Whether you're on the employer's or the employee's side, one term you'll frequently encounter in the working life is "payroll". Its commonality stems from its frequent practical appearance and the legal importance attributed to it. Payroll is often confused with wage slips and they are usually used together. In our study, we will examine the legal basis of payroll and wage slips, the mandatory elements they must contain, their similarities and differences, as well as their place in labor litigation.
Payroll According to the Tax Procedure Law No. 213
Article 238 of the Tax Procedure Law No. 213 mandatorily stipulates that employers are required to keep (organize) a payroll every month for the wages they pay.
Employers are free to organize the payroll in any format they desire. It must indicate for which month it is issued at the beginning, and the payroll for a month must be prepared and dated by the twentieth day of the following month, then signed by the owner or manager of the institution and the officer who organized the payroll. The minimum information (data) that must be included in the payroll is listed as a limitation, and no specific form requirement is envisaged provided that the principles stated in the article text are followed.
Mandatory Information Required on Payrolls According to the Tax Procedure Law
- The employee's surname and first name; their signature or seal indicating receipt of the wage.*
- If applicable, the date and number of the tax booklet (Tax Identification Number).
- The unit wage (monthly, weekly, daily, hourly, or piece rate).
- The period of work or the period to which the wage relates.
- The amount of taxes calculated on the wage.
*In cases where employee wages are deposited into bank accounts, there is no need to have the payroll additionally signed as proof of payment.
Payroll According to the Social Insurance and General Health Insurance Law No. 5510
The payroll, in the context of social security procedures, is often confused not only with the wage slip but also with premium ledgers. In the past, insurance premium payments and employee notifications were made through quarterly or four-monthly period ledgers. The term "premium ledger" is also mentioned in the currently effective Social Insurance Procedures Regulation. What both phrases refer to is the Monthly Premium and Service Document. Due to the habit of pronunciation from past periods and the similarity of the words, premium ledgers and payrolls are often confused with each other.
In the Law No. 5510, the payroll is referred to as "wage payment payroll," and it is defined in the same manner in regulations and related circulars. The purpose of organizing the payroll is to ensure the verification of premium documents submitted to the Institution by employers. Payrolls are not separately defined in the Law, but the mandatory elements that must be included in the payroll are authoritatively regulated in Article 102, Paragraph 5/e, which deals with administrative fines imposed by the Institution.
According to Law No. 5510, the mandatory elements that must be included in the payroll are as follows:
- The employer's registration number,
- The month to which the payroll relates,
- The insured's name and surname,
- The insured's social security registration number (Turkish Identification Number),
- The number of days for which wages are paid, the insured's wage, the amount of wage paid, and the insured's signature indicating receipt of the wage are mandatory. (Except for payments made via receipt or through banking channels concerning the signature requirement)
Wage Slip According to the Labor Law No. 4857
In the Labor Law No. 4857, the term payroll is encountered as a wage slip. Article 37 of the Law stipulates that the employer is obliged to provide a slip, signed or bearing the employer's special mark, showing the wage account to the employee in payments made at the workplace or to the bank.
According to the Labor Law No. 4857, the mandatory elements that must be included in the payroll are:
- The day of wage payment and the period it relates to,
- The amount of all kinds of additions to the basic wage such as overtime pay, weekly holiday pay, public holiday and general holiday pay,
- All kinds of deductions such as tax, social security premiums, advance payments, alimony, and execution must be shown separately.
Payroll in Labor Litigation
As known, in labor litigations, claims are predominantly related to severance payments, as well as overtime, national holiday, and general holiday pay, and weekly rest pay. Among the necessary elements for calculating these claims, one is the duration of work, while another significant element is the employee's monthly wage. It is precisely in determining these elements that whether the payroll or wage slip has been properly organized, and whether the document includes the employee's signature, becomes of great importance.
In labor litigation, labor courts adopt the simple litigation procedure and the principle of presentation by the parties. Accordingly, parties are required to prove their claims. The means of proving claims include witness statements and, especially, payrolls as written evidence. Payrolls documenting wages for overtime, weekly rest, and work on national holidays and general holidays, based on the working hours, are considered credible evidence. If the payrolls are signed, the contrary can only be proved with written evidence, meaning that if a document is signed by the employee, it will be considered credible for the period it belongs to unless proven otherwise. If a payroll is not signed, documents indicating accrued working hours for the periods in question will lose their status as written evidence, and judgment may be based on witness statements for the same period. However, if it is understood that the wages recorded in a non-written document were paid through the bank, such accruals will only be offset from the total claims (overtime, national holiday pay, weekly rest) item.
