payroll

continuation of pension plan by a new employer

Moshe

Continuation of pension plan by a new employer

Submitted by Moshe on Thu, 29/04/2010 – 15:13

 

An employee who starts a new job and has an active pension plan from a previous employer, can demand immediate deductions from his payroll from his start date, along with employer’s contribution according to the law.
In order to procure this the employee needs to present the new employer with a detailed printout of the existing accounts’ deposits.

This is highly recommended, rather than waiting several months until the employer starts deducting towards a new plan.This is highly recommended, rather than waiting several months until the employer starts deducting towards a new plan.

However, some employers will only do this after you have tenure of three months in order to ensure that employees stay on. If the tax year ends prior to your three month tenure date, it is required for the employer to forgo the 3 month waiting period because the pension funds do not allow retroactive deposits for previous years due to new regulations.

severance pay when an employee records serious disciplinary offences

Moshe

Severance pay when an employee records serious disciplinary offences

Submitted by Moshe on Wed, 28/04/2010 – 08:38

 

An employer may be exempt from paying out severance pay to a terminated employee, if the employee purposely acted in such a way as to cause his termination, by way of serious disceplinary offences. For example; An employee had been working for several years at his job and approached his employer, demanding to be fired,therefore making him eligible to receive severance pay, or so he thought. This based on the assumption that if he quit his job he would not be entitled to severance pay, where as if he were terminated the employer would need to pay severance pay.
The employer refused to fire the employee saying he was very happy with his work and he was due for a promotion, but if he so wished he could resign his position. The employee refused to resign, but started purposely doing acts that can only be described as “serious disciplinary offences”;showing up late, not completing tasks, or ignoring others, as well as frequent, unexcusable absences and basic indiferrence to his job, in hope of getting fired. The employer repremanded the employee both verbally and in writing and when this had no effect, summoned him to an internal hearing. As this also had no effect, the employer notified the employee of his decision to fire him.
The labor laws specifically state that in such cases the labor court can order a reduction or a complete cancellation of in severance pay !
This was the scenario in this case as the employer had no problem proving that the employee’s actions had been purposely done with the intent on causing the employer to fire him. Therefore it is the employee who acted towards ending the employer-employee relationship and is thus seen as resigning for all purposes and intents with regard to severance pay.

Checklist for the terminated employee

Moshe

 

The employee termination check list

Submitted by Moshe on Mon, 19/04/2010 – 09:52

Following is a check-list of things that employees who are terminated need to receive from the employer:

1) Termination letter.
2) payout of any unused vacation days
3) payment of Havra’a (if tenure is 1 year
or more)
4) severance pay (if tenure is 11 months or
more)
5) release letters for all savings plans,
pension plans to the employee’s
ownership.
6) recommendation letter
7) copy and explanation of all final
calculations (severance pay, etc)
8) 161 and 161A tax forms
9) final pay slip and time-sheet
10) make sure all company property has been
returned: keys, swipe card, laptop, cell
phone, car. etc and that the company
employee who receives them from you has
signed off that they have been returned.

Also see the Guest post blog I wrote on this topic:
http://jobmob.co.il/blog/employee-layoff-rights-israel/

Holiday payment directives

Moshe

 

Holiday Payment Directives

 Submitted by Moshe on Wed, 07/04/2010 – 14:17

Holidays are explicitly defined:
2 days Rosh Hashana, Yom Kippur, 2 days Sukkot, 2 days Pesach, Shavuot and Yom Ha’atzmaut.

Monthly employees are entitled to payment for the Holidays that occur during the month for which payroll is paid, since their base pay is monthly based (set). Such employees receive their regular pay and are not entitled to additional pay for the Holidays.

Employees who receive a daily rate (or hourly rate or contractual employees) are entitled to payment for Holidays, provided that they worked at least 3 months at the place of employment and that they were not absent from work the day before and the day following the Holiday, except with the employer’s permission.

Non-Jewish employees: The employer is not liable to pay non-Jewish employees for Jewish Holidays in addition to the Holidays of his/her faith. In this case the employee must choose whether to receive payment for Jewish Holidays or Holidays of his/her faith.

