Memorandum submitted by British Business
Group
INVESTMENT ISSUES: A NOTE ON ISSUES ARISING
WITH RESPECT TO WORK PERMITS FOR FOREIGN PERSONNEL IN TURKEY
BACKGROUND
The British Business Group ("BBG")
is an informal group of British Businessmen and women or businessmen
and women working with British businesses in Turkey. It gathers
monthly for networking and lunch meetings in Istanbul and occasionally
in Ankara.
The aim is to share experiences and provide
a networking environment for British business persons in Turkey.
The British Consulate commercial section supports these lunches
and many of the lunch members are also members of the British
Chamber of Commerce in Turkey (BCCT).
The BBG has no formal status, but participants
are drawn from a cross section of businesses, some multinational
and some SME's. Some of the participants have lived in worked
in Turkey for many years, some have just arrived. This lunch forum
provides an opportunity for the sharing of views about the business
environment in Turkey amongst people currently active in that
environment.
As a group many of us have been greatly impressed
by the tremendous steps taken by the current Government to improve
the business and investment environment in Turkey. All of us have
benefited from these developments and we are pleased to see Turkey
taking its place as a major player in the region and the world.
It is in the interest of helping Turkey become
even more attractive to investors that we wanted to take this
opportunity to share some observations from members of our group
on the issue of work permits.
Whilst initially one might not make a link between
the issue of work permits and the level of foreign investment,
in practice allowing foreign managers and business people to come
freely to Turkey to work in large multinationals or even international
SME's, enables smoother investment and quicker sharing of experience—both
of which will benefit Turkey as it continues to grow. It is in
this context which we have prepared this report.
THE WORK
PERMIT REGIME
In 2003 the passing of the Direct Foreign Investment
Law was intended to open Turkey's doors to more extensive foreign
investment, without the need for prior permission and minimum
investment restrictions, placing Turkish and foreign investors
on an equal footing.
In parallel, the "Law Concerning Work Permits
for Foreigners" (the "Law") was also passed in
2003, introducing for the first time a complete law to regulate
work permits in Turkey. The purpose of this Law is to set out
principles for granting foreigners' work permits. The specific
procedures were set out in regulations issued together with the
Law. A second set of Regulations was also issued, to be applied
to "Key Personnel" under the Direct Foreign Investment
Law. This was to benefit high level employees of major multinational
entities, to enable them to obtain work permits more easily.
The Law placed the responsibility for the administration
of foreigners' work permits into the hands of the Ministry of
Labour and Social Security (the "Ministry"), who thereby
took over the role from the various departments dealing with permits
at that time. Understandably the priority of the Ministry has
been to ensure that there is sufficient justification to grant
a foreigner permission to work in Turkey. They also ensure that
foreign personnel are meeting the requirements of Social Security
and other legal obligations. However over the past three years
it has become a matter of concern that the Ministry's negative
approach to the granting of permits is having an increasingly
adverse impact on foreign personnel in Turkey and the foreign
investment environment in general.
WORK PERMITS—A
SUMMARY OF
THE PROBLEM
AREAS
Consultation within our community and with companies
engaged in obtaining work permits for foreigners has revealed
several areas of difficulty which we strongly believe need to
be addressed in relation to Work Permits in Turkey. These include
the following:
— It is taking an increasingly long
time to obtain permits.[24]
— Once granted, permits are often for
short periods.[25]
— Conditions not set out in any laws
are imposed by the Ministry.[26]
— Submission of additional documents
is frequently required with applications.
— The Ministry is very inaccessible
and information is very hard to obtain.[27]
— Sections of the law granting possible
preference to certain categories of foreigner are almost totally
ignored.
— Foreigners with many years' experience
Turkey are treated like brand new applicants when applying for
extension of their work permits.
— The Ministry uses wide discretion
to reject work permits applications[28].
MAIN ISSUES
OF CONTENTION
— Approach and Attitude of Ministry
of Labour.
