG

  1. b) Legislation applicable for the foreign national employees who are nationals of the countries that have signed Social Security Agreement with our country

In addition to the multilateral international agreements, the Social Security Legislation applicable for the nationals of the countries that have signed bilateral social security agreement[10] with our country during the term of their employment in Turkey is also determined with these bilateral agreements. Though the exceptions differ within the framework of the agreements, the bilateral social security agreements are based on lex loci laboris principle as well. As it is stated above, the social security legislation of the contracting party in which the task is performed is applicable for the foreign national employees. Accordingly, the national of country B, which has signed bilateral social security agreement with Turkey, employed by company A in Turkey is subject to the Social Security Legislation of Turkey. Likewise, the exception of this principle is subject to “secondment”. As it is also stated within the framework of the Circular numbered 2011/43, “In accordance with the provisions of the bilateral or multilateral social security agreements signed by and between our country and contracting parties, in case the foreign national employees are temporarily send to our country by the undertaking established in a contracting party for the performance of a certain task, the double insurance has been prevented by stating that the insured will be subject to the legislation of the country in which the place of business employing him is located as if he is working in his own country.[11]

The foreign national employees, who certify that they are subject to the social security legislation of their country and are sent to Turkey with secondment by their employer in a country that has signed bilateral social security agreement with Turkey, are subject to the social security legislation of the country sending them and independent from the legislation of our country. The durations of secondment and extension periods for secondment have been separately stated within the framework of the bilateral social security agreements. With respect to the foreign national employees of the contracting parties still in Turkey after the expiry of the relevant durations, the Social Security Legislation of Turkey will be applicable.

SECONDMENT APPLICATIONS ACCORDING TO THE AGREEMENTS

Contracting Party Duration of Secondment Extension Period
1- United Kingdom During the duration of secondment, the legislation of the country registered is applied.
2- Federal Republic of Germany 5 years 3 years
3- Netherlands 24 months As agreed
4- Belgium 24 months As agreed (in practice, limited with 60 months)
5- Austria 24 months As agreed
6- Switzerland 24 months As agreed
7- France 3 years As agreed (in practice, limited with 6 years)
8- Denmark 12 months Until the completion of task (on  condition of agreement)
9- Sweden 12 months 12 months
10- Norway 12 months As agreed
11- Libya After September 01, 1985, constant temporary employee application
12- Turkish Republic of Northern Cyprus 24 months As agreed
13- Macedonia 24 months Can be extended up to 60 months
14- Azerbaijan 24 months Can be extended up to 60 months
15- Romania 24 months Can be extended up to 60 months
16- Georgia 24 months Can be extended up to 60 months
17- Bosnia-Herzegovina 24 months Can be extended up to 60 months
18- Canada 24 months Can be extended up to 60 months
19- Quebec 60 months As agreed
20- Czech Republic 24 months As agreed
21- Albania 24 months Can be extended up to 60 months
22- Luxembourg 12 months 12 months
23- Italy 12 months As agreed
24- Portugal 12 months As agreed
25- Spain 12 months As agreed

Resource: Circular regarding “Social Security of the Foreign Nationals” numbered B.13.2.SGK.0.10.03.01-358 May 31, 2011, Social Security Institution

Apart from the above mentioned general exceptions, the third sub-paragraph of Article 4 of the Convention on Social Insurance signed by and between the United Kingdom and Turkey states that even in case the nationals of the United Kingdom are send to our country with secondment, unless they apply to the social insurance authority of Turkey at their own request, they can choose to be subject to the legislation of the United Kingdom. In accordance with the third sub-paragraph of Article 4 of the relevant Convention,

“If a national of the United Kingdom who is ordinarily resident in the territory of the United Kingdom is employed in the territory of Turkey and the provisions of paragraph (2) of this Article do not apply to him, the legislation of Turkey concerning invalidity, old age and survivor’s insurance shall not apply to him unless he so chooses and gives notice to that effect to the social insurance authority of Turkey. He shall also be entitled to choose that the legislation of the United Kingdom shall apply to him, and, if he so chooses, that legislation shall apply to him as if he were an insured person entitled to pay voluntary contributions from abroad[12].”

