Legal Intern
August 2, 2025
22 min read
The social security relationship between Türkiye and Azerbaijan is built upon a layered and complementary legal foundation that governs the rights and obligations of their citizens and employers. A proper understanding of this framework is a fundamental prerequisite for the error-free management of complex processes, particularly temporary assignments.
The legal structure that ensures social security coordination between the two countries consists of three fundamental international agreements and the administrative regulations that guide their implementation. Each of these documents forms a different part of the system and has emerged in response to evolving needs over time.
Signed in Ankara on July 17, 1998, and entering into force on August 9, 2001, this main Agreement laid the foundation for social security relations between the two countries. The Agreement establishes fundamental principles such as the determination of applicable legislation, equal treatment, and the protection of acquired rights.
Detailing the practical application of the main Agreement's provisions, this agreement was signed in Baku on May 6, 2004. The use of specific forms like "TR/AZ 1," inter-institutional communication channels, and procedural details are regulated by this text. This document serves as a bridge, translating theoretical principles into operational steps.
Signed on September 18, 2006, and entering into force on December 14, 2011, this additional agreement incorporated the unemployment insurance provisions introduced in Türkiye by Law No. 4447 into the scope of the main Agreement. This revision brought the Agreement's scope in line with current legislation.
Issued by the Social Security Institution (SGK) on August 5, 2020, this circular serves as the most current and comprehensive administrative guide for the implementation of all the aforementioned agreements. The circular clarifies the procedures and principles to be followed by SGK units, employers, and the insured, consolidating the accumulated practical knowledge over the years into a single text. Therefore, this circular is the primary reference source for current compliance strategies.
The fact that these legal instruments were signed and entered into force on different dates demonstrates that the system has evolved over time and was developed to find solutions to practical problems encountered. This highlights the significant risks of acting based on outdated or incomplete information.
The core principles that form the spirit of the Agreement and guide all its articles are as follows:
Such international agreements signed between the two countries have a superior legal status to domestic law norms in case of conflict. This means that in a situation of dispute or ambiguity, the solution must first be sought in the provisions of the Agreement.
It guarantees that citizens of one Contracting Party, while working or residing in the territory of the other Contracting Party, are subject to the same social security rights and obligations as the citizens of that country.
The general rule is that a person is subject to the social security legislation of the country in which they work (the lex loci laboris principle). However, the Agreement introduces important exceptions to this rule. The temporary assignment, which is the main subject of this report, is the most significant of these exceptions and allows the insured person to remain subject to their home country's legislation.
It ensures that social security rights earned in one country (e.g., a retirement pension) are paid to the beneficiary even if they reside in the other country.
Knowing the administrative structure and hierarchy responsible for implementing the Agreement is of critical importance for using the correct application channels.
Competent Authority: Ministry of Labour and Social Security.
Competent Institution: Social Security Institution (SGK).
SGK Central Units: The General Directorate of Pensions (EHGM) and, under it, the Department of Foreign Agreements and Pensions (YSEDB), play a central role in resolving extension of assignment periods, inter-institutional agreements, and complex cases.
SGK Provincial Units: Provincial Directorates of Social Security (SGİM) and Social Security Centers (SGM) are the primary points of contact where the insured and employers conduct initial applications and form submissions.
Competent Authority: Ministry of Labour and Social Protection of Population of the Republic of Azerbaijan.
Competent Institution / Liaison Body: The Dövlət Sosial Müdafiə Fondu (State Social Protection Fund), located in Baku, is the SGK's counterpart institution in Azerbaijan.
This division of labor within the SGK is a key detail for understanding how the processes work. While routine and standard initial assignment applications are managed at the local level (SGİM/SGM), requests that require further review and international agreement, such as extensions beyond 24 months, are handled at the central level (EHGM/YSEDB). This means that the procedure a company follows for a standard assignment will be insufficient for an extension request. The extension process involves interaction with a higher-level administrative unit, more documentation, and, consequently, longer processing times. This distinction must be considered when planning projects and assignments.