In cases where the amount of wage is disputed, benchmark wage research results, along with witness statements and signed payrolls, will also influence the outcome.
General Evaluation
As detailed above, documents named payroll or wage slips will inevitably continue to be among the most frequently used concepts in both the working life and labor litigation. While payrolls are primarily organized for tracking the receivables of public institutions (such as premiums and taxes), the concept of wage slips is introduced for the purpose of informing the worker of their rights and interests and enabling their follow-up.
Therefore, rather than what the document is called, whether it is properly organized and whether it has the status of a credible document during the litigation process becomes significant. The required elements in both documents can be combined into a single document to achieve the same outcome. The content of the document, rather than its name, carrying the sought-after conditions will be sufficient.
With recent advancements in technology, an increase in flexible working models, and efforts to ensure the necessary diligence in protecting personal data, payrolls are commonly delivered to employees through email, Registered Electronic Mail (REM) systems, and internal intranet systems. This approach prevents unnecessary labor and time loss and increases efficiency. The change in this method will need to be evaluated according to the provisions of the laws quoted above and litigation principles.
Considering the provision in the Labor Law No. 4857 that mandates the delivery of the wage slip to the employee, if the obligation is fulfilled electronically by establishing a system by the employer, no sanctions will be faced.
Similarly, while the Social Insurance and General Health Insurance Law No. 5510 and the Tax Procedure Law No. 213 stipulate that payrolls must be signed by the employee, subsequent amendments have acknowledged that this obligation is considered fulfilled if wages are deposited into bank accounts, and thus, no administrative sanctions will be faced according to these laws.
The disputed matter is whether payrolls/wage slips delivered to employees electronically can substitute for signed documents in litigation. The established jurisprudence of the Supreme Court states: "If there is a record of the employee's objection that the overtime pay is more than what is recorded in the payroll, the proof of more work than what is shown in the payroll can be made with any type of evidence. If the payrolls are signed and without any objection, the employee needs to prove any work beyond what is stated in the payroll with written evidence. If the employee is not made to sign the payroll, and wages including overtime pay accruals are paid in varying amounts each month through bank channels, it cannot be expected for the employee to raise an objection on record, and thus, proving that more work has been done than what was paid can be done with any type of evidence." Accordingly, for payrolls/wage slips to be considered credible regarding work hours, they need to be signed. If a payroll is not signed, any excess hours beyond what is recorded in the document can be proved with witness testimony. However, if the payrolls are signed, the contrary can only be proved with written evidence.
The Supreme Court's established jurisprudence on the proof of annual leave states that "the employer must prove that annual leaves have been granted with a signed leave register or an equivalent document."
However, in a case related to the incident where it was understood that annual leaves approved by employees were uploaded to the bank's internal electronic correspondence system, the Supreme Court's 9th Civil Chamber, in its decision dated 26.02.2019 with case number 2016/23478E. and 2019/4742, stated summarily: "...Furthermore, it has been argued that since 2013, the defendant employer has been approving the leaves taken by the employees through the system, and it is understood that no investigation has been conducted in this matter. Whether the claimant has approved the leaves via the system while taking leaves from the defendant should be investigated, and the annual leave period should be evaluated according to the result of this investigation..." This implies that systems approved by employees are regarded similarly to written evidence.
One of the main reasons the Supreme Court requires payrolls to be signed is to ensure that the employee has seen the document's content and is aware of the accruals. Another important aspect is to provide the opportunity to object to the content of the document. The presence of the employee's signature on the document (except in cases of fraud, claims of forgery, etc.) indicates that the payroll has been delivered to the employee, the opportunity to object to the document has been provided, and the option to place an objection on record instead of signing it is available.
Therefore, when evaluating according to the reasons explained, delivery methods that do not allow for the sought functions will enable the employee to be informed about the content of the document, but will not provide an opportunity to object to the content. Due to this shortfall, deliveries made in electronic environments have not been accepted as written evidence by judicial bodies.
In this case, the dispute can be resolved by meeting the conditions sought by judicial bodies. In the electronic systems to be established, it is necessary to include the date the document was sent to the employee, the date the employee viewed the document, a confirmation of acceptance or rejection of the document content, and a section for the employee to write their objection. We assess that in a system carrying the mentioned conditions, showing this process on each payroll, as well as organizing it in a way that prevents any subsequent modifications to the document content, will enable payrolls/wage slips delivered through electronic systems to be used as written evidence in potential future disputes.
Originally published 01 April 2024
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.