Erev Chag – In work places where the work week is 6 days, work on Erev Chag is 7 hours (payment is for 9 hours- full day) and in places where the work week is 5 days, work on Erev Chag is 8 hours (payment is for 9 hours- full day).

Hol-Hamoed: There are no directives in the law with regard to Hol-Hamoed or the payment for work on these days. As far as the law is concerned, these are regular, normal work days. This is of course unless there is a collective agreement at the place of work which specifies differntly,or if it is specifically mentioned in an employee’s work contract.

This directive commenced by power of the comprehensive mandatory order about shortening the work week to 43 hours, which went into effect on July 1, 2000 and applies to all employees and employers in the State of Israel.

Employee’s Responsibilities Toward Their Employers

Moshe

1. Employees are obligated by law to fill out a 101 tax form for each and every place of employment where they receive a salary (via payslip).

This needs to be done close to your start-date as well as annually, at the beginning of each tax year. The employer usually will issue existing employees a printed version from the payroll program which includes all the existing data, as supplied previously, as it currently appears in the employer’s payroll database. Continue reading “Employee’s Responsibilities Toward Their Employers” →

Everything about Social Security Payment Co-ordination

Moshe

What is Social Security Payment Co-ordination ?
This is called Teum Dmei Bituach Leumi in Hebrew. There are two stages for calculating Social Security and Mandatory Health tax that are automatically deducted from employees’ gross pay. The first stage or reduced rate is 0.4% for Social Security and 3.1% for Health Tax up to a ceiling of 4,809 shekels (Jan 2010)
Any income over this amount, the deductions rise significantly to 7% for Social security and 5% for Health Tax.
If someone is employed by several employers, they will need to have a payment co-ordination done (in addition to the better-known tax co-ordination) in order to avoid paying the higher rates from the first shekel for income earned from the additional employer, as it is possible that there is unutilized portion of the 4,809 shekels that the additional employer can use for the reduced rates.

Who needs to do s.sec co-ordination ?
If a person is employed by more than one employer they will usually need a s.sec. co-ordination.

How do i get a Social Security Co-ordination ?
Up until Dec 2009, anyone who declared on their annual 101 tax form that they have additional income, was required to apply at their local Social Security office for a Co-ordination. If the employee didn’t bother doing it, the employer automatically deducted the higher rates from the first shekel.
Do to a change in the Social Security laws, effective January 1, 2010, the additional employer is allowed to do the co-ordination himself, on several conditions, thus eliminating the need for the employee to take time off work and go in to the Social Security office.

What are the conditions that allow an additional employer to do the co-ordination ?
1. The employee must fill out a declaration via a 644 form (available on the Social Security website – www.btl.gov.il)
I advise using the Hebrew site and not the English as the form doesn’t appear there yet. It is a PDF file that can be downloaded.

The 644 form is a declaration which states the employee’s last gross pay from his main employer.
note: if the pay is over the ceiling (4,809 shekels) this is irrelevant as he has utilized the full amount at the reduced rate and therefore all pay from the additional employer will be at the higher rates.
2. If the employee works for more than 2 employers or he earns more than 75,000 shekels per month, he will need to apply personally at the Social Security office and this form is irrelevant for him.

This declaration needs to be renewed annually along with the 101 tax form and tax co-ordination forms.

What happens to the money I overpaid in previous years ?

While there is a chance that you paid too much money via the Social Security and Health Tax deductions on their payslip from the additional employer, this needs to be checked out individually. You will need to write a letter to Social Security requesting a refund.

How can I know if I was overcharged ?
It is advisable to have this pre-checked by a payroll professional. This is one of the paid services Israpay offers. Interested employees should send an email toMoshe@Israpay.com with their name and contact information

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.

Risk Pregnancy (Shmirat herayon)

Moshe

If a woman is diagnosed by her doctor to be in risk pregnancy, under certain conditions she may be eligible for a stipend from Social Security (bituach leumi).

Section 58 of the social security law defines risk pregnancy that entitles insured women to risk pregnancy stipend; absence from work during pregnancy due to medical condition that stems from pregnancy and endangers the woman or her fetus.

The conditions are:
1) Doctor’s note which explicitly states that the woman is in risk pregnancy.
2) the woman is absent a minimum of 30 consecutive days from work due to this condition.