One of the most important provisions of the Türkiye-Azerbaijan Social Security Agreement is the "temporary assignment" regime, which allows an employee to work temporarily in the other country while maintaining their affiliation with their home country's social security system. This regime aims to facilitate international labor mobility by eliminating the burden of paying double social security contributions.
For an employee to be considered temporarily posted from Azerbaijan to Türkiye and to remain subject to Azerbaijani legislation, certain conditions must be met. The basic condition is that the person must be sent by an employer based in Azerbaijan to perform a specific job in Türkiye on behalf of that employer. A similar provision applies to self-employed individuals who temporarily move their activities to the other country.
The most fundamental advantage of this status is that the insured person is exempt from paying contributions to the Turkish social security system (SGK) despite working in Türkiye. Without this exemption, the general rule of applying the legislation of the country of employment (lex loci laboris) would necessitate paying contributions in both countries.
The Agreement sets the maximum initial period for a temporary assignment, during which the insured can remain subject to their home country's legislation, at 24 months. During this period, an employee assigned from Azerbaijan to Türkiye continues their insurance in Azerbaijan and is completely exempt from Turkish SGK contributions (for disability, old-age, death, work accidents, occupational diseases, and unemployment insurance). The official initiation of this process and its recognition by the Turkish authorities is made possible by submitting the "AZ/TR 1" form issued by the Azerbaijani competent institution.
In cases where the initial 24-month assignment period is insufficient, the Agreement provides for an extension mechanism. However, this extension is not an automatic right and is subject to a stricter procedure.
The extension is conditional upon the prior mutual agreement of the competent institutions of both countries (SGK-EHGM for Türkiye and Dövlət Sosial Müdafiə Fondu for Azerbaijan).
The total duration of the assignment, including the initial 24 months and a maximum extension of 36 months, cannot exceed 60 months.
The extension request must be made before the end of the initial 24-month period and must be accompanied by a reasonable justification for why the assignment needs to be extended.
While a unilateral notification (submission of a certificate) is sufficient for the initial 24-month period, the fact that the extension process is based on mutual agreement fundamentally changes the nature of the procedure. This means that an extension is not a right, but a discretionary action subject to negotiation. Türkiye, as the host country, has the authority to reject the extension request if it does not find the provided justifications sufficient. This reveals that companies should not have an automatic expectation for assignments planned to last longer than two years; they must build a solid case for extension and initiate the process in a timely manner. This uncertainty is a significant risk that must be considered in long-term project and human resources planning.
The forms used in the implementation of the Türkiye-Azerbaijan Social Security Agreement are official documents that facilitate information exchange between the institutions of the two countries and certify the rights of the insured. These forms constitute the backbone of the temporary assignment process, and their correct use is vital for the smooth operation of the process.
These documents, referred to as "Forms," legally function as a "Certificate of Coverage." They officially prove that the holder of the document is subject to their home country's social security system and is therefore exempt from the system of the host country where they are assigned.
Purpose: To certify that an employee or self-employed person sent from Azerbaijan to Türkiye for an initial assignment not exceeding 24 months continues to be subject to the Azerbaijani social security system during this period.
Issuing Institution: The Dövlət Sosial Müdafiə Fondu in Azerbaijan.
Submission Process in Türkiye: The insured person or their employer is obligated to submit the original AZ/TR 1 form obtained from Azerbaijan to the relevant SGİM or SGM at the place of work in Türkiye. The SGK does not approve this initial assignment certificate; it only registers it and adds it to the workplace file. This action prevents the insured from being incorrectly registered in the Turkish system.
Legal Consequence: It completely eliminates the obligation to pay social security contributions in Türkiye for the insured person for the period specified in the form.
Purpose: To certify that an insured person assigned from Türkiye to Azerbaijan continues to be subject to the Turkish SGK system.
Issuing Institution: Issued in duplicate by the SGİM/SGM where the employer in Türkiye is registered.
Submission Process in Azerbaijan: The insured person or their employer is responsible for submitting both copies of the issued TR/AZ 1 form to the Dövlət Sosial Müdafiə Fondu in Baku.
