employee

Pension plan contributions for salaried sales employees

Moshe

If you are an employer of salaried employees who work on a base pay with sales commissions or if you are an employee who works in a sales commission job, this is for you:

Joe worked as a sales rep for a company for several years. He resigned his position and sued his employer for payments towards mandatory pension, that were done only from his base pay, without taking into account the sums he earned from sales commissions.

In a recent verdict in labor court (11.2013), the court recognized the fact that sales commissions are a major component of  salary, and as such, they are to be taken into account for pension purposes, as well as severance pay!
This despite the fact that sales commissions are not a set rate or fee, but rather they change monthly, based on the employee’s performance and actual sales. 

 

 

Everything you wanted to know about Garnished wages

Moshe

What are garnished wages ?

Garnished wages are amounts that require  one party who owes another party money, to transfer all or part of the owed sum to a third party. The third party can be the Tax Authority, Bituach Leumi, or any entity to whom a court decision has rendered a decision to their credit. In most cases the collection and distribution of collected funds are via the Authority of Enforcement and collection’s execution chamber (Hotza’a lepoal).

How are employer’s notified of garnished wages orders?

Written notification is issued by the Autority of Enforcement and Collection and sent to the employer of the entity who owes money. This notification is binding and includes the creditor’s name and address, the total sum owed and what the reason for the debt is. It is common for such notifications to be sent to companies, garnishing sums owed to suppliers, or to employers, garnishing sums owed to salaried employees (payroll) – which is the focus of this post.

What do I need to do if I received a garnished wages order ?

The recipient of a garnished wages order  must send a written reply within 7 days of receipt, as to whether they can comply, or not (such as if the employee no longer works for them, is unknown, or no money is owed to them.
Employers who do not send a reply to notifications and/or do not comply with the instructions on the garnished wages order notification open themselves up to legal action by the creditor which can result in them absorbing the debt themselves!

Are all garnished wages orders the same ?

No! There are two basic types of garnished wages: 1) alimony and 2) everything else.

1)      Garnished wages for alimony payments.

2)      Everything else

In addition, there are garnished wages orders for set amounts per month, there are those that only state the total sum owed and there are those that specify a set % of the wages owed. It is extremely important to note the reason for debt, because if it is alimony, the table below does not apply and all the net pay needs to be garnished until the sum of debt is paid.

 

Am I required, as a recipient of a garnished wages order, to zero out all of the employee’s net wages?

The protection of salary law specifies amounts (see table below) that are exempt from garnished wages orders, based on marital status and the number of children up to age 19 in the debtor’s care. If the exempt amount is more than 80% of the monthly salary, the garnished pay will be reduced to 80% of the monthly salary.
If an employee is employed at a daily rate, the garnished wages shall not exceed 25% of the daily rate.

In general, the amounts relate to net pay after deduction of mandatory deductions (tax, social security, health tax). Any other deductions are considered wages for all purposes and intents.

This does not apply to alimony payments.

Table of amounts exempt from garnished wages orders (except alimony):

From

Single

Single + 1 child

Single + 2 children
or more

Female widow + 1 child

Female widow + 2 children or more

Couple

Couple + 1 child

Couple + 2 children or more

01.2013

2,122

3,008

3,517

3,432

4,281

3,183

3,692

4,201

01.2012

2,093

2,966

3,467

3,384

4,221

3,139

3,641

4,143

01.2011

2,040

2,892

3,381

3,298

4,114

3,059

3,549

4,038

01.2010

1,995

2,863

3,347

3,266

4,074

3,028

3,512

3,997

01.2009

1,921

2,723

3,183

3,106

3,875

2,881

3,342

3,803

01.2008

1,838

2,605

3,047

2,973

3,708

2,757

3,198

3,639

01.2007

1,788

2,534

2,963

2,892

3,607

2,682

3,111

3,540

The Authority of Enforcement and collection’s service and information hot line is: *35592  and operates:  Sun –Thurs  08:00 – 16:00

Partial Vacation Days

Moshe

What happens if an employee takes a half day of paid vacation ?

In terms of payment, they would receive a full day’s pay. However, the issue isn’t as simple when debiting an employee’s vacation day balance. Apparently, as reflected by a recent labor court verdict, which determined that any day that an employee shows up at work is to be considered a work day. The same day cannot be counted twice !

The same would apply towards half days taken as sick days. In actuality, they are work days and travel expenses will need to be paid for them. The missing hours should be deducted as such and the payment should be itemized separately.

The employer and employee can agree on payment for half days and there are certain sectors that have explicit sections about this issue.

 

e-Book: 2013 Tax Benefits for Salaried Employees in Israel

Moshe


Finally released via Amazon kindle – The 2013 updated version of the Tax Benefits for Salaried Employees in Israel, in English !

Just in time for the end of the tax year, find out if you have correctly utilized all the tax benefits you are entitled to, as a salaried employee.

If your employer failed to credit you or you were not aware of certain tax benefits that you qualify for, no worries !

Taxes are configured annually, so if you update your employer before December’s payroll is processed you will be credited retroactively to January 2013.