— Foreign personnel, their
employers and agents are increasingly frustrated by the lack of
logic and unclear rationale employed by the Ministry in the way
it handles applications and the decisions it makes. Despite there
being a comprehensive law and regulations in place, in the majority
of cases additional documentation is requested.
— Rejections of Permits are
generally based on Article 14a[29]
of the Work Permits Law. No further explanation is provided, and
so the employer or potential employee has no way of understanding
the actual criteria being applied. Therefore they do not have
the information necessary to make an effective appeal—thus
appeals are almost always unsuccessful[30]—and
the Ministry feels no need whatsoever to give any justification
for its decisions.
— The Ministry has very cumbersome
internal bureaucracy, which involves application files being circulated
internally to several departments. Where the process of granting
a one year work permit takes nine months, an applicant has less
than three month of working under permit before having to reapply.
In short the process takes far too long.
— Inaccessibility of staff—Applicants
are granted the opportunity to make personal enquiries about progress
of applications for only 1 hour every second week. No other consultation
is accepted. It is rarely possible to reach relevant staff by
telephone:
— The Head of Department is frequently
unavailable, and in her absence there is no-one available to deputise—for
example while on a long vacation any files waiting for signature
wait unattended until her return.
— It is supposed to be possible
to track applications on-line. This system does not work, other
than an initial e-mail to confirm that documents have been submitted—which
fact of course the applicant already knows!
— No urgency is shown by the
Ministry in processing applications. Applicants do not get the
impression that the Ministry is providing an efficient service
or presenting a good image for Turkey. The overall impression
from some officials is that they would rather not grant permits
to foreign applicants.
— Despite provision in the
Law allowing long term permit holders to apply for long term work
permits the Ministry seems reluctant to grant these. Upon every
application for extension the same documents need to be submitted
each time, even older historical ones which do not change.
— Lack of interest or understanding
by Ministry staff. Because they have no direct contact with foreign
personnel, whilst this may enable equal treatment of applications,
Ministry staff have negligible understanding or appreciation of
foreigners and the needs of their businesses. For example they
have no appreciation of the impact of refusing to renew the permit
of a foreign businessperson who may have been living and working
legally for years, paying taxes, and having set up home and family
in Turkey.
— Documents, Diplomas and Certificates:
It is (and always has been) a requirement for
applicants to submit their university degrees or other relevant
certificates to demonstrate their qualifications to perform the
job for which they are seeking permission. However in certain
situations this requirement causes major problems.
— Those applying to work as engineers
in Turkey require to demonstrate that they are qualified to practice
engineering in their own country, and obtain a certificate of
equivalence from the Union Of Chambers Of Turkish Engineers And
Architects (TMMOB). TMMOB appear reluctant to grant this certificate,
and often demand certificates from overseas that do not exist
due to differing conditions in different countries[31].
Apparently efforts by the Ministry to encourage TMMOB to soften
its approach have been unsuccessful.
— For example engineers on a highly
specialised high profile government sponsored engineering project
have been unable to obtain permission because of strict equivalency
document requirements. As time is of the essence in such a project
these engineers often find themselves working without proper permission,
even though in effect they were invited by the Turkish government
to provide necessary expertise unavailable in Turkey.
— Foreign personnel with engineering
degrees, but who are not working in Turkey as engineers, are required
to submit notarised undertakings that they will not practise engineering
in Turkey[32].
— In some cases foreign companies choose
to appoint senior personnel who may not have university degrees,
but who have many years of experience which more than qualifies
them for the job[33].
This lack of understanding among officials about the importance
of experience and their excessive concern with paper qualifications
hampers the inflow of experience into Turkey and harms investment.
— The onerous documentary requirements
in work permit applications often put undue pressure on individuals
and companies, which are being forced to sign undertakings that
can cause them difficulties from a personal or a corporate governance
point of view. Local or overseas management naturally have difficulty
seeing the relevance or necessity of some of the documents being
requested.
