PEO vs Employer of Record (EOR) in Turkey: Which is right for your organization?
- Natia Gabarashvili
- Oct 7
- 12 min read
Updated: Oct 16
Table of contents:
TL;DR: The quick decision
If you don’t have a legal entity in Turkey, a PEO isn’t going to help you.
PEOs require a local company to co-employ with; you can’t shortcut that. Trying to use a PEO without an entity is like trying to rent an apartment in Istanbul without an address: it’s just not going to fly.
That’s where an Employer of Record (EOR) comes in. The EOR becomes the legal employer for your team in Turkey, handling contracts, payroll, social contributions, and statutory benefits while you stay focused on running your team. Think of it as putting the tricky legal stuff on autopilot so you can hire fast, scale confidently, and stay compliant.
Here’s a quick comparison:
Factor | PEO in Turkey | EOR in Turkey |
Local entity needed | Yes | No |
Legal employer | Your company | The EOR |
Compliance liability | Shared | EOR takes it on |
Time to hire | Months | Weeks |
Best for | Companies with existing entities | Companies testing the market or scaling fast |
No entity? Don’t waste time with a PEO. Go EOR. It’s faster, safer, and keeps your finance and HR teams sane.
What is a PEO in Turkey?
A Professional Employer Organization (PEO) in Turkey operates on a co-employment model.
In plain terms, that means both your company and the PEO share responsibilities for your employees.
You handle the day-to-day management and direction, while the PEO takes care of HR administration like payroll, benefits, and onboarding support.
Here’s the catch: a PEO in Turkey requires a local legal entity. Without a registered company in Istanbul, Ankara, or anywhere else in Turkey, there’s no entity for the PEO to attach to.
No entity? No co-employment. It’s that simple. This is why many foreign companies looking to test the Turkish market or hire a small team quickly find that a PEO isn’t the right option.
What a PEO Covers
If you already have a legal presence in Turkey, a PEO can help:
Payroll administration: Ensuring salaries are calculated, taxes are withheld, and contributions to social security are correctly processed.
Benefits administration: Handling health insurance, employee perks, and other HR-related benefits.
What a PEO doesn’t cover
The PEO does not become the legal employer. That responsibility, and all the compliance obligations that come with it, remains with your Turkish entity. If taxes are filed late, contracts aren’t compliant, or statutory benefits are mismanaged, your company is still liable, not the PEO.
What is an EOR in Turkey?
If you’re thinking about hiring in Turkey and don’t have a local entity yet, an Employer of Record (EOR) in Turkey is your fastest, safest route. I say this as someone who has hired teams in Istanbul, Ankara, and Izmir, and yes, I’ve seen companies try the wrong way and pay for it in headaches, fines, and months of lost time.
An EOR provider in Turkey is the legal employer of your staff. That means the EOR takes care of all the compliance-heavy stuff while you focus on managing your team and growing your business. Here’s what that looks like in practice:
The EOR handles the legal employer role
Turkey’s labor laws are strict. If you hire directly without an entity or proper structure, you’re exposed to tax audits, backpay claims, and misclassification risks. The EOR becomes the official employer on paper. They sign employment contracts with your staff, file payroll and taxes, and ensure social security and statutory benefits are correctly applied.
Contracts: Bilingual, legally enforceable, and fully compliant with Turkish labor law. You don’t need to be fluent in legal Turkish or worry about contract errors that could cost you.
Payroll & taxes: The EOR calculates and deducts income tax (progressive, up to ~35%) and employer social contributions (~20–22%), then files everything with the relevant authorities.
Benefits: Paid annual leave (14–20 days depending on tenure), public holidays, sick leave, maternity leave, and social insurance—all handled without you lifting a finger.
Why EOR Works for Non-Entity Scenarios
Here’s the thing: setting up a Turkish entity takes months, money, and local expertise.
You’ll need a registered office, a local director, and you’ll have to navigate a maze of bureaucracy. For most foreign companies, especially startups or pilot teams, this is overkill.
An EOR lets you bypass that. You can hire legally in weeks, not months, without creating an entity. You get the same compliance protection and legal standing as if you had your own company, but without the overhead.
Speed: Get your first hires onboard in Istanbul or Ankara in a matter of weeks.
