employer

Employer’s expense to rise over next 3 years !

Moshe

Change in Employer’s contribution to Social Security

 

As part of “the law to reduce the national deficit and change in the burden of taxes”, which was published today – August 13, 2012, a raise in the employer’s contribution towards Social Security has been authorized for the next 3 years, as follows:

From the higher level (on the part of salary over 60% of the average wage)

In 2013 – 6.5%

In 2014 – 7%

In 2015 – 7.5%

 

The current rate in 2012 is 5.9%.

This does not include employees who are pension-age, receiving a old-age stipend from Social Security or foreign workers or employees under age 18.

Company officers and executives can be prosecuted !

Moshe

If you are a company executive or officer and your job entails employing workers  this post is for you,

It is your responsibility to be updated, to know and be familiar with the latest laws, regulations and court verdicts in this field.

You must control, oversee and issue directives in order to notify the company where you are employed that they are acting legally or not.

New regulations will be coming into effect on June 19th 2012 which call for closer control and inspection by the Ministry of Trade, Industry and Employment for violations of mandatory labor laws in Israel.

Violators will be prosecuted, including company officers or executives, personally ! This is a criminal offense and can be punished with administrative fines of up to 35,000 shekels for each offense or even jail time.

It is your duty to do everything in your power to make sure that the law is adhered to. Do not play around with employee’s rights, it is not worth the risk of the good name of your company.

The Ministry has allocated a special tab on the menu of their website where they will publish the names of all employers who have violated the law !

Potential employees who are searching for a job can check this site to see if the employer is listed – they might get an indication whether they want to work for such an employer or not.

 

 

 

 

 

Tightening of Enforcement of Labor laws

Moshe

Effective on June 19,2012 The Administration of Enforcement & Regulation in the Ministry of Trade, Industry and Labor will be stepping up their efforts to enforce labor laws by spot checking employers. Any discrepancy can lead to fines of thousands of shekels for each offense and for each employee. In addition, CEO’s will be held personally responsible for failure to implement the laws. The fine issued to a CEO cannot be paid for by or refunded by the company and in extreme cases can result in criminal charges and even possible jail sentence. The only way a CEO can legally fight the fines and charges in a court are if he has proof of existing policies and procedures and that he has done all in his power to enforce the labor laws.
For example, a company who hires a manpower agency to provide cleaning workers or guards, can be held responsible if the manpower agency doesn’t pay them minimum wage, overtime, allow them to sit or take a break, are tardy in paying. The company needs to check the manpower agency’s calculations and payslips to ensure they pertain to the labor laws.

All employees need to have time-sheets, they can be an actual swipe card electronic clock, a computerized program, via a cash register or an internet time-sheet. It must have start and end times for each day worked and be able to track absences and overtime. The only exception are employees who work outside, on the road, etc in which case the pay slip needs to say “hours not able to be tracked”

 

Employee’s rights on employer’s bankrupcy

Moshe

The law protecting employee’s rights in bankruptcy or liquidation of a corporation.

The law for security of employee’s rights when an employer goes bankrupt or when a court verdict orders the liquidation of a corporation came into being in 1975, in order to protect employees whose rights have been compromised due to difficulties the employer has come into and as a result of these difficulties a bankruptcy or liquidation order has been issued by a court of law.
This law is defined specifically in Chapter 8 of the Social security law.

According to this law, a salaried employee whose employer has declared bankrupcy or the company he has worked for has been liquidated, is entitled to payment for salary and severance pay that the employer owes him, up to the ceiling of the stipend as determined by the law. The employee is also eligible  that Social security transfer monies owed to his pension or savings plan if the employer has not deposited the required amounts owed (all or some).

 

Who is eligible ?

  1.  Salaried employees that their employer has declared bankruptcy or salaried employees that a court has issued a liquidation order against their employer (provided the employer is a corporation)
  2.  Pension/ Gemel fund if the employer owes money to a fund that the employee is ensured with.
  3.  Member of a co-operative who has been a member of a Kibbutz or a collaborative Moshav for at least 7 years
  4. An employee’s next of kin if an employee passed away before the benefit owed him was paid, his next of kin are eligible to receive the debt for salary and severance pay.
  5. Foreign workers / Yehuda – Shomron workers are eligible provided they have legal and valid work permits and visa. Illegal aliens are not eligible.
Note: An update to this law states that in projects that occurred from Jan 1, 2004 employees with controlling interests in a company are not eligible.