And if you weren’t able to update your employer’s payroll dept by Dec’s payroll, just file for a tax rebate.

Get your copy today !

 

Severance Pay – a minor detail you should be aware of

Moshe

Everyone knows that when an employee is terminated and he has worked for at least one year for the employer, he is eligible for severance pay. Most employees also know that severance pay is one month’s pay (according to the last full salary) multiplied by his tenure. Or in layman’s terms, one month’s pay for each full year worked and prorated for any portions of a year.

The “minor” detail that everyone should be aware of is the question of what actually is the “last full salary” ?

Well, it really depends on how you are employed. The simple case is that of an employee who receives a monthly based salary, then the above would apply.

However, there are other types of salaries: Hourly based, Daily based, job based.

Many unique scenarios can also have an effect on what the “last month’s pay” actually is and thus effecting how severance pay is calculated.

For instance, an employee who worked full-time and changed to part time at some point (or vis-versa), an employee whose pay was reduced, an employee that had a temporary change in his last salary, an employee whose type of employment changed in essence, an employee whose position changed in essence or an employee who receives a base pay and changing commissions.

The Labor laws all specifically address these scenarios by dividing up the salary into several parts, before and after the change and a separate calculation is done for each part accordingly.

Those who receive changing salaries due to hourly or daily rates that change each month due to the number of hours/days worked or due to commissions – an average of the last 12 salaries is used as a basis for severance pay calculation.

 

So, what exactly is a “keren hishtalmut” ?

Moshe

Keren Hishtalmut

Roughly translated, a keren hishtalmut is an advanced study fund. This is in actuality a savings plan. In the past it used to be a dedicated savings plan, meaning that the funds could only be used for enhanced studies. Today, it can be used for any purpose.

In recent years, the monetary market has undergone revisions and changes, and at present keren hishtalmut is the only medium length savings plan, that the earned interest is still tax exempt (provided of course that the deposits are within the ceiling published by the Tax Authority)

What are the % of contributions towards keren hishtalmut ?

For salaried employees, The employee’s contribution is deducted directly from the gross pay via the paylsip.

Employee contributions are usually 2.5%  and employer’s contributions are 7.5%.

For self-employed, the contribution is 7% (up to 17,040 sh annually)

 

How much can I deposit into a keren hishtalmut ?

The annual ceiling from which contributions can be made is currently 188,544 sh (or 15,712 sh per month). Contributions from higher amounts result in taxation on the portion over the ceiling.

 

How long is the keren hishtalmut plan ?

Keren Hishtalmut savings plans are  a six-year plan. The accumulated sums in the fund can be used after 4 years tenure towards advanced studies. They cannot be used towards a university degree, but rather on enhancement courses, regardless of the subject.

At the end of 6 years tenure, all the accumulated sums can be withdrawn and be used for any purpose, However they do not have to be withdrawn and remain available for immediate withdrawl upon request, while at the same time continue to gain interest.

Since this type of savings plan is very attractive, it would be wise not to withdraw the money after 6 years, if you do not need to.

 

Is keren hishtalmut mandatory ?

No, it is not. The labor laws do not mention it at all.
In the public sector (Government, Municipalities, etc) it is mandatory due to existing work agreements and custom procedure in the place of employment.
In the private sector, it is a nice perk that you may be able to get instead of a higher salary via contract negotiations.
Some places of employment will give keren hishtalmut after certain tenure has been reached.

Aug 25th – mini-seminar: understanding your payslip and employee’s rights

Moshe
This unique mini-seminar, in English, is meant for salaried employees who want to know how to read their payslip and understand it.
It is also geared towards employers who want to better understand their legal obligations regarding payslips and the implications of failing to do so.
Don’t miss out on this amazing opportunity to learn from a senior payroll professional with over 20 years experience in all facets of Israeli payroll and labor laws.
DATE: Sunday  August 25, 2013
Time: 09:30 – 11:30
Venue:  JBC
             24 Hillel st. 5th floor
             Jerusalem
Speaker: Moshe Egel-Tal, CSPP
               CEO & Founder ISRAPAY “making payroll simple”
Price: 120 sh
Limited space available – register today !
Don’t miss this great opportunity to learn how to read and understand your payslip
Send your name and contact info to moshe.israpay@gmail.com

Employer who single-sidedly reduced employee’s salary was forced to pay severance pay

Moshe

The employee worked for a gardening company. Upon recieving his last payslip, he discovered that his daily rate had been reduced substantially !

He contacted the employer, demanding that his daily rate be restored to what it was previously, as no-one notified him of any change and he also did not agree to any such change.

The employer refused on several request attempts by the employee, stating that it was a simple “computer mistake” but the bottom line is the same. As a result the employee resigned his position and sued the employer in labor court, demanding his daily rate be restored, as well as severance pay and social benefits from the full rate and not partial from the new, reduced rate, as the employer calculated.

The employer countered, in his response to the court, that the employee resigned his position and as such is not entitled to severance pay. In addition, the employer requested that the employee pay him for failure to give 30 days advance notice.