Risk-free compliance: The EOR assumes legal responsibility for contracts, payroll, and benefits. You avoid fines, audits, and misclassification headaches.
Scalable: Start with a small pilot team and expand to 10, 20, or 50 employees seamlessly. When it’s time, you can transition them to your own entity if needed.
Who benefits most from EOR in Turkey?
Companies testing the market: You want to hire a small engineering or marketing team without committing to a local entity.
Remote-first teams: Your staff works in Turkey but reports to a HQ elsewhere. EOR makes remote employment compliant and simple.
Finance-conscious decision-makers: One invoice, all-inclusive, predictable costs. Payroll, taxes, benefits, compliance—all bundled. No surprises.
An EOR in Turkey isn’t just a workaround; it’s a strategic tool for scaling fast, staying compliant, and keeping your focus on the work that actually grows your business. From my experience, any foreign company entering Turkey without an entity should seriously consider this model first.
Legal risks of hiring in Turkey without an employer of record
Here’s the reality: hiring in Turkey isn’t just about posting a job ad and sending a contract. If you get payroll, taxes, or statutory benefits wrong, the Turkish authorities will notice, and your company could face fines, audits, or backpay claims. I’ve seen it happen: startups trying to “do it themselves” ended up paying thousands in penalties that could have been avoided with the right setup.
This is where an Employer of Record (EOR) becomes a lifesaver. The EOR takes on the legal employer responsibilities, ensuring everything from payroll to statutory benefits is compliant, while you manage the work.
Payroll compliance and tax obligations for employer of record employees in Turkey
Income tax withholding: In Turkey, income tax is progressive, roughly 15–35%, depending on the employee’s salary. It must be withheld from salaries and submitted monthly to the Revenue Administration.
Employer social contributions: Expect to pay around 20–22% of salaries for social security and insurance contributions. This is in addition to the employee’s contribution.
Monthly filings: Payroll and tax filings are mandatory every month. Mistakes or late submissions can trigger penalties and interest charges.
An EOR manages all of this for you, removing the risk of costly errors.
What benefits must an employer of record provide in Turkey?
Employees in Turkey are entitled to a set of statutory benefits. If you skip these, the authorities can, and will, come knocking:
Paid annual leave: Between 14–20 days, depending on the employee’s tenure.
Public holidays: Employees are entitled to national holidays.
Sick and maternity leave: Fully protected under Turkish law. Maternity leave is typically 16 weeks with pay covered in part by Social Security.
Social insurance: Mandatory for all employees, covering health, pensions, and unemployment benefits.
An EOR ensures that employees receive these benefits correctly, while you don’t have to manage the paperwork or the calculations.
Misclassification and IP risks
Misclassifying a full-time employee as a contractor might seem tempting, but in Turkey, it’s a legal minefield:
Misclassification consequences: If authorities determine that a “contractor” is effectively an employee, your company could face fines, back taxes, and even retroactive benefits.
IP protection: Employees hired under proper contracts have IP ownership clauses that protect your business. Misclassified contractors may not, which can create disputes down the line.
With an EOR, every hire is properly classified, and your intellectual property stays protected.
Why this matters
The difference between a compliant hire and a compliance disaster in Turkey can be the difference between weeks of lost work, thousands in fines, or worst-case audits. By using an EOR, you:
Ensure all payroll and tax obligations are met accurately.
Guarantee employees get statutory benefits without errors or delays.
Avoid the risk of misclassification and protect your IP.
Hiring in Turkey doesn’t have to be a headache. With the right EOR partner, you get legal peace of mind, while your team gets paid correctly and stays happy.
Cost difference between peo and eor in Turkey
Let’s talk money, because at the end of the day, finance teams and founders care about one thing: how much is this going to cost, and will it stay predictable? In Turkey, the difference between a PEO and an EOR isn’t just legal or operational; it’s also a budget story.
How PEO fees work
PEOs in Turkey typically charge either a percentage of the employee’s salary or a flat monthly fee per employee. Sounds simple, right? But here’s the kicker: hidden costs can quickly add up.
Extra fees for payroll administration beyond standard services
Set up or onboarding costs for new hires
Benefits management or additional HR services
So while a PEO might look cheaper upfront, your finance team could be juggling multiple invoices, unexpected add-ons, and fluctuating percentages. Predictability? Not exactly.
