Payroll

This section covers Payroll laws, rules and practices including minimum wage, severance pay, vacation pay and more.

2010 – Amounts exempt from garnished wages

Moshe

 

The amounts that are exempt from garnished wages (except alimony) have been updated by the Israel Tax Authority as of Jan 1, 2010 as follows:

marital status amount in shekels
single 1,994
single/divorced/widowed
with 1 child 3,224
single/divorced/widowed
with 2 children or more 4,022
couple 2,991
couple with 1 child 3,469
couple with 2 children or more 3,948

If the above amounts are more than 80% of the monthly wages, then the amount that is exempt from garnished wages will be lowered to 80% of the monthly wages.

Note: If a court issues a garnished wages order due to alimony payments, the whole paycheck can be garnished.

Q & A regarding part-time jobs

Moshe

Q  How is Havra’a configured for an employee who is employed in a part-time position ?

A  Employees who are employed part-time are paid the Havra’a supplement pro-rated to the actual % of the position worked. If you worked 55 %, you would get 55 % of the Havra’a supplement.

Q  I work 80 % position and recently returned from Maternity leave. I asked my boss to allow me to work 1 hour less each day (nursing hour) as defined by law. My boss says this doesn’t apply to me as I don’t work full-time. Is he correct ?

A  Yes he is, section 7 of Women’s employment law allows women who returned from maternity leave the right to work 1 hour less each day, with no deduction in pay for 4 months, provided they work full-time. If you work 99% position you are not eligible.

Q  My Job benefits include an annual payment of my car insurance, test and car license. I was told that if I work 75% position, I would only get 75% of these expenses. What is the logic behind this ? The expenses are still 100% ?

A  The logic is simple. This is a salary benefit and not a return of expenses. Although the expense remains the same for the employee, the employer’s participation is reduced according to the % of the position worked.

Q  I work at a 50% position. Many times we have pressure at work and I end up staying extra hours, but I am always paid 100% for these hours. Shouldn’t I be paid 125 % and 150% for overtime hours ?

A Actually, no. You need to fill up the hours you worked to 100% position. only then are you eligible for overtime hours.
The hours you worked that are in excess of your defined position are called extra hours or excess hours and they are paid at 100% rate. Overtime hours is a term specifically defined in labor laws as anything over full-time.

Q How are taxes configured for a part-time position ?

A Taxes are configured from the actual gross pay and the % of position is irrelevant.
However, if you work at more than one place of employment, you need to do a tax alignment (teum mas).

Q My boss wants me to go down to half-time position due to a slack in sales. Can he force me to do this ?

A Contract changes, especially in % of position, are acts that need consent of both sides (employer and employee). if an employee forces an employee to lower their % of position, this is a one-sided change of contract which enables an employee to resign their position while retaining rights to severance pay (provided the employee has worked 12 months).

Q I worked for 10 years full-time and now my boss wants me to go down to half-time. How will this effect my severance pay ?

A Ordnance 7 of the severance pay law specifically determines that severance pay shall be calculated according to the last full-time salary, pro-rated to the actual % of position worked for the whole period of employment. In other words,for the 10 years you worked full-time, you would be eligible for severance pay of ten full monthly salaries (1 for each year) and for the time you worked at half-time, you would be eligible for 1/2 a full monthly salary for each year worked.

Women who received maternity leave pay may be eligible for more

Moshe

If you meet all the following criteria you are probably owed more money from Social Security.
But, of course they won’t notify you of this.

The criteria are:
1) You gave birth in the last year.
2) You are salary employed.
3) You have returned to work from your maternity leave.
4) You have received an annual payment (on your payslip) since you returned to work.

An annual payment is a payment that is a once a year payment, such as Havra’a stipend, Clothing stipend, Car insurance reimbursement, A yearly bonus or any other once-a-year payment.
These payments are usually withheld during maternity leave since the employee doesn’t get paid, and therefore would be paid immediately upon return from maternity leave.

The process is pretty simple and doesn’t involve much. It may be worth hundreds or thousands of shekels to you.
You need to act soon before a year passes.

You would need to write a letter to your local Social security office stating that you recently returned to work after maternity leave and were paid an annual payment on your payslip and therefore should be eligible for addition stipend for Maternity leave.
It is highly recommended to make a copy of the letter for your records and send it via registered mail or hand-deliver it and get your copy stamped “received” with a date on it at the reception desk.

 

Why all employees will be getting less net pay in Sept 2009

Moshe

No, we are not in Chelm, although sometimes I really wonder. And yes you did read the title of this blog post correctly.

The government is busy passing laws. Here’s an example in how they force employees to donate to the “righteous causes”, this one is called “help businesses in distress”. No one knows yet what the criteria are to receive this help but one thing is sure – we all have to pay and that has been made crystal clear with the recently passed law.