 

Conditions of eligibility

The benefit will be paid to a salaried employee if the following conditions are met:

A) A District court has issued a bankruptcy order or liquidation order to a company, co-operative, collaborative or Non-profit organization.

B) A district court has appointed a Trustee or liquidator to above.

C) The details of the employee’s claim have been acknowledged by the trustee or liquidator of the company.

 

How is the benefit calculated ?

An employee whose employer has been issued a bankruptcy order or liquidation order is eligible to receive a benefit from Social security, which includes amounts of salary owed him, that haven’t been paid by the employer and also amounts of severance pay that have no coverage in a pension / Gemel fund.

The benefit will be paid up to a ceiling of 79,750 sh for court orders issued up until July 31, 2009 or 103,675 sh for orders issued from August 1, 2009 onwards.

The amount of the benefit will include linkage from the date the debt was incurred until the payment date by Social security.

 

Salary items that are taken into account

  1.  Salary: according to section 1 of the protection of salary law that hasn’t been paid by the employer to an employee until the date he ceased work.Itemized salary that will be taken into account include: Base salary, overtime hours, premiums, bonuses, commissions, and any additions that are paid due to effort, or  departmental or professional reasons.The salary to be taken into account will not be less than minimum wage owed the employee according to his percentage of position (full-time, part-time). A benefit that is calculated according to minimum wage will be calculated for a period of up to 12 months.
  2.  Buyout of accrued vacation day balance: payment for the number of accrued and unused vacation days up until the date he ceased work, as they appear on his last pay slip, up to the maximum number of days that can be accrued by law and subject to the Annual vacation law. 
  3. Havra’a (convalesence pay): the part that was not paid to the employer up until the date he ceased work and for the last two years.

  4. Clothing stipend:  the part that was not paid to the employer up until the date he ceased work and for the last year (relevant only in places of employment where this stipend is paid – usually public sector only)
  5. 13th salary: the part that was not paid to the employer up until the date he ceased work and for the last year (relevant only in places of employment where this stipend is paid – usually public sector only)
  6. Value of advance notice: employees whose employer did not pay them the value of advance notice will be eligible to receive as part of the benefit, according to the Advance notice for termination and resignation law (2001).
  7. Employer’s portion towards pension: employees whose employer did not open a pension plan for them as required by law are eligible to claim the employer’s portion of 6% of the base salary and for a period that will not exceed 12 months after employer-employee relations were severed.Note: Any other itemized items on the payslip can be included as well, as long as they fit the definition of salary. Items that will not be included in the calculation of the benefit (for example) refunded car or telephone expenses, etc.
How do I apply for the benefit

The claim for a benefit is to be sent to the court-appointed Trustee or liquidator only and not to Social Security on a form 5305/bl (original only) along with documents to back up the claim. The form is available online on Social Security’s website: www.btl.gov.il or at  Social Security’s Head office in Jerusalem –  branch office (located behind Binyanei Hauma – 13 weizman st. Tel 02-6463020).

The appointed trustee or liquidator has approved the claim he will send it to Social Security’s head office.

Applications for claims relating to pension /gemel funds are to be submitted to the trustee or liquidator by the fund.

 

Tips

  • Always keep a copy of all documents for your own records
  • Never submit original documents, make photocopies of payslips, contract, etc to attach to the claim.
  • Send the claim to the trustee /  liquidator via registered mail with proof of delivery or submit in person and get them to stamp your copy “received” with the date on it.
  • Social Security recommends filling out the claim form in detail and accurately in order to avoid unnecessary delay in processing your claim.

 

Source:  Social Security (Bituach Leumi)

 

 

Garnished Wages – updated

Moshe

As of Jan 1st, 2012 the amounts exempt from  garnished wages have been updated as follows:

single – 2,093 sh

widower/divorced/single parent + 1 child – 3,384 sh

widower/divorced/single parent + 2 or more children – 4,221 sh

couple – 3,139 sh

couple + 1 child – 3,641 sh

couple + 2 or more children – 4,143 sh

 

Notes:

1) The above amounts do not apply to garnished wages for alimony.

2) Should the above amounts be more than 80% of the monthly salary (after deductions for income tax and social security and health tax) the amount exempt shall be reduced to 80% of the actual monthly salary.

