Impact of Digital Transformation
We are witnessing the growing impact of digital transformation as a trend gaining speed especially after the COVID-19 pandemic. With the emergence of platform economies and the expansion of online markets, business practices are evolving, leading to a growing tendency to innovate employment conditions. Indeed, companies, businesses and employers are transforming their business practices to secure a place in international markets and stay competitive in an increasingly fierce environment driven by widespread technological innovations and globalization. As a result, different working arrangements are being widely recognized as a solution to satisfy both the obligations of employers and the social and individual aspirations of employees.
Remote work differs from a standard full-time or part-time working arrangement in legal aspects. Remote workers can work full-time, part-time or on-call, i.e. when their service is required. The labor law regulates these varying working hours and arrangements. Indeed, an article has been added to the law to expand the scope of remote work, defined as follows:
“Remote work is a working arrangement agreed on in writing, where an employee, following the employer’s work organization, performs duties from home or another location outside the workplace using technological means. (…) The employment contract shall contain the description, style, duration and location of the work, the salary and how it will be paid, the equipment provided by the employer and the obligations regarding its protection, the employer’s communication with the employee, and general and special working conditions. Remote workers cannot be treated differently from their counterparts solely due to the nature of their employment contracts, unless there is a valid ground to do so. Employers are required to inform remote workers about occupational health and safety measures, provide the necessary training, pay regard to their health and take the necessary occupational safety measures regarding the equipment provided, taking into account the nature of their work.”
Digital transformation has popularized different working arrangements such as remote work, flextime and the gig economy. As such, the relationship between an employer and an employee and their employment contracts need to be redefined and reconsidered in Türkiye and across the world.
Analysis of Remote Work within the Framework of Labor and Social Security Law
The key concern regarding digital transformation is whether remote workers will be insured. The current regulations differentiate between the self-employed and the dependent employees working under an employment contract to identify their insurance status. Indeed, in the gig economy, the status of an employee as an independent contractor or a worker is a crucial factor in defining their social security rights.
Pursuant to Income Tax Law no. 193, the taxpayers subject to the real or simple taxation system due to their commercial or self-employment income will be insured as per subparagraph 4/b of Law no. 5510 after the commencement of their tax liabilities and will pay their insurance premiums in accordance with their premium-based monthly income declared. If they have multiple jobs that require insurance, it will be sufficient for them to file a single tax return.
Currently, working outside a workplace does not automatically eliminate a dependent employment relationship. In fact, a person is considered a dependent employee if working for the benefit of and at the request of an employer in accordance with the employer’s operations or business organization. In that case, their dependency remains even if they perform their duties outside the workplace, freely and flexibly, and do not act under the supervision and control of the employer.
Therefore, in a remote work arrangement, the place where an employee works will be considered as their workplace, and their contracted work will require them to be deemed an insured (employee) as per article 4/a of Law no. 5510.
Employers that wish to utilize the labor, skills and capabilities of employees via digital means have a tendency to consider them as “self-employed working on their own behalf and account”. However, when a dispute arises, the verdict often favors the employee in order to deter employers from avoiding their obligations and to protect the labor of the employee. As a result of digital transformation, employees may be forced into choosing to work as a self-employed person through platform economies, which is the biggest downside of digital transformation in respect of employee rights.
Conclusion
The categorization of employees as self-employed, independent contractors or freelancers provides economic relief to employers by allowing them to avoid social security payments and other taxes, while simultaneously denying employees access to benefits such as minimum wage, weekend holidays, annual and unpaid leave, health insurance, unemployment pays and pensions. Therefore, the lawmaker should revise the existing regulations in a way that will benefit both the employer and the employee without creating a loss of rights for either party.
Birgi Kuzumoğlu, Partner