And the bilateral social security agreement signed by and between Sweden and Turkey comprises provisions similar to the provisions of the convention signed with the United Kingdom. In accordance with the first paragraph of Article 5 of the relevant agreement, “The nationals of Sweden shall be subject to the invalidity, old are and survivor’s insurance in Turkey only with their written application2[13].”

  1. c) Legislation applicable to the foreign national employees who are nationals of countries that have not signed Social Security Agreement with our country

Basically, the social security legislation of Turkey is applied for the foreign national employees coming from countries that have not signed social security agreement with our country[14] (Lex Loci Laboris). On the other hand, in accordance with sub-paragraph (e) of Article 6 of the Social Security and General Health Insurance Law numbered 5510, “the employees who are send to Turkey for a task by any undertaking established in a foreign country and on behalf of the relevant undertaking as not to exceed three months and certify that they are subject to social security in a foreign country and self-employed individuals working on behalf of themselves and reside abroad and are subject to the social security legislation of the relevant country[15] are not deemed insured in accordance with the social security legislation of our country.

On March 02, 2011, with the expression included to sub-paragraph (d) of Article 10 of the Social Security Transactions Regulation, this relevant article of the Law numbered 5510 has been amended as in case the foreign national employees who are nationals of countries that do not have social security agreement with our country certify that they are subject to social insurance in the country to which they are send with secondment, they shall not be deemed insured for three months maximum and following the expiry of three months, they shall be subject to the social insurance legislation of Turkey[16]. Though, with the regulation amendment dated March 02, 2011, the duration for being subject to their own social security regimes during secondment have been limited with 3 months for the nationals of countries that are not contracting parties of the international social security agreements, afterwards, with the amendment of the Social Security Transactions Regulation on August 21, 2013[17], this limitation has been removed and the discussion about the “secondment” concept have started. With the temporariness, definition and requirements of the international assignment, the deficiency in our legislation has become clearer.

The lower limit of the temporariness of the secondment of the nationals of foreign countries that are not contracting parties of the social security agreements regulated with the above mentioned regulations and circulars in our country has been redefined in the legislation lastly with the inclusion of limiting duration of 3 months after the amendment made in the Law on the Amendment of the Labor Law and Some Decree Laws and Restructuring of Some Receivables numbered 6552 and sub-paragraph 6(e) of the Law numbered 5510.[18]

CONCLUSION

Though the determination of the legislation applicable for the international secondment of employees is considered as an exception for the validity of the law of the place of business in which the routine task is performed, with the emphasis on the temporariness, has led to the interpretation as part of this principle. In case of the secondment of the employee in a foreign country by leaving the place of business in which the employee is performing his routine task for the performance of a certain task for a certain time, the reduction of the burdens with respect to the procedures that might be imposed on the employer or employee in the other country or other tax burdens is principally emphasized for the promotion of especially the foreign capital and foreign investments. Without doubt, nowadays when the concepts such as global workforce, global mobility, international assignment and free movement of employees are of great importance, the development of broader and more comprehensive legal instruments regarding the international assignment of foreign nationals are important especially in terms of the legal predictability.

*  Has been updated in the light of the recent legislation amendments.