 

source: protection of salary law, 1958 update 2012

 

 

Change in sick pay rates – April 2011

Moshe

Good news for employees who were forced to take time off work due to illness:

 

Update #4 – 2011 of the sick pay law, effective April 1, 2011 incurs a change in the rates paid:

1st day – no pay (no change)

2nd + 3rd days – 50% of regular pay (up from 37.5%)

4th day onwards – 100% of regular pay (up from 75%)

 

In addition, employees who work a 5 day week – 21 2/3 days will be considered a full month (entitling employee to 1.5 sick days credit). If an employee did not work a full month the  credit will be prorated accordingly. (This is a change from previously 25 days = a full month)

 

Notes:

  • The employee can request a doctor’s note for any illness.
  • The sick days need to be continuous, otherwise the count starts anew.
  • There is no buyout or redemption of unused sick days by law. This is accepted practice only in the public sector.
  • Sick day accrual, credit and debit as well as opening and closing balances for the pay period need to be itemized on the payslip.

 

 

 

Warning Signs – Employers You Don’t Want to Work For

Moshe

There are many indications that one can detect if they are aware of them, even in job interviews (!), that will indicate a “bad” boss or mildy put “an employer you do not want to work for. This is especially true in Israel, where some employers just blatantly disregard labor laws. However, things are improving in this area in the last decade since Government enforcement has become more involved. they act on anonymous tips and after investigation submit suits in labor law, which heavily fine employers for recurring infractions of the law. Continue reading “Warning Signs – Employers You Don’t Want to Work For” →

Order and enforcement of labor laws

Moshe

Order and enforcement of labor laws

Submitted by Moshe on Tue, 23/11/2010 – 00:12

 

The Administration of order and enforcement of labor laws takes a lot of action in implementing the directives of the labor laws in the State of Israel. The Labor laws, whom the administration has been trusted with enforcing, are defined as protective laws, that make up the legal infrastructure of the Israeli employment market. the purpose of these laws is to set a minimum Raff and to determine basic social rights for employees. These rights are expressed in setting employment terms for employees, that come to ensure a person’s honor, his ability to self fulfillment, equality, division of justice and more. A good portion of these laws have considerable financial significance and they increase the minimum wage to be paid to an employee, with aim to ensure a relatively appropriate standard of living in exchange for his work.

The Administration, as both the professional and authorized agent, coordinates under it’s auspices the enforcement of 19 labor laws, and locating violators and minimizing the detrimental treatment of salaried employees in the lower pay scales.

Goals:
1) Implementation of labor laws via efficient and effective mechanisms of
licensing and enforcement.
2) Creating and establishing practical basis for cooperation with internal and
external enforcement partners.
3) Intensifying both employer and employee awareness to directives of labor
laws within the administration’s responsibility.

The administration’s actions, both criminal and administrative are accompanied, guided and handled by the legal bureau of the Ministry of Industry, Trade & Labor.

Please note that while all complaints are followed through, a complaint may not necessarily solve your own personal issue with the employer and further action by you may be needed.

The administration can be contacted as follows:

Voicemail for complaints: 1-800-354-354 (can be done anonymously)
Tel: 03-622-3116
Fax: 03-682-8690
Email: achifa-ma@moital.gov.il

The administration of order and enforcement of labor laws
Derech Salameh 53
Tel-Aviv

Collective agreements and how they affect you

Moshe

Collective agreements and how they effect you

Submitted by Moshe on Tue, 09/11/2010 – 21:40

Most of the terms of employment are set not by law, rather by collective negotiating, thereby determining that the collective agreement is the basis for employee’s rights and duties.

The arrangements in collective agreements can be best characterized by the fact that they are not uniform. In each collective agreement one can find a different arrangement which is the fruit of collective bargaining. From the non uniformity of rights in collective agreements one can learn that not only are the span of rights different , but there are large groups of employees who do not share the same rights.

So, what is a collective agreement ?
They can be effectively divided into 2 types:
1) General Collective agreements
These are reached & signed by organizations that represent factoriesemployers in a certain field (such as: construction, textiles, diamonds, hotels, electronics, etc.) or in all fields (cost of living increase, travel expenses, Havra’a payment) and the liason office of general organizations and the worker’s union (histadrut) that represents the employees in a certain field or sector as well as the government (usually the Finance ministry).
2) Special Collective agreements
These apply to a certain employer and are signed by both the management of the employer and the worker’s union that represents the employees of that employer.

Some collective agreements get issued as a expanded regulations order by the minister of Labor, thereby becoming mandatory for every employer in the State of Israel.
A few examples of this are: travel
reimbursement to and from work, cost of living increase.

When a collective agreement is signed it binds all employees and an employee cannot say that he disagrees and didn’t approve it. That is why there are worker’s unions.