Well there’s the good news and the bad. I’ll start with the good news – this is a one time deal for Sept 2009’s pay slip (paid in October) and the employer will also be donating the same.
The bad news is this is the government of Israel’s holiday gift to the citizens – a one time donation equal to one half of a day’s vacation pay to be added to each employee’s social security (bituach leumi) deduction ! (The calculation is half of the monthly pay divided by 30).
The only employees and employers exempt from this “donation” are the public sector employees (i.e. government workers) and employees in the domestic help sector.

I guess it pays to be a productive public sector employee !

New Mandatory Pension law in Israel

Moshe

On July 19, 2007 a collective agreement was signed between the New General Worker’s Union’s professional and pension association and the liaison office of the financial organisations in Israel requiring employer’s to insure their employees in a comprehensive pension plan.

On July 30, 2007 this agreement was declared an expanded regulation order by the minister of labor, thereby making parts of the collective agreement mandatory for all employers and employees in Israel starting January 1, 2008.

Who does this apply to ?
————————

Any employee who isn’t insured and is employed/will be employed in any place of work.

Who does this not apply to ?
—————————-
1. An employee who is insured in a pension plan
2. An employee who retired from work at retirement age and is receiving a pension
3. An employee, who is 50 years old or older, who on the 1.1.2008 or the start of employment date (the later of the two) doesn’t have a pension plan can join at his choosing, by way of written notification to his employer, a gemel savings plan (pension or savings or any combination of the two) but if he doesn’t choose as said above this expanded regulation order will bind him as well.
4. Female employees under age 20 and male employees under age 21. when they reach said ages the expanded regulation order will bind them as well.

When does this law apply ?
————————–
Starting January 1, 2008 or the employee’s start date (the later of the two).

An employee who starts work and has no pension plan coverage at all will be eligible immediately for pension plan coverage after 6 months tenure.
(during 2008 the waiting period was 9 months).

An employee who starts work and has pension plan coverage will be eligible for pension plan coverage from his start date. The deductions will start after 3 month’s tenure or at the end of the tax year (the sooner of the two), retroactive to the start date. In this case there is no waiting period.

Employees who have tenure of at least 9 months on jan 1, 2008 – deductions will commence from Jan 2008.

Employees who have enure of at least 6 months on jan 1, 2009 – deductions will commence from Jan 2009.

Base pay for pension
——————–
The mandatory pension insurance is from the base for severance pay as defined by the severance pay law.
The ceiling is the average salary as publicized from time to time.
This is a gradual plan meant to bring the mandatory deductions to 15% within 5 years.
The deductions are done through payroll and will be itemized on the payslip, including accrued annual totals and employer’s part.

There are 3 parts to this plan: the employee’s part, the employer’s part and severance pay part (also the employer’s part)-and all are listed on the pay slip.

How much is the deduction ?
—————————
(Only the employee’s part is deducted from the employee’s pay)

Starting 1.1.2008 the employer’s and employee’s parts are 0.833% and the severance pay part is 0.834%
total 2.5%

Starting 1.1.2009 the employer’s and employee’s parts are 1.66% and the severance pay part is 1.68%
total 5%

Starting 1.1.2010 the employer’s and employee’s parts will be 2.5% and the severance pay part will also be 2.5%
total 7.5%

Starting 1.1.2011 the employer’s and employee’s parts will be 3.33% and the severance pay part will be 3.34%
total 10%

Starting 1.1.2012 the employer’s and employee’s parts will be 4.16% and the severance pay part will be 4.18%
total 12.5%

Starting 1.1.2013 the employer’s and employee’s parts will be 5% and the severance pay part will be 5% as well.
total 15%

The employer’s part for severance pay will be instead of severance pay according to the severance pay law and cannot be returned to the employer’s ownership unless the employee is denied right to severance pay according to sections 16 and 17 of the severance pay law, or in case an employee or his beneficiary withdraws money from a pension fund before he is eligible (death, retirement at age 60 or over, invalid)

How many vacation days is an employee entitled to ?

Moshe

There is generally some confusion as to the exact number of vacation days an employee is entitled to. This is due to the fact that the wording of the law uses the term “days” and not “work days”
According to the directives of this law, all employees are entitled to paid annual vacation. Vacation days are included in the basic labor laws and cannot be waived.

Special employees, as defined by additions to the annual vacation law, may be entitled to enlarged allotment of vacation days under certain conditions. For example: Employees who deal with radiation that comply with the conditions in the addition to the law are entitled to 21 days annually, Nurses, Doctors, and others who come in contact with sick people, under certain conditions outlined in the addition to law are entitled to 42 day annually. But in these cases the vacation days cannot be accumulated beyond the year, they need to be utilized.

The vacation days must be consecutive, unless both employer and employee agree, then at least one week must be consecutive and the rest can be sporadic. This is probably the reason for the wording of the law to begin with.