— Lack of Commercial Understanding
— Service companies, management and
consultancy firms—foreign businessmen with experience in
Turkey often establish consultancy businesses to advise foreign
investors on how to invest and operate in Turkey. The added value
they bring to the economy can be significant. However since they
are often small specialist businesses with no or minimal local
support staff, applications for work permits are generally rejected
on the grounds that there are no or too few local employees, and
therefore in the eyes of the Ministry no contribution is being
made to the local economy. Advisory companies who help the establishment
of factories and larger investments in Turkey should be encouraged
not penalised. If their foreign staff cannot get work permits
the benefits they could bring will be lost.
— Where permits in such businesses
are granted, there have been conditions that a permit will not
be renewed unless evidence of "contribution to the local
economy and local employment" is provided.[34]
The Ministry's understanding of a "contribution to the local
economy" is too narrow.
— Liaison Offices—these are permitted
under the Direct Foreign Investment Law to enable foreign entities
to have a representative or non-commercial presence in the country.
By the nature of these they are very often small, but it may be
the desire of the parent entity to appoint a foreigner to represent
them. Where there is deemed to be insufficient local employment
permits are refused—thus creating a potential barrier to
foreign entities establishing that initial presence in Turkey,
which means a loss of potential investment.
— Job descriptions—many large
corporations appoint personnel to certain positions with non-standard
job descriptions to fit unique posts. This often causes confusion
and delay with the application, as the Ministry seem only to understand
simple titles.
— It is often not easy to meet the
conditions imposed by the Ministry as they are not commercially
realistic; even so where a condition is not met the permit is
almost always refused.
— The value of years of business experience
is placed far below the formal education or a degree of a candidate,
when in practice suitability for the appointment of a foreigner
is almost always determined primarily by that person's work experience.
This was illustrated in footnote 4 above. The question is surely,
"Is the Ministry or the company itself better placed to judge
who is the best employee for the purposes of the foreign company's
business?"
— The "Social Security Trap"
— When setting up a new company the
Ministry requested from its foreign shareholder evidence that
he had registered for "Bağ-Kur", the Social
Security system for the self employed. After this has been done
the Ministry then rejected the work permit application. However
the Bağ-Kur registration cannot be cancelled or premiums
stopped since the person, as a company shareholder, continues
to be liable. The following year, upon re-applying for a work
permit, the "Bağ-Kur" records were submitted
to show compliance, but the Ministry questioned why the premiums
had continued to be paid, and asserted therefore that the foreign
person was working illegally through the year. To this end, they
sent out an inspector to verify this, and imposed a fine on the
company and the foreigner for working without a proper work permit.
The inconsistencies in this approach are plain to see.
— A similar situation arose when an
extension was applied for on behalf of an employee. While awaiting
permission the employee continued on the payroll of his employer,
paying Social Security. The application file was returned as incomplete.
Again an inspector was appointed, and upon noting that the employee
had been working following the expiry of the previous permission,
a fine was imposed on the company and employee on the basis that
he had been working without permission. However the reason for
his working without a permit was purely due to the delays of the
Ministry in processing the application.
— Application time periods
— Applications are never accepted earlier
than 60 days prior to the expiry of the current permit. However
none of those providing feed back have ever had a permit issued
within 60 days. It is usually not until 60 days after the application
that the first response comes from the Ministry, and this is usually
to request additional papers. The Ministry only gives the applicant
only 15 days to collate and send the requested documents. Once
the additional papers are received into the file, the Ministry
has by law a further 90 days from submission of the additional
documents to respond. Therefore most applicants find themselves
caught in between the expiry of one permit and the granting of
the next. This has led to people being fined for working illegally,
or fined upon leaving the country whilst waiting for a permit
because they not longer have a valid residence permit.
