Employment

In this section you’ll find tips regarding employment and employer/employee relations. To keep up-to-date please subscribe to this blog using the SUBSCRIBE link in the sidebar.

Are you a salaried employee or self-employed ?

Moshe

Are you a salaried employee or self-employed ?

There is a huge difference ! Not only in the benefits you are entitled to, but in regard to your responsibilities. No, I am not talking about your social benefits or your salary. I am talking about Social Security (or Bituach Leumi as it is known in Israel). Before you say that of course you know what your status is, I suggest you read this post through to the end. It may have some eye-opening surprises for you that can have serious impact on you, financially.

Many people own companies or are suppliers of services as self-employed. There are people who work legitimately as salaried employees, and some do a little of both.
Others have start-ups they run from home: anything from selling things, to doing work over the computer, whether it be building internet sites or translating work, or whatever.  It is this last group that this post is targeting.

First, it is important to understand that while both self-employed and salaried employees pay Social Security, the rates are different and so is the coverage for various stipends as well as the base amounts for the stipends.

If you are considered by Bituach Leumi to be self-employed, but you are reported on a company’s payroll (not a placement or manpower agency), that fact does not make you a salaried employee. What counts is your actual status. Bituach Leumi, by law, can change a person’s status one-sidedly and even retroactively ! As a result of such a change they can demand back payment at the rates that existed for self-employed persons ! If you received in the past, during the said changed period, a stipend from Bituach Leumi, your eligibility for that stipend may be re-evaluated and even disallowed.

Recently, a verdict was released by the labor court in a case of “stage and communication ltd” and others vs. Bituach Leumi (case # 5062/06). Bituach Leumi one-sidedly changed the status of certain “employees” in the company. The company and the employees filed suit in labor court contesting the change.
The court, asked the simple basic question “did employee-employer relations exist between certain employees who were on the company’s payroll as salaried employees and reported as such ?”. The verdict explicitly stated that there were no such relations and these “employees” should have been reported as self-employed for all purposes.

The Judge stated in his verdict the following: “The model of employment, which all of the plaintiff companies involved in the suit, used was in actuality a front. These companies only designation was to relieve self-employed people from the burden of managing their affairs with the tax authorities and the defendant (Bituach Leumi). There is no relationship or connection between the plaintiff companies and the services the employees, who were reported as salaried workers, provided to the recipients of the services. The only reason the employees were on payroll as salaried employees was to avoid having to manage their affairs with the authorities.”

This is a precedent setting, important verdict, the first of it’s kind, in a very lengthy case.

This is how you can check yourself to see if you qualify as a salaried employee or as a self-employed person

Answer the following questions truthfully. If your answer to any of these questions is negative, this very well could mean that you are self-employed:

1. Is there someone who arranges your schedule at work ?

2. Is there someone at work who assigns or re-assigns you to a project/position ?

3. Is there someone at work who has the power and authority to fire you and terminate your job ?

4, Is there someone at work that you need to request vacation leave from ? Or to notify regarding tardiness, sick days, reserve army duty, etc  ?

5. Is there anyone at work who supervises your work and you report to as a superior ?

6. Is there any type of time-sheet reporting and follow-up for your work hours and days ?

and if your answer to any of these questions is positive this very well could mean that you are self-employed:

7. Do you decide which clients/ jobs to accept and which to reject ?

8. Do you negotiate with clients the price they will pay or determine the cost for jobs ?

9. Are your wages implemented by sharp up and down changes due to the cash inflow that you receive from third parties ? And as a result is it difficult to point out your monthly base pay ?

10. Is payment of your wages delayed until the amount is received in full from a third party ? (not paid on a set date)

If the answer to these questions is negative, chances are you are not eligible to be a salaried employee. You need to register as a self-employed individual at your local Bituach Leumi office in order to ensure your rights. Don’t wait for them to rescind your salaried employee’s rights retroactively. More information can be found on Bituach Leumi’s website:  www.btl.gov.il

This is not something to be taken lightly !

