Gross-to-net conversion is the process of converting labor claims determined as gross in a court judgment into net amounts before moving to the enforcement stage. This process is mandatory under both enforcement law and labor law.
What is gross to net?
When labor claims are calculated, the items are first determined as gross. However, the gross claim items stated in a court judgment must be requested as net when submitted for enforcement. Otherwise, the debtor may file a complaint and the proceedings may be stayed.
For this reason, after the court judgment has become final as gross, the net equivalents of all items must be calculated before enforcement proceedings are initiated.
Legal Basis
Enforcement and Bankruptcy Law No. 2004 Art. 16, Art. 33 and the relevant Court of Cassation case law; GVK No. 193, DVK No. 488, SSGSSK No. 5510.
Why is it necessary?
The gross amount stated in a court judgment is not the amount the employee will actually receive. The net amount is found by deducting tax and SGK deductions from the gross claim. In enforcement proceedings, initiating proceedings on an incorrect amount is both a loss of time and a procedural risk.
According to Court of Cassation case law, claims stated as gross in a court judgment must be requested as net in enforcement proceedings. Gross-to-net conversion is therefore a critical step to be carried out before enforcement.
Deduction rates
| Item | Income Tax | Stamp Tax | SGK Premium |
|---|---|---|---|
| Severance Pay | None | ‰7,59 | None |
| Notice Pay | Yes | ‰7,59 | None |
| Wage Claim | Yes | ‰7,59 | %15 (%14 + unemployment %1) |
| Overtime | Yes | ‰7,59 | %15 (%14 + unemployment %1) |
| National and Public Holidays (UBGT) Claim | Yes | ‰7,59 | %15 (%14 + unemployment %1) |
| Annual Leave Pay | Yes | ‰7,59 | %15 (%14 + unemployment %1) |
Conversion by item
Severance pay gross to net
Only stamp tax (7,59 per mille) is deducted from severance pay. Income tax and SGK premium are not deducted. The difference between gross and net is therefore very small.
Net Severance Pay = Gross Severance Pay − (Gross Severance Pay × 0,00759)
Notice pay gross to net
Since notice pay is in the nature of a wage, income tax and stamp tax are deducted. SGK premium, however, is not deducted.
Net Notice Pay = Gross Notice Pay − Income Tax − Stamp Tax
Wages and other claims gross to net
Income tax, stamp tax and SGK premium (employee share %14) are deducted from wage, overtime, UBGT and annual leave claims.
Net = Gross − Income Tax − Stamp Tax − SGK Premium