— Independent Work Permits (Bağımsız Çalışma Izni)
— The Work Permits Law envisages the
granting of "Independent Work Permits" to those who
apply for these, if they have been living legally in Turkey for
more than five years. This should be granted independent of any
place of work, with the foreign person notifying the ministry
when they have established a business. From our research there
are no examples of this permission having been granted. It appears
that the Ministry always wants to see information about the business
in which an applicant works, so the concept of an independent
permit contradicts the general approach taken; thus this type
of permission, even though found in the law, is not really available.
— Professionals (Lawyers/Architects/Accountants)
— Recently it seems that foreign professionals,
particularly those with law degrees are not being granted permits.
We are aware that the Turkish Bar Association is concerned about
foreigners practising law in Turkey, and although there is now
scope for foreign law firms to enter into partnership with local
firms[35]
work permits for any foreigner having a law degree are automatically
refused. However in rejecting such an application, the reason
given is still Article 14a of the Work Permits Law. The Ministry
fails to understand that in most countries it is common for foreign
lawyers to work in international companies (or local companies
with a significant international client base), and generally rather
than hindering or threatening the legal profession in these countries
the presence of foreign lawyers brings an additional dimension
to the local profession. Similar problems face other professionals
despite the fact that as part of the EU accession process Turkey
will be required to open up its markets to European professionals.
— The Law and Regulations set out a
number of possible situations whereby permission might be more
easily granted. Although there is no obligation to grant a work
permit on the basis of these exceptions, they seem to be completely
ignored by the Ministry even if referred to in application. The
law envisages that those subject to exceptions may be granted
indefinite period work permits or independent permits, as they
are people who would be expected to be staying long term in Turkey
for reasons other than just work.
— In particular those married to Turkish
citizens should be able to benefit from the exceptions, but in
practice seem to be given no preference in obtaining Work Permits.
PROPOSALS FOR
AN IMPROVED
SYSTEM
It is certainly not the intention of this paper
merely to list a series of complaints. The British Business Group
recognises with deep appreciation the giant steps taken by the
current Government to improve the business and investment environment
in Turkey. However it seems that the area of work permits needs
some serious attention, if it is not to hamper the investment
environment. If international businesses cannot get permits for
the people they want to run their businesses in Turkey, why should
they stay?
In addition the BBG is not looking for help
with individual applications; rather the BBG is asking the Government
to consider looking at improving the system and practices, so
that they work more efficiently for the long term benefit of the
country and future investment.
We believe that the system of work permit application
would benefit from some change and in this light we wish to make
suggestions for the improvement of the processing and approving
of work permit applications.
1. Understanding the business of the applicants:
It would assist greatly if the personnel in the ministry were
given training to enhance their understanding of foreign businesses
or just business generally. Language training would also help.
Establishing an office in Istanbul where the majority of foreign
businesses are located would also help this process.
2. Interview with applicants or agents: Rather
than just submitting an application file, an initial interview
with an official to check the adequacy of papers straight away
would help to ensure that papers were in order, rather than being
left to await a formal letter requesting that papers be corrected.
An Istanbul office of the Ministry would also help the process
of interviewing and understanding the business of the applicant
company.
3. Reduction of time period for processing:
There should be a distinction between first applications and extensions.
A file with the basic documents (degrees etc) should be maintained
and the extension application should only require a form which
states any changes to the status of the employee. If the job is
the same then a form referring to the file with the basic documents
should be enough to allow processing. This would cut down the
work of the ministry and enable faster processing.
4. Increase Staffing: It seems currently
that too few officials are handling the applications. There seems
to be a need either for staff levels to be increased, or for the
system to be streamlined much more effectively.
5. Reduction of Documents: It seems the ministry
requires more and more documents as time goes on. If the ministry
were to meet with business representatives and agree to a limited
number of critical documents (passport, letter from employer confirming
suitability and experience etc.) then again the process of dealing
with applications could be reduced dramatically.