The right to an hour off work/day when spouse is in active reserve army duty

Moshe

IDF soldiers in action
The women’s employment law was updated on July 3, 2017 (correction 58). Accordingly, an employee will be eligible to be absent from work for one hour per day during the period of time when their spouse is in active reserve duty (miluim) in the I.D.F. under the following circumstances:

1. The period of the spouse’s active reserve duty is no less than five consecutive days.

2. The employee has at least one child under age 13.

3. The employee is employed in a full-time position as accepted in place of employment.

4. The employee notified the employer of the intent to utilize this right and presents the employer with a copy of the spouse’s proof of actual active reserve duty.

The above applies to men and women.
Payment for above hours are not to be deducted from salary.
This does not apply to employees who are eligible for paid parent (breast feeding) hours or pregnancy hours.

Prevention of discrimination in acceptance to a job

Moshe

It is forbidden by law to discriminate against candidates for employment or against employees due to gender, age, religion, nationailty, country of origin, political beliefs. The equal employment opportunities law (1988) requires employers to pick out only relevant information about the candidates for the position they are looking to fill. If anyone is discriminated against they can contact the Equal opportunities commission for initial legal consultation. If the commission feels a case is justified they may take legal action against the offending employer. People who feel they were discrimated against may file a suit in labor court. The Equal opportunities commission contact information is:
The Equal opportunities commission נציבות שוויון
Address: 5 Bank of Israel st. Govt. quarter, Jerusalem כתובת: בנק ישראל 5, קריית הממשלה, ירושלים
Mailing address: P.O. Box 3166 Jerusalem 9103101 ת.ד. 3166, מיקוד
Tel: Tel-Aviv טלפון: ת”א – 03-7347215
Jerusalem ירושלים 02-6662367, 02-6662780
Haifa חיפה – 04-8613902/1
National commission נציבות ארצית – 02-6662701
Email: shivion@Economy.gov.il :דואר אלקטרוני

    Want ads

      A good want ad is one that describes the position and the requirements the employer seeks and encourages job seekers to apply for the position. When an employer places a want ad for a position. It is supposed to give the professional backround required while appealing to the widest range of potential candidates. the language and wording used, as well as any illustrations should reflect this. Avoid using language or wording that applies to one gender, a specific age group, color, ethnic backround, religion, nationality or residents of a certain area(s). Also avoid direct discrimination, such as “wanted: good looking men” or “looking for young woman”. Avoid circumventive discrimination, such as if a postion requires very little verbal communication do not write in the ad “high level command of Hebrew required”.

    Job interviews

Not all questions are legal in a job interview. Personal questions such as “are you pregnant?”, “Do you intend on having more children?”, Aren’t you too old for this job?”, “do you smoke?” are totally illegal and also irrelevant. Employees who are asked illegal questions that do not relate to previous experience and knowledge should be met with a smile and “This question has nothing to do with the position, let’s please keep this interview professional.”
Questions regarding a candidate’s army service or National service – or lack of either, or whether they serve in reserves, what their rank is are also prohibited.
Employers are advised to have more than one interviewer present at job interviews and if possible should be representative of different groups of the population which will usually drastically reduce the chance of any discrimination occurring. Remember that as much as you are screening candidates, they are screening you as well. Keep it professional.

In cases where a candidate feels he/she was discriminated against, it is advisable to consult first with the commission and if necessary with a lawyer who specializes in labor law.

Employers – 6 simple rules to follow and substantially illiminate law suits by employees

Moshe

From our years of experience, it is very clear that employers who follow these six simple rules (which just happen to be labor laws and regulations that are mandatory for all empployers, in both public and private sectors, in Israel) will reduce drastically the number of suits by employees and former employees. Most of the lawsuits filed in recent years deal with these issues. They are really simple to adhere to and can save you literally time and money.

1. Sign all new employees, within 30 days of their start date (or within 7 days of start date if they are under 18 years of age), on a notification of employment conditions or a contract. This should be done prior to starting to work, or first thing on the first day of work along with other technical things like filling out 101 tax form, issuing a time card, etc
If you use a contract it must contain all of the information on the notification of employment terms form, which is downloadable here:
http://economy.gov.il/Employment/WorkRights/WorkingRelationshipsCreation/Pages/WorkingConditionsNotification
This will