 

[1] In accordance with Lex Loci Laboris principle, the legislation of the country in which a person is employed shall be applicable. For more detailed information: Handbook on European Social Security Law, Increasing the Institutional Capacity of the Social Security Institution Project, Turkey, http:///www.sgk-kap.org/en/database/db/B2_C8_717.pdf

[2] Social Security and General Health Insurance Law No. 5510, May 31, 2006, Art. 4

[3] Social Security and General Health Insurance Law No. 5510, May 31, 2006, Art. 6 (e) http://mevzuat.basbakanlik.gov.tr/Metin.Aspx?MevzuatKod=1.5.5510&MevzuatIliski=0&sourceXmlSearch=

[4] Regulation for the Amendment of the Social Security Transactions Regulation, Official Gazette, August 21, 2013/28742

[5] Social Security Transactions Regulation, Official Gazette, May 12, 2010/27579

[6] European Convention on Social Security, 14 December 1972, Paris, Preamble

[7] European Convention on Social Security, 14 December 1972, Paris

[8] European Convention on Social Security, 14 December 1972, Paris, Art. 14 (a) In accordance with the same article of the Convention, the crew and public officers shall be subject to the legislation of the country in which they are employed. Apart from this, the self-employed persons shall be subject to the legislation of the contracting party in which they work Art. 14 (b-c-d).

[9] European Convention on Social Security, 14 December 1972, Paris, Art. 15 (a) (i)

[10] Countries that have signed Social Security Agreement with the Republic of Turkey: Germany, Albania, Austria, Azerbaijan, Belgium, Bosnia-Herzegovina, Bulgaria, Czech Republic, Denmark, France, Georgia, Netherlands, United Kingdom, Sweden, Switzerland, Canada and Quebec, Turkish Republic of Northern Cyprus, Libya, Luxemburg, Macedonia, Norway, Romania.

[11] Circular on “Insurance of Foreign Nationals” numbered 2011/43, SOCIAL SECURITY INSTITUTION, May 31, 2011, http://www.sgk.gov.tr/wps/wcm/connect/15746de0-d2c0-4a72-9557-05ee7afad050/31.05.2011+_+2011-43+_+Yabanc%C4%B1+Uyruklular%C4%B1n+Sigortal%C4%B1l%C4%B1klar%C4%B1.pdf?MOD=AJPERES&CACHEID=15746de0-d2c0-4a72-9557-05ee7afad050

[12] Social Security Agreement between the Republic of Turkey and United Kingdom, January 06, 1961, Art. 4 (3) http://www.sgk.gov.tr/wps/wcm/connect/9d82aa94-4bee-4923-aed4-92da593e6eef/INGILTERE_SOSYAL_GUVENLIK_SOZLESMESI.doc?MOD=AJPERES&CACHEID=9d82aa94-4bee-4923-aed4-92da593e6eef

[13] Social Security Agreement between the Republic of Turkey and Switzerland, January 01, 1972, Art. 5 (1) http://www.sgk.gov.tr/wps/wcm/connect/d3775804-b72c-4b76-818a-b1a592f34404/ISVICRE_SOSYAL_GUVENLIK_SOZLESMESI.doc?MOD=AJPERES&CACHEID=d3775804-b72c-4b76-818a-b1a592f34404

[14] Social Security and General Health Insurance Law No. 5510, May 31, 2006, Art. 4 (Considered Insured)

[15] Social Security and General Health Insurance Law No. 5510, May 31, 2006, Art. 6 (e) http://mevzuat.basbakanlik.gov.tr/Metin.Aspx?MevzuatKod=1.5.5510&MevzuatIliski=0&sourceXmlSearch=

[16] Social Security Transactions Regulation, Official Gazette, May 12, 2010/27579, Art. 10 (d) “Persons sent to Turkey for work by and on behalf and account of any organization established abroad (Supplemental statement: Official Gazette-March 02, 2011-27862) for maximum three months and persons certifying that they are subject to a social insurance abroad and self-employed persons working in Turkey on behalf and account of themselves, persons residing abroad and subject to the social security legislation of the relevant country”

[17] Regulation for the Amendment of the Social Security Transactions Regulation, Official Gazette, August 21, 2013/28742, Art. 2

[18] Act No. 6552 to Amend the Labor Act and Some Acts and Decrees Having Force of Law and Restructuring Some Public Receivables, Official Gazette, September 11, 2014/29116, Art. 40

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