6. Online tracking: Online tracking of applications
should be made properly effective with interactive electronic
communication to accelerate the application period. It should
be possible for applicants to communicate by e-mail with the departments
handling applications, and even to be able to send electronic
versions of required documents to expedite the application process.
7. Long Term Permits: We would suggest a
much more accommodating approach to those who have been living
and working legally in Turkey for more than say five years. This
could be through the granting of independent and indefinite time
permits, perhaps requiring only an annual statement of activities
and tax paid by the person for ongoing compliance, rather than
the need for constant submission of the same documents for renewal
of permits. These criteria should be sufficient to warrant extension.
This would enable such people to have a type of "permanently
resident working foreigner" status—and significantly
cut down much waste and duplication created by the current need
for regular renewals.
8. Commercial Awareness: Staff handling applications
need to be much more commercially aware, and thus be able to see
the commercial implications of proposals being presented to them.
There should be training in these areas, or those recruited should
come from a business background and have foreign language skills.
9. Multinational Applicants: Criteria should
be set for very large foreign companies investing in Turkey so
that they can more simply install the key personnel of their choice
into key positions. The choice of the foreign company's senior
manager should be left with the company, whatever the nationality.
It should not be for the ministry to decide who is suitable or
not for the company's business.
10. Clearer Reasons for Refusal: Application
rejection letters need to contain specific reasons for the rejection.
The current basis for rejection is stated so broadly that it gives
little or no opportunity to appeal effectively, or to make a more
informed application in the future. In addition supporting documents
must be provided since reference to a document as a basis for
rejection without providing that document to a rejected applicant
is a breach of the basic principles of Justice and the Turkish
Constitution.
The British Business Group would be happy to
meet with the relevant Government agencies to discuss further
these recommendations and would be glad to provide its full assistance
in clarifying any of the points raised in this report.
February 2008
24 A period of more than nine months is not uncommon Back
25
It is unusual to see permits for more than one year Back
26
There have been examples of the ministry requiring companies to
make more profit! Back
27
Telephones unanswered. Personal visits not accepted. Refusal to
deal with enquiries or provide documents referred to as the basis
for rejection Back
28
From feedback it appears rejections are becoming increasingly
common and this is a concern. Back
29
Article 14- The request for work permit or work permit extension
shall be rejected under the following conditions: - a. -Where
the state of business markets and the developments in the working
life and where changes in sectoral and economic factors related
to employment are unsuitable for a work permit to be granted Back
30
The Ministry has specifically stated that it has a policy of never
reversing its decision once it has given a rejection Back
31
For example one agricultural engineer was required to produce
a certificate demonstrating he was not restricted from practicing
engineering in his home country. However there is no such certificate
in that country, and even no professional body of agricultural
engineers which could issue one. Back
32
An executive with a major Turkish company was asked to produce
an engineering certificate, as he had a first degree in engineering.
However he has never worked as an engineer, does not belong to
any engineering body, and his current role is not related to engineering. Back
33
For example, the General Manager of a German Bank in Turkey was
in fact a graduate in History. He had 30 years experience in banking,
working all over the world. When he applied for a work permit
in Turkey the officials took no notice of his skills as a manager
and experience in the bank. Rather they wanted to see a degree
in finance or economics, not having such a degree led to trouble
in getting a work permit. Often in such situations the Ministry
seeks a "high school" certificate, when the person may
have left school over 30 years previously, the school may no longer
exist, and in any case no such certificate may ever have existed Back
34
A foreign consultant was given a conditional permit in 2005, but
when the situation in the small company being worked in had not
changed after two years, information was submitted about the business
itself, including companies established through its services,
foreign investment attracted and general contribution to the Turkish
economy. In 2007 a conditional renewal for 1 year was granted,
with a clear statement which can clearly be understood to mean
that the Ministry is really interested in seeing local employees
in that company itself-regardless of whether or not this is in
fact practicable or sensible. The prospect of this being renewed
is minimal. Back
35
On condition they only provide advisory services on international
law matters Back
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