The woman is entitled to continuous deductions to any and all social benefits (kupot gemel, keren hishtalmut, pension plans) provided she pays her part.

Most employers continue the payments and collect the employee’s part when she returns to work after maternity leave.

This period of time is considered to be continuous work period for tenure, social benefits. In other words, employer-employee relations are still in effect.

Forms for application and more information is available on the Social Security website:

www.btl.gov.il

You are entitled to a hearing before termination

Moshe

If an employer decides to terminate an employee, he is required by law to grant the employee a hearing prior to terminating the employee.
While this may not change the employer’s mind about the termination, it does clear the air by allowing both sides to express themselves and lay everything on the table.

Employers in the public sector and large companies usually do this as standard procedure, while many private sector and small employers tend to ignore this basic issue which gives respect to employees as people.

Failure to grant a hearing to an employee prior to termination, may void the termination. Employees who were not given a hearing prior to termination are advised to file a complaint with the Ministry of Trade, Industry and Labor’s hotline 1-800-354-354 and seek damages for infringement of rights via Labor court.

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.

 

Everything you wanted to know about sick pay but were afraid to ask

Moshe

Okay, even if you weren’t afraid to ask.

Sick Pay is specifically defined in the Israeli labor laws and as such is binding to all employers.
Employers can pay more than the law specifies, but may not decrease from these bare minimum requirements.
An employee is eligible to accumulate a credit of 1.5 days for each month worked, or a total of 18 days per year, but no more than 90 days per year.

The criteria for sick pay
=========================
A doctor’s note which lists the employee’s name, I.D. number and specifies the exact dates the employee was sick, as well as the total number of days, the illness and must include the doctor’s name, address and medical license number.
The note should be from the employee’s Kupat cholim and the original needs to be submitted to the employer (usually HR dept or by attaching to monthly time-sheet)

Payment for sick leave
======================
1st day – nothing
2nd and 3rd days – 37.5% of pay
4th day and on – 75% of pay

Configuration of sick days
==========================
The dates specified (or not) on the sick note can be detrimental in determining an employee’s right to consecutive sick pay or whether the counting of the sick days starts anew.
If someone was sick from Tuesday through Monday, a total of 7 days.
If the sick note list all 7 dates (from… to…) the employee would be entitled to payment as follows:
1st day – nothing
2nd + 3rd days – 37.5%
4th and 5th day – nothing (Friday + Shabbat)
6th and 7th days – 75%

But if the sick note only lists Tues – Thurs (3 days) and a separate note would include Sun and Mon, the payment would be as follows:
1st day – nothing
2nd and 3rd days – 37.5%
for the second sick note, the count of sick days is reset, since they aren’t consecutive days on the sick note.
for the 2nd note payment would be:
1st day – nothing
2nd day – 37.5%

In short, you need to request a sick note from your doctor to include the off days and list all dates that you were absent from work.

If you use a private doctor and not a Kupat cholim doctor, the employer has a right to request the employee to undergo a 2nd opinion diagnosis. If the employee refuses, this could result in a forfeit of sick leave pay.

Children’s illness
==================
An employee can utilize up to 8 days of his/her sick days annually for a illness of a child up to 16 years old. This is provided that the spouse is working and hasn’t taken leave of absence for the illness as well.
If the employee is a single parent they would be entitled to 12 days annually for their children’s illness as part of their sick leave.
In extreme cases, where a child is diagnosed with cancer or other terminal disease and the child is under 18 years old, the employee is eligible for up to 30 sick days for the child, or 60 days if the employee is a single parent.

Spouse’s or parent’s illness
============================
For a spouse’s illness and employee can utilize up to 6 days annually if the spouse is totally dependent on the employee in order to do daily activities (as defined in the social security laws), such as dressing, washing, eating and drinking, etc.
The same applies to an employee’s parents, with the added condition that they are 65 years old or more.

There are many employers who pay 100% for all sick days, provided a sick note from a doctor is submitted by the employee.
In the public sector, there are places of employment that pay an employee a “buyout” of all his accrued sick days that haven’t been used, but this is not mandatory and very unusual.