The Subcontractor's Administrative Fine Debt Will No Longer Affect the Principal Employer's 5-Point Discount

Under Article 81, paragraph (ı) of the Social Insurance and General Health Insurance Law No. 5510, the procedures and principles for benefitting from the 5-point discount on the employer's share of disability, old age, and survivors' insurance premium rates were explained in Circular No. 2008/93. The section titled “9- Workplaces with Subcontractors and Transactions Related to Subcontractors” provided that: "Therefore, in order for the Treasury to cover the 5-point portion of the employer’s share of the disability, old-age, and survivors' insurance premiums, there must not be any outstanding debts for insurance premiums, unemployment insurance premiums, administrative fines, and their related delay penalties and interests for each workplace. Consequently, for the principal employer to send the monthly premium and service document to the Institution by selecting the Law No. 5510 type to benefit from this discount, there should be no outstanding insurance premium, unemployment insurance premium, administrative fine debt, or their related delay penalties and interests, both from the principal employer and the subcontractors who have taken work from the principal employer."

Concerning this matter, a lawsuit was filed against the Social Security Institution before the 12th Chamber of the Council of State under file number 2019/5932, which was later continued under file number 2020/2727 in the 10th Chamber of the Council of State. In the decision dated 11.06.2024 and numbered 2024/2504, it was ruled as follows: “It was decided to annul the 'Administrative Fines and their Accruals' portion of Article 9, titled 'Workplaces with Subcontractors and Transactions Related to Subcontractors' in the Circular No. 2008/93 dated November 13, 2008 issued by the Social Security Institution on the topic of 'the 5-point discount in the employer's share of the disability, old-age, and survivors' insurance premium rates.'”

Due to the mentioned decision of the Council of State, in Circular No. 2024/11, which was published on August 13, 2024, the phrase “administrative fine” was removed from the section “9- Workplaces with Subcontractors and Transactions Related to Subcontractors” in Circular No. 2008/93, and the clause was amended as follows: "Therefore, in order for the Treasury to cover the 5-point portion of the employer’s share of the disability, old-age, and survivors' insurance premiums, there should not be any outstanding debt for insurance premiums, unemployment insurance premiums, administrative fines, and their related delay penalties and interests. Hence, to benefit from the mentioned discount, the principal employer must send the consolidated premium and service declaration to the Institution by selecting the Law No. 5510 type, and there must not be any outstanding debt for insurance premiums, unemployment insurance premiums, administrative fines, and their related delay penalties and interests from both the principal employer and the subcontractors who have taken work from the principal employer."

Thus, even if the subcontractor working for the principal employer has an administrative fine debt, this debt will not be considered under the principal employer's responsibility within the scope of the 5-point premium discount. Accordingly, private sector principal employers can benefit from the relevant discount by sending the consolidated withholding and premium service declaration according to Law No. 5510. This amendment took effect as of the publication date of the circular, August 13, 2024.

You can access the text of the related Circular here (In Turkish).

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