Vacation days are not allocated in one shot, neither at the beginning of the year nor at the end. The net annual allotment (the allotment less the weekly rest days) are divided into 12 and each month that the employee works, entitles him to the monthly allocation. Of course the percentage of the employee’s position is also a factor, so if an employee was employed at a 50% position, he would be entitled to half the vacation allocation that a full-time positioned employee would be entitled to and so forth.

Another important thing is that in many work places there is an enlarged annual vacation allotment. This is usually due to a work agreement. Special attention should be given when an employee is entitled to a larger allotment than the law. The law provides certain protective restrictions which are meant to ensure

If an employee has acrued vacation days that haven’t been utilized, some employers erase them at year’s end. others allow acrual up to a maximum number of days.
Both of these are legal, provided the employer notifies the employees in advance.
In addition, the balance at the start of the month, monthly acrual, used days and new balance for the end of the month must all be shown on the payslip.
Employers must also allow employees to take vacation, but can dictate when it is convenient for them that the employee take vacation.

Tenure of 1 -4 years = 14 vacation days *
Tenure of 5 years = 16 vacation days *
Tenure of 6 years = 18 vacation days *
Tenure of 7 years = 21 vacation days *
Tenure of 8 years = 22 vacation days *
Tenure of 9 years = 23 vacation days *
Tenure of 10 years = 24 vacation days *
Tenure of 11 years = 25 vacation days *
Tenure of 12 years = 26 vacation days *
Tenure of 13 years = 27 vacation days *
Tenure of 14 years and up = 28 vacation days *

 

* The allotment of vacation days in the table above  includes one weekly rest day for each seven days of vacation. For Jewish employees, this would be Shabbat for an employee who is employed 6 days a week and Friday and Shabbat for an employee who is employed 5 days a week.
According to this, for example, an employee who is employed 5 days per week would be entitled annually to 10 paid vacation days, whereas an employee who is employed 6 days per week would be entitled annually to 12 paid vacation days.

How much advance notice are you entitled to when terminated ?

Moshe

When an employee is terminated from his/her position they are entitled by law to advance notice from the employer. The amount of advance notice is based on an employee’s tenure with the employer as well as his pay rate.

For employees being paid at an hourly or daily rate the employee is entitled to:

During the first year = 1 day for each month worked.
During the 2nd year = 14 days + 1 day for each two months worked.
During the 3rd year = 21 days + 1 day for each month worked.
From 4 years and on – one month’s notice.

For employees being paid at a monthly rate, the employee is entitled to:
During the first 6 months = 1 day for each month worked.
From the 7th month until the completion of 1 year = 6 days + 2 1/2 days for each month worked.
After completion of 1 year tenure = one month’s notice.

The Israeli Employee’s Rights Handbook

Moshe

Due to increasing request and popular demand, work has commenced on the new ‘Employee’s Rights in Israel Handbook” soon to be released.
The handbook is in English and explains, in easy to understand language, basic payroll and labor law issues that are relevant to anyone who works as a salaried employee or is an employer of employees. The handbook is a means for employees and employers alike to become familiar with employee rights according to the Israeli Labor laws and avoid unnecessary confrontations in the future.
The Handbook will be available through this site only – stay tuned !
Place your order for the the handbook today and receive a 10% discount on the price ! This offer is for a limited time only.

send an email to Moshe.israpay@gmail.com to reserve your copy today  !

According to the law, what info needs to be included on my payslip ?

Moshe

According to correction 24 of the protection of salary law which went into effect on Feb 1, 2009, The following is a list of mandatory items that must be listed on an employee’s monthly payslip:

1. Employer and Employee ID details
a. Employee’s last name, first name and
Israeli ID # (or passport #)
b. Employer’s name, ID # (company #) and
address
2. Details about Employee’s employment
a. Start date of employment
b. Accumulated tenure in place of work
with employer (the higher of the two)
c. For monthly-wage employees – percent
of position
For salary-wage employees (hourly,
daily, commission)- the base of rate
(hourly,daily, way of calculation of
commission)
For employees on the rank and level
pay scales (public sector and any
connected collective agreements)
the rank and level must be detailed.
3. The pay period
a. Calendar pay period for which the
payslip is paid
(for example: FEB 2009)
b. Total number of max. possible
workdays and work hours in the place
of work in the pay period.
c. Total number of actual days worked
in the pay period. (not including
vacation, holiday and sick leave,
reserve army duty)
d. Total number of actual hours worked
in the pay period. (including
overtime hours, not including
vacation, holiday and sick leave,
reserve army duty)
NOTE: If there is no possible way to track an employee’s hours due to their conditions of work and employment – this needs to specified on the payslip.
e. Total number of vacation days
accrued in the pay period, total
number of paid vacation days taken
in the pay period and remaining
vacation day credit balance.
f. Total number of sick days
accrued in the pay period, total
number of paid sick days taken
in the pay period and remaining
sick day credit balance.
Note: If the employer has insured his employees in a sick insurance fund, (not to be confused with Kupat Cholim medical insuance) he is exempt from this.
4. Salary paid to the employee
a. hourly rate
b. base pay (regular hours for
hourly-waged employees)
c.Additional (other) payments to
base pay or regular hours need to
be itemized separately. These
include:
overtime hours, payment for work
during weekly rest day shabbat),
Havra’a, vacation and sick days,
etc. All of these items must
include the type of payment,
number of units, rate and sum of
payment.
d. Total amount of salary and other
payments that are taxable as well
as the total yearly accrual of
these payments to date.
e. Total amount of salary and other
payments that are taxable for
social security as well as the
total yearly accrual of these
payments to date.
f. Total amount of salary taken into
account for pension or other
social benefits purposes,
itemized specifically per type of
benefit, as well as their yearly
accrual to date.
NOTE: If any of the above (4. a-f) is paid for a period different than the specified pay period, the corresponding pay period for which it is paid needs to be specified
(for example: difference for previous pay period)
5. Deductions
a. Income tax
b. Social security
c. National health
d. Savings or pension plans. each
plan needs to be itemized
separately, including name of plan
and sum.
e. any other deductions, itemized
including sum.
Note: all of the above (5. a-e) need to also include the total yearly accrual to date.
f. Total deductions
6. Employer’s contribution to employee’s
social benefits:
Itemization of the payments, not paid to
the employee and not deducted from the
employee’s salary, including savings and
pension plans.
7. Settlement details
a. Total gross pay for pay period
b. Total net pay
c. way of payment (check, bank
transfer). If bank transfer, bank
account details. If paid through
3rd party – needs to be specified.
8. Minimum wage
min. wage per hour and monthly min.
wage in effect on pay date. for
employees under 18, the relevant min.
wage must be stated.

Can an Intern agree to work without pay ?

Moshe

Case 252/07 which was brought before the National labor court and ruled upon on Dec 11, 2007

Facts:
=======
The petitioner worked as an law intern for a law firm for 1 year, from 01/09/1997 – 31/08/1998 and signed a waiver/agreement whereby he agreed to work without pay or benefits for his intern work.

The prosecution sued in labor court for pay and benefits for his work as an intern. The local labor court ruled partially in favor of the intern and ordered the law office to pay the intern, which in turn led to this appeal.

The National Labor court ruled:
===============================
Article 12 of the minimum wage law, 1987, which is a Basic law which cannot be waived or made to be Dependant on other factors. The minimum wage law was meant to prevent employers from taking advantage of groups of workers as well as protect employees from themselves and prevent instances where an employee agrees to work for free because he is in need of a professional mentor.

The court determined that even if an intern agrees to work without pay, despite this “agreement” the employer must pay the intern at least minimum wages. This despite the impression that the employer may have that the employee would be willing to work without pay. Even if the employee didn’t act wholeheartedly, and even if he sued the employer after leaving his position, this cannot demeanor his rights by law.

The court further determined that in a work relationship between a mentor and an intern, the mentor will always have the upper hand. From the outset this is not an equal relationship. The intern is like a student who approaches his master, as the employer oversees his student’s professional manner, guides him and needs to authorize the internship, thereby opening doors to his profession future by allowing him access to the Israeli bar association.

As such, even if the intern agrees to work without pay or for partial pay, this is interpreted as exploitation of the distress of the weak by the employer and not as an insincere action by the employee.
Furthermore, and on the other hand it would be insincere action on the part of the employer to imply or suggest that an employee work for free or at a reduced rate and even if he were presented with such a suggestion from the employee, he should turn it down completely.

It is a given that the wording of the law will not accept a “waiver” of basic employee rights, as minimum wage, even if implied, suggested or agreed upon. It has no consequence whether it is an oral or written agreement or even an understanding or implication because the employee didn’t complain about not receiving pay or receiving less than minimum wages.
It also does not matter whether this was done before, during or after employment.

The court rejected the appeal and charged the employer with the court fees as well.

How To Quit Your Israeli Job and Still Receive Severance Pay

Moshe

This article was published exclusively at JobMob

Scared about your severance rights?

The employed-job sector has gone through many revolutionary changes in recent years that are characterized mainly by a huge turnover of positions. The days when an employee was secure and stable in his position for life – that were a major factor in accepting a position – are no longer. Employees aren’t afraid anymore to change jobs and if someone stays at a position for 3-4 years it is considered a long-term position. Due to high employee mobilization, many employees would like to resign in order to pursue other job opportunities but refrain from doing so because they know they will only get severance pay if they are terminated by their employer. Continue reading “How To Quit Your Israeli Job and Still Receive Severance Pay” →