The court ruled that relevance of section 11a of the severance pay law, which enables an employee to resign his position and still be eligible for severance pay, is upon the employee.

Basically, the employee was able to prove that the employer single-sidedly reduced his wages, by submitting photocopies of his payslips to the court as evidence.

Reducing salary is considered a “worsening of work conditions” that an employee is not expected to continue working under.

The employer stated to the court that after amendment 24 to the “protection of salary” law in 2008, the employer was instructed by his bookkeepers and legal advisors to itemize all payments on the payslips, instead of the one line – “salary” which was used up until then. The employer “fixed” this by lowering the salary rate and adding other mandatory items seperately, such as travel expense and Havra’a. The court ruled that these other items should have been added in addition to the existing pay and not all inclusive, since the item listed was only salary.

The court awarded the employee full severance pay and the employer was instructed to pay the employee the remainder of his salary (restore the original rate) and the social benefits from the full amount, as well as back pay (from his start of employment) for travel and Havra’a.

It pays for employers to configure payslips properly, according to the law, and avoid such scenarios.

Minimum wage update – April 2013

Moshe

Effective from April 2013’s payroll the minimum wages will be updated as follows:

Monthly rated employees

Apprentices 2,580.-
up to age 16 3,010.-
from age 16 to age 17 3,225.-
from age 17 to age 18 3,569.-
age 18 and up 4,300.-

Daily rated employees

  5 day work-week  6 day work-week
Apprentices

119.08

103.20
up to age 16

138.92

120.40
from age 16 to age  17

148.85

129.-
from age 17 to age 18

164.72

142.76
age 18 and up

198.46

172.-

Hourly rated employees

Apprentices 14.91
up to age 16 17.40
from age 16 to age 17 18.64
from age 17 to age 18 20.63
age 18 and up 23.12

These rates are mandatory for all employees in Israel, regardless of sector (public and private), industry, vocation or tenure.
Employers who pay less than the above minimum wages risks penalty (stiff fines and even imprisonment) and prosecution in Labor court, by the Ministry of Industry, Trade and Labor, as a criminal felony  for violation of Labor laws.

 

Working hours on Israel’s Memorial Day & Independence Day

Moshe

Memorial Day of Israel’s Fallen soldiers is Monday April 15th, 2013

According to the fallen soldiers law (1963), any employee who is one of the following:
*  parent
*  grandparent
*  spouse
* child
* sibling

of a fallen soldier, is eligible to be absent from work on this day without liability of deduction from pay.

 

Independence Day (Yom Ha’atzmaut)

Israel’s 65 birthday is Tuesday April 16th, 2013

According to the Independence Day law (1959), This is a paid national holiday. This applies to all employers in Israel.

The day prior to Independence Day (Memorial Day or Erev Yom Ha’atzmaut) is a shortened work day, by law.
Employees who work an 8 hour workday, need work only 7 hours.
Employees who work a 9 hour workday, need work only 8 hours.
Places of employment that have a collective or personal agreement, or custom which is more favorable to the employee than the law, these would take precedence.
There is no deduction for missing hours for this day.

To be paid for Independence Day, you need to have at least 3 month’s tenure with your employer and you need to work the day before and the day after Independence day.

Employers that are not included in the list of places that need to operate on a holiday which is published by the Prime Minister’s Office are not allowed to force their employees to work on Independence Day as publicized by the Israeli Labor Court.

Employees who work for an employer who is included in the list, are entitled to 200% for all hours worked from 24:00 (midnight) on Memorial Day until 24:00 on Independence Day.
Payment for Independence Day needs to be itemized separately on the payslip.

 

 

Employee’s Rights Lecture – Tel-Aviv – May 5th 2013

Moshe

Are you receiving all you should from your employer, by law ?

Is your payslip hard to understand/ decifer ?

What should you do if you’re not ?

And what are your rights ? What can you do about it (aside from quitting your job) ?

Come find out the answers to these questions and more…….

What: Employee’s Rights Lecture

 Date: Sunday, May 5th, 2013 at 18:30 

 Where: AACI Tel-Aviv  –  94/a Allenby Street 

       

Pre-registration required. There is a small fee to attend. Please contact to register:

 contact: Helen Har-Tal –    Tel: 03-6960389       Email: aacicentralregion@gmail.com

Tax Authority adds more hours in the afternoon to customer service

Moshe

The Israeli Tax Authority released a memorandum to the public on March 10th, 2013 regarding the hours in the afternoon/evening that the tax reconciliation department is open to the public. The memorandum can be found in Hebrew on the Tax Authority’s website: www.taxes.gov.il

In an effort to better serve the public in a more efficient manner, The Tax offices in Jerusalem 3, Tel-Aviv 5, Be’er Sheva and Haifa will be open on Sundays from 3 p.m. until 6 p.m. on a trial basis up until (and including) April 14th, 2013.
After which it will be determined whether to continue this service and to what extent.

The service is meant for anyone who wishes to procure a new tax reconciliation for more than one employer for 2013 and those who wish to file for a tax rebate for previous years.