How EOR fees work
An Employer of Record (EOR) in Turkey charges a flat, all-inclusive fee. No hidden charges, no extra line items, just one invoice that covers everything. For example:
EOR flat fee: €299 per employee per month
Covers payroll processing, income tax withholding, social contributions, statutory benefits, and compliance filings
You still pay the employee’s salary, but the EOR takes care of everything else
This makes budgeting simple, especially if you’re scaling a team. One invoice, one predictable number, your finance team will thank you.
Real-world example
Let’s say you want to hire a senior developer in Istanbul:
Base salary: €2,500/month
EOR service fee: €299/month
Total all-in cost: €2,799/month per employee
That’s it. One invoice, no surprises, full compliance, and a fully onboarded employee. Compare that to a PEO model, where hidden fees and layered percentages can creep in and complicate budgeting.
Why it matters
For decision-makers looking to expand in Turkey:
EOR = predictable, all-in cost with legal peace of mind
PEO = potentially cheaper, but risk of hidden costs and entity requirements
Pros and cons of EOR VS PEO in Turkey
Hiring in Turkey isn’t just about contracts and paychecks; it’s about picking the right model for your business goals.
Both PEO and Employer of Record (EOR) services can help you onboard talent, but they do it very differently. Let’s break down the real-world pros and cons so you can make a smart decision.
PEO in Turkey: What works and what doesn’t
Pros:
Co-Employment Control – You remain the legal employer. You manage the team, performance, and strategic direction while outsourcing HR admin like payroll and benefits.
Local HR Expertise – PEOs have knowledge of Turkish labor laws and payroll systems, so your HR team gets guidance without doing all the heavy lifting themselves.
Scalable for Existing Entities – If you already have a Turkish entity, a PEO can help you scale without building an in-house HR infrastructure.
Cons:
Requires a Local Entity – No entity, no PEO. You can’t legally co-employ without a Turkish company.
Shared Compliance Risk – You’re still liable for legal filings, tax payments, and benefits. If something goes wrong, the authorities hold your entity accountable, not the PEO.
Hidden or Variable Costs – Flat fees or percentage-based charges can add up, especially if extra HR services are needed. Finance teams often end up juggling multiple invoices.
What is EOR in Turkey: Why it’s often the safer choice
Pros:
No Local Entity Required – The EOR becomes the legal employer, letting you hire employees in Istanbul, Ankara, or beyond without registering a company.
Full Compliance Coverage – Payroll, income tax, social contributions, statutory benefits—handled correctly and on time. You avoid fines, audits, and backpay claims.
Predictable All-in Cost – Flat fees (e.g., €299 per employee per month) make budgeting simple. Finance teams get one invoice, no surprises.
Fast to Implement – Onboard a pilot team or small remote workforce in weeks, not months.
Scalable & Flexible – Start small, then grow your team quickly, with the option to transition employees to a local entity later if needed.
Cons:
Less Control Over Legal Employment Terms – The EOR owns the employment contract, so while you manage work output, you don’t manage the legal relationship.
Higher Service Fee vs. Minimal PEO Fees – For companies that already have a local entity and don’t need full legal protection, the flat EOR fee might be higher than a basic PEO setup.
Limited HR Management – The EOR focuses on compliance and payroll, not performance management or employee development. You’ll need to handle day-to-day HR yourself.
The bottom line for Turkey
No entity yet? EOR is your clear winner. It’s faster, fully compliant, and avoids legal risk.
Entity already exists? PEO can work if you want to outsource HR admin while retaining legal control, but you still carry liability for compliance.
In practice, most international companies testing the Turkish market or hiring small teams start with an EOR. It gives them speed, compliance certainty, and budget predictability, without the headaches of entity setup.
Decision framework: Which should you choose?
Alright, let’s make this simple. You’ve read about PEOs and EORs, their costs, compliance requirements, and pros and cons. Now it’s time for the real question: which one is right for your business in Turkey?
Here’s how I break it down for companies expanding into Istanbul, Ankara, or anywhere else in Turkey.
Step 1: Check if you need to set up a local entity
No entity: Forget about a PEO. Co-employment only works if you already have a registered Turkish company. Your only compliant option here is an EOR, which becomes the legal employer and handles all payroll, taxes, and statutory benefits.
Existing entity: A PEO is on the table. You can outsource payroll and benefits administration while keeping the legal employment under your control. But remember: compliance responsibility still sits with your entity.
Step 2: Decide How Fast You Need to Hire
Fast hires/pilot teams: EOR wins hands down. You can get employees onboard in weeks, not months, without worrying about entity setup or legal filings.
Slow, planned expansion with an entity: PEO can work if you already have the infrastructure to manage compliance and just want HR support.
Step 3: Evaluate your compliance
Want to hand off risk? EOR is the safer bet. Payroll, taxes, social contributions, benefits—they take responsibility for everything. You avoid fines, audits, and backpay headaches.
Comfortable managing compliance yourself? A PEO allows you to stay the legal employer, but you’re still liable for errors or missteps.
Step 4: Consider your finance team’s needs
Predictable costs matter: EOR offers a flat, all-inclusive fee (e.g., €299 per employee/month), so budgeting is straightforward.
Flexible, percentage-based fees: PEO fees can fluctuate based on salaries, benefits, and additional services. Finance teams need to reconcile multiple invoices.
Step 5: Think about scaling and flexibility
Small pilot or test market: EOR lets you start small and grow quickly without bureaucracy.
Long-term local presence with entity: PEO might make sense if you already have infrastructure and want to keep employment legalities in-house.
Quick decision summary
Scenario | Recommended Model |
No local entity, testing the Turkish market | EOR |
Small pilot team, need speed and compliance | EOR |
Already have an entity, want HR admin support only | PEO |
Scaling long-term with an established local entity | PEO or transition to entity + EOR as needed |
How to implement EOR in Turkey (5 steps)
Hiring through an Employer of Record (EOR) in Turkey isn’t complicated, but it does require a clear process. From my experience hiring teams in Istanbul and Ankara, following a structured approach keeps everything compliant, fast, and headache-free. Here’s the five-step roadmap.
1. Define the Role
Start by clarifying exactly what you need. What’s the job title, responsibilities, required skills, and experience level? In Turkey, roles like software engineers, marketing specialists, and finance professionals are in high demand, so defining the scope helps you attract the right candidates and avoid hiring mismatches.
2. Candidate Selection
Once the role is clear, identify your top candidates. The EOR can assist with compliance checks and local labor requirements, but you control who you hire. Interviews, technical tests, and references are handled just like with an in-house team.
3. Sign Employment Contracts
Here’s where the EOR adds serious value. They issue bilingual, legally enforceable contracts compliant with Turkish labor law. Contracts cover:
Salary and compensation
Working hours and leave entitlements
Social security and statutory benefits
IP ownership and confidentiality clauses
You don’t need a local entity—the EOR is the legal employer.
4. Set Up Payroll and Compliance
The EOR handles all payroll calculations, tax withholdings (15–35%), employer social contributions (~20–22%), and statutory benefits. They file the necessary documentation with the Revenue Administration and Social Security offices. One invoice covers everything, so finance teams don’t have to chase multiple payments or worry about compliance errors.
5. Onboard the Employee
Finally, bring your new hire on board. The EOR ensures they receive equipment, access to systems, and necessary HR documentation. Meanwhile, you focus on training, workflows, and team integration. Employees are legally compliant from day one, and your team can hit the ground running.
Conclusion
Hiring in Turkey doesn’t have to be complicated, expensive, or risky. The difference between a PEO and an Employer of Record (EOR) comes down to one simple question: do you have a local entity or not?
If the answer is no, the EOR is your clear, compliant, and fast solution. It becomes the legal employer, handles payroll, taxes, social contributions, and statutory benefits, and lets you focus on managing your team rather than drowning in bureaucracy.
If you already have a Turkish entity and want to outsource HR administration while retaining legal control, a PEO can work, but remember, compliance responsibility still rests with your company.
For companies entering Turkey, piloting teams, or scaling quickly, the EOR model is the fastest way to hire legally, manage costs, and avoid fines. One invoice, full compliance, and peace of mind, so you can focus on growing your business, not paperwork.
