The Supreme Court’s decision evaluating regular and continuous tip payments within the scope of wages; It directly affects the severance pay and overtime accounts of workers, especially those working in the restaurant, cafe, hotel and tourism sector. Accordingly, while it is possible for the employee who constantly receives tips to consider this income as a part of the wage and take it into account in the severance pay calculation, depending on the circumstances of the concrete case, the guaranteed wage and tip parts are calculated with different coefficients in the overtime calculation. For employers, it is important to record regular tip payments and make accurate social security declarations.
In the established practice of the Supreme Court, it is stated that only the increased portion of the overtime pay of workers working on tip or percentage basis should be calculated. In this context, the equivalent of the guaranteed wage in the overtime account is evaluated with a coefficient of 1.5, and the tip part is evaluated with a coefficient of 0.5.
Accepting regular tips as part of the wage may also affect the severance pay calculation in case the employee’s employment contract ends. However, for this to happen, the tip must be continuous and it must be demonstrated in a concrete case that it is an element of the wage system.
“TIPS ARE WAGES AND WILL BE COUNTED AS SEVERANCE PAYMENT”
Social Security Chief Expert and Türkiye Newspaper Writer İsa Karakaş, who made evaluations on the subject, underlined that the Supreme Court decision affected the service sector and said, “In the evaluation made by the local court in the mentioned incident, tips were not included in the calculation of severance pay. The Supreme Court overturned this decision and ruled that the tips constantly paid to the workers should be taken as basis in the calculation of compensation, just like wages.”
“66 THOUSAND LIRA PENALTY FOR BUSINESSES WHO HAVE NOT REPORTED THEIR TIPS TO SSI”
Karakaş touched upon the problems that employers and employees may encounter if tips are not reported to SSI and made the following statements:
“If the tip is not reported to the SSI, there will be deprivation of incentives such as both administrative fines and minimum wage support. Because when we look at the decisions of the 10th Civil Chamber of the Supreme Court of Appeals, we understand that the tips paid to workers are not exempt from the SSI premium and therefore should be included in the calculation of premiums. When calculating the earnings based on insurance premium, the tips should also be included and reported to the SSI. What happens if it is not reported to the SSI? For example, 3 thousand 400 If a tip in the amount of 10.000 lira is not reported to the SSI, the SSI cancels the entire minimum wage support that the business has benefited from, regardless of the number of workers in the workplace. In addition, if the tip has not been reported to the SSI for several months, an administrative fine of more than 66 thousand liras is imposed. In summary, these penalties will increase many times over. “It is related to workers’ receivables and compensation calculation. From now on, if tips are paid to workers and this is continuous; for example, when tips are collected and distributed to workers in restaurants, cafes, hotels and restaurants, it will of course be in the interest of employers to also report this to SSI.”
“TIPS WILL BE CALCULATED BY 0.5, NOT 1.5, IN OVERTIME ACCOUNT”
Karakaş stated that regularly paid tips should be taken as basis in calculating severance pay and that different coefficients will be applied for guaranteed wages and tips in overtime calculations. Karakaş said, “Since the 9th Civil Chamber of the Supreme Court considers the tips as the main salary, that is, the guaranteed salary, the continuously paid tips should also be taken as basis in the calculation of severance pay. Again, according to the aforementioned decision, while 1.5 times the normal wage, that is, the salary, was ruled to be taken as basis when calculating overtime; in the part related to tips, a more equitable decision was made by multiplying by 0.5, not 1.5 times.”
“RETIREMENT SALARY WILL INCREASE BECAUSE WORKERS’ TIPS ARE INCLUDED IN THEIR SALARY”
Karakaş underlined that recording regular tips as wages is important in terms of both preventing the sanctions that employers may face and protecting the social security rights of employees, and said, “With this decision, it is aimed to prevent wage-based informality by not counting tips as wages in practice. In addition, since employers will be deprived of the large amounts of administrative fines and incentives we mentioned if they do not report the tips to the SSI, it will be in the interest of employers to report them. With this notification, it will be in the interest of workers to report these tips.” “Since the tips will be included in the salary and reported to the Social Security Institution, this will also increase the salaries of the workers in retirement. In this sense, this is a turning point. Therefore, we can say that the tip is neither a favor nor a gift nor a benefit, but directly a wage, a salary.”
“IF THE EMPLOYER HAS AGREED WITH THE WORKER ONLY FOR TIP AND THE TIP IS BELOW THE MINIMUM WAGE, IT WILL BE COMPLETED TO THE MINIMUM WAGE”
Karakaş emphasized that the wages of workers working with the tip system cannot remain below the minimum wage and that regular tips should be taken into account in SSI notifications and said:
“If the employer has agreed with the employee solely on the tip and this amount remains below the minimum wage, the employer will need to top it up to the minimum wage and notify the SSI. This is also worth underlining. With this decision of the Supreme Court, the inclusion of the tip in the severance pay and the calculation regarding overtime have become clear. Of course, there is no need for any legal regulation for this. Again, there is a legal clarity regarding the reporting of the tips to the SSI. Because the SSI’s practice Payments that are not included in the SSI premium are counted one by one in the Law No. 5510. Since tips are not considered as an exception, they will of course be subject to the SSI premium. In this context, employers are required to collect the tips given to workers every month and add their share to their wages and report them to the SSI.