Critical Risk of Error: SGK circulars note that failure to submit this form to the competent institution in Azerbaijan is a common and serious problem. Failure to submit the form can lead to the assignment being considered invalid by the Azerbaijani authorities, the insured being treated as an undocumented worker, the cancellation of their service periods, and the rejection of future extension requests. This clearly shows that the compliance process is not just about obtaining the forms, but also about their actual submission to the host country's institution. Companies' internal checklists should include not only a copy of the form but also a confirmation of receipt from the Azerbaijani institution.
Purpose: To request and document the mutual agreement between the two countries' institutions for extending a temporary assignment beyond 24 months.
Form AZ/TR 1A (Extension of Assignment in Türkiye): The Azerbaijani competent institution initiates the extension request and sends the AZ/TR 1A form directly to the SGK's central unit, the EHGM, for approval.
Form TR/AZ 1A (Extension of Assignment in Azerbaijan): The Turkish employer applies to the local SGİM/SGM. The request is forwarded to the central unit, EHGM. The EHGM then formally requests mutual agreement from the Dövlət Sosial Müdafiə Fondu using the TR/AZ 1A form.
Process: These procedures are conducted between the central institutions of the two countries, not by local units. The decision to approve or reject is communicated by the central institution to the local unit and the employer.
Specific forms are also used for pensions and other rights under the Agreement:
TR/AZ 12 (Request for Record of Service): The form used by one country's institution to request the insured person's periods of insurance (record of service) from the other country's institution, usually for pension calculation purposes.
TR/AZ 13 (Detailed Medical Report): The medical report form used in applications for disability pensions (maluliyet aylığı), detailing the insured's health condition.
TR/AZ 1 (As a Transmittal Form): SGK circulars indicate that the TR/AZ 1 form can also be used as a cover letter for sending other documents, such as a pension claim, by marking the relevant boxes. This eliminates the need to write a separate letter.
The implementation of the Agreement and its related forms, while offering significant advantages for employers and employees, also includes serious risks and obligations that must be carefully managed. This section addresses the most critical practical consequences of the process.
The most significant and often overlooked risk in the temporary assignment process relates to health services. In accordance with Article 26 of the Administrative Agreement, the provisions of the Agreement regulating mutual health benefits are contingent upon the full implementation of a general health insurance system in Azerbaijan, a condition that has not yet been met, leaving these provisions suspended.
The direct consequence of this is as follows: An employee who comes to Türkiye from Azerbaijan with a valid AZ/TR 1 form, while being exempt from Turkish social security contributions, is also not eligible to benefit from Türkiye's General Health Insurance (GSS) system. While the AZ/TR 1 document provides a financial benefit by preventing double contributions, it also creates a critical gap by depriving the employee of public healthcare coverage. This situation makes it not just a choice, but an absolute necessity for employers to arrange comprehensive private health insurance for their assigned employees, as a requirement of the employer's duty of care.
The Agreement offers a solution for individuals who have periods of insurance in both countries but cannot meet the minimum service period required for a pension in a single country. This mechanism, known as "Aggregation of Periods," allows the insured person's periods of insurance in Türkiye and Azerbaijan to be combined to qualify for an old-age, disability, or survivor's pension.
In this process, there is no transfer of contributions between the countries. Instead, if a person qualifies for a pension only after their periods of service are aggregated, each country calculates and pays a partial pension (kısmi aylık) proportional to the insurance periods completed in its own territory, according to its own legislation.
Independent of the Agreement, there is another unilateral mechanism available to Turkish citizens. "Service Buy-in" (Hizmet Borçlanması), regulated under Law No. 3201, allows Turkish citizens (and those who were Turkish citizens by birth and later renounced their citizenship) to retroactively "purchase" their periods of work in Azerbaijan by paying contributions to the SGK.
This procedure allows periods spent abroad to be counted as if they were spent in Türkiye and offers the possibility of receiving a potentially higher full Turkish retirement pension (tam aylık) instead of the partial pension that might be granted under the Agreement. These two mechanisms – aggregation of periods and service buy-in – should not be confused. They have different legal bases and result in different financial outcomes. Aggregation is a determination of entitlement that does not require payment, whereas the buy-in is an investment that requires a significant financial outlay. Therefore, when planning for retirement, especially for employees who are Turkish citizens, the advantages and disadvantages of both options must be analyzed separately.
To facilitate the translation of theoretical knowledge into practice, the steps for the temporary assignment of an employee from Azerbaijan to Türkiye are presented below as a checklist and a flowchart.
This list is designed to help human resources managers manage the process step-by-step and without omissions.
[ ] Confirm that the assignment meets the definition of a "posted worker" under the Agreement.
[ ] Apply to the Dövlət Sosial Müdafiə Fondu in Azerbaijan to obtain Form AZ/TR 1 on behalf of the employee.
[ ] Arrange a comprehensive private health insurance policy for the employee that is valid in Türkiye. This is a critical obligation, even if not a strict legal requirement.
[ ] Submit the original Form AZ/TR 1 to the competent Provincial Directorate/Center of Social Security (SGİM/SGM) where the work will be performed.
[ ] Obtain proof of submission (e.g., a copy stamped "received") and keep it in the workplace file.
[ ] Ensure the payroll system is correctly configured not to deduct SGK contributions for this employee.
[ ] Calendar and closely track the end date of the 24-month assignment period.
[ ] If the assignment needs to be extended, initiate the extension (mutual agreement) process through the competent institutions in Azerbaijan well before the 24-month period expires.
[ ] When the assignment ends, if an SGK registration was made in error, take the necessary steps to terminate it.
The Türkiye-Azerbaijan Social Security Agreement regulates only one, albeit important, part of the temporary assignment process. It is imperative for companies to proactively manage other critical legal areas beyond social security to avoid serious risks such as administrative fines, legal disputes, and project delays. It should not be forgotten that obtaining a valid "Certificate of Coverage" (AZ/TR 1) does not eliminate the obligations mentioned below.
One of the most common mistakes is confusing the exemption under the Social Security Agreement with a work permit exemption. These two processes are completely independent of each other. All foreigners, including Azerbaijani citizens, who will work in Türkiye on behalf of an employer or on their own account are legally required to obtain a valid work permit from the Ministry of Labour and Social Security before they actually start working. Employing personnel without a work permit leads to severe sanctions, including hefty administrative fines for the employer and deportation for the employee. The social security exemption provides no legal protection against these sanctions.
Determining in which country the assigned personnel's salary will be subject to income tax is another critical issue that must be managed with precision. This situation is determined according to the provisions of the "Double Taxation Avoidance Agreement" (DTAA) between the two countries. The agreement generally includes an important principle known as the "183-day rule." According to this rule, if an employee stays in Türkiye for less than 183 days in a given period and certain conditions are met, such as their salary not being paid by an employer or permanent establishment in Türkiye, the right to tax may remain with Azerbaijan. However, if the 183-day limit is exceeded or other technical conditions are not met, the right to tax passes to Türkiye. Failure to correctly analyze this situation can expose companies to retroactive tax debts and tax loss penalties.
Assigning personnel also brings up the question, "Which country's labor law rules will apply to the employee's contract?" Even if the parties agree in the employment contract that Azerbaijani law will apply, this choice is not unlimited. Because the work is actually performed in Türkiye, the "mandatory provisions" of Turkish Labor Law regarding minimum wage, weekly working hours, overtime pay, annual leave, occupational health and safety, and job security are applicable in all circumstances. Therefore, harmonizing employment contracts prepared for assignments with the mandatory rules of Turkish Labor Law, which protect the employee in a potential dispute, is a strategic necessity to prevent future lawsuits.
To put theoretical knowledge into practice, let's examine the entire temporary assignment process step-by-step through a common scenario.
Scenario: "AzerCode Software," a leading software firm based in Baku, has won the project to renew the digital banking platform of a major private bank in Istanbul. It decides to send Ali Valiyev, a senior software engineer and an expert in his field, on a temporary assignment to Istanbul for 18 months to undertake the project's critical systems architecture task.
Here is the realistic roadmap that AzerCode Software's Human Resources (HR) and Legal Departments followed to manage this process:
Immediately after the assignment decision, AzerCode Software's HR department initiates the process. Instead of acting hastily, they conduct an integrated legal assessment with the company's legal advisors. First, they confirm that the 18-month period is compliant with the 24-month period provided by the Social Security Agreement, but that this exemption does not eliminate the work permit requirement. They also take into account the tax liabilities, as the assignment period will exceed 183 days. Immediately after this triple assessment, they initiate the official processes, which include the work permit application—the step that could take the longest—and simultaneously, the request for the AZ/TR 1 form from the Dövlət Sosial Müdafiə Fondu (DSMF) in Azerbaijan.
After a waiting period of about 1.5 months, both the work permit approval and the AZ/TR 1 document reach the company. The legal groundwork for Mr. Ali's arrival in Türkiye is now complete. At this stage, AzerCode Software makes a critical move and arranges a comprehensive private health insurance policy for Mr. Ali, who will not be able to benefit from public health services. Within the first week following Mr. Ali's arrival in Istanbul, the most critical administrative step is taken: the original AZ/TR 1 form obtained from the DSMF is submitted to the competent Social Security Center (SGM). As proof of this submission, the company gets a copy of the document stamped "Received," securing itself against potential future problems, and carefully files this document.
In the 16th month of the project, the client bank, pleased with the project, approves a second phase and requests that Mr. Ali's assignment be extended for another 12 months. The fact that the total duration will now be 30 months, exceeding the initial 24-month period, means a new and more complex process. AzerCode's HR department acts proactively, months before the 24-month period is due to expire. They prepare a persuasive justification report explaining why the project was extended and initiate the "mutual agreement" process through the DSMF in Azerbaijan. The process is successfully completed when the DSMF finds the request appropriate, forwards the AZ/TR 1A form to the SGK General Directorate of Pensions (EHGM) in Türkiye, and the EHGM also approves this request. While this official correspondence is ongoing, the necessary applications are also made to extend Mr. Ali's work permit.
The success of AzerCode Software in this process contains important strategic lessons. The foundation of the process was managing issues like social security, work permits, and taxes with an integrated approach and simultaneously, rather than thinking of them as separate. Accumulating written evidence at every step, like that simple "received" stamped photocopy from the SGK, provided the strongest legal guarantee in potential disputes. Finally, being aware that an extension is not an automatic right and acting proactively months before the legal deadlines expired prevented the project from being interrupted and the employee's legal status from being put at risk.
The Türkiye-Azerbaijan Social Security Agreement provides an effective mechanism that supports labor mobility between the two countries and eliminates the burden of double social security contributions. However, this detailed analysis reveals that the implementation of the Agreement relies on manual processes that require proactive management and attention to detail. In particular, the requirement for physical submission of forms and the critical gap in health insurance coverage are the most striking elements.
In light of these findings, the strategic recommendations for companies that assign personnel between Türkiye and Azerbaijan are as follows:
Given the fact that employees on temporary assignment to Türkiye cannot benefit from public health services, comprehensive private health insurance should be made a mandatory and integral part of all assignment packages. This is a requirement of the employer's legal and ethical responsibility.
It must be understood that the compliance process is completed not merely by obtaining the Certificate of Coverage (e.g., AZ/TR 1), but by its actual submission to the host country's social security institution. Internal audit and compliance checklists should require not only a copy of the form but also a "receipt confirmation" or a stamped copy from the receiving institution. This closes the compliance loop and prevents potential future disputes.
Requests for the extension of an assignment period should not be treated as a routine administrative task, but as a formal project requiring central oversight, early application, and strong justification. Since this process is conducted directly with central competent institutions (EHGM/YSEDB) rather than local offices, planning and communication strategies must be adjusted accordingly.
Clear counseling on retirement planning must be provided, especially to employees who are Turkish citizens. It should be explicitly explained that the "Aggregation of Periods" under the Agreement and the "Service Buy-in" under Turkish national legislation are different mechanisms with different costs and outcomes. This will help employees make the most informed decision for their own long-term interests.