Not always does a collective agreement define the terms of employment. Frequently Small or private employers or where personal contracts are used, the contracts define the terms of employment, However, it should be noted that the personal contract cannot diminish or contradict the rights defined by law or by an expanded regulation order or collective agreement that may apply to the employer due to the field in which he operates. In short, the personal agreement cannot violate the labor laws of the State of Israel or the expanded regulation orders of collective agreements which are treated as labor laws. The personal agreements can however improve the terms in the law or collective agreement.

Even if a personal contract specifies explicitly terms that diminish the terms/rights defined by law, it becomes null and void, even if an employee signs it.

In small places of employment, it was customary to have work agreements based on verbal agreements, which would be always hard to prove. In such cases the law provides the minimum.

Since Jan 2008, when the section 24 of the protection of wages law came into effect, making mandatory written notification to all employees describing their terms of employment and specifying what needs to be written on this notification, verbal contracts have no place anymore.

see my blog post on correction 24:

and the blog post on “what needs to be included on my payslip” :

What happens to unused vacation days ?

Moshe

 

What happens to unused vacation days ?

Submitted by Moshe on Mon, 08/11/2010 – 20:23

If your employer has a policy of erasing unused vacation days that have been accrued, then basically it’s “use them or lose them”.
This is totally legal provided the employer notifies the employees in ample time to allow them to utilize the accrued days.

If an employee has 10 accrued days, the employer can’t notify the employee on Dec 31st that the days will not be carried over to January. He can and should specify this in employee’s contracts or notification of work conditions as well as a reminder in Sept or Oct with the payslip and notification on employee notice boards.

If such policy does not exist then the days are accrued and carried over from one year to the next. This is easily checked as the balance must be listed on the paylsip.

When an employee resigns or is terminated his position, all unused vacation days that have been accrued are paid out on the last payslip.

Mandatory Pension law – updated Sep 7, 2010

Moshe

Mandatory Pension law – updated Sep 7, 2010

Submitted by Moshe on Sat, 09/10/2010 – 23:18

 

The mandatory pension law was recently updated (Sept 7, 2010).
Originally planned for gradual annual updates from 2008 – 2013, when the mandatory % will reach 15% (5% employee, 5% employer and 5% severance pay -employer)

The new revision now ads another year (2014).
Starting Jan 1, 2014 the mandatory pension will be 17.50% as follows:
employee – 5.5 %
employer – 6.0 %
employer (pension) – 6%

The mandatory pension revision also specifies:
1) that it applies to employees who retired at retirement age and receive a stipend from social security (Bituach Leumi).
2) An employee who begins work at a new place of employment and is insured in a pension plan from his previous place of employment, will be eligible to receive the percentages specified in the mandatory mandatory pension law from day one with the new employer.

see the full wording of the mandatory pension plan here:

Everything you wanted to know about Havra’a payment

Moshe

 

Everything you wanted to know about Havra’a payment

Submitted by Moshe on Mon, 30/08/2010 – 23:51

 

What is Havra’a payment ?
Havra’a payment (or convalescence pay) is an annual, mandatory payment effecting all employers in the state of Israel via an expanded regulation order signed by the Minister of Labor. This means it is treated as a law.
Havra’a pay is paid to all employees who have at least one year of tenure with the employer.
Those who don’t are not eligible, but the following year are eligible to receive Havra’a payment for the full year plus the portion of the first year.
The payment is a number of days (see table below) multiplied by the rate (currently 351 shekels), which is updated every June. Employees who work less than full-time positions, it is prorated according to your % of position actually worked (including sick days, vacation, reserve duty and maternity leave).
There are two rates, one for the private sector and another, higher rate for the public sector. There are also separate tables of days of Havra’a eligibility for Histadrut employees, municipal employees and teachers.

Since most of the users of this site are employed in the private sector I have chosen to relate to this only.

Tenure with employer                       Number of Havra’a days
1 year                                                                     5
2-3 years                                                                   6
4 -10 years                                                               7
11-15 years                                                                8
16-19 years                                                                9
20 years and  upwards                                         10

 

Example: an employee who has been employed with the employer for 4 years in the private sector would receive as follows:

7 days * 351 sh = 2,451 sh (gross)

Note: There are employers who prefer to pay Havra’a on a monthly basis instead of a one-time annual payment. This is legal and the result would be an additional payment on each payslip of 1/12 of the Havra’a payment. Of course the amount needs to be updated annually (usually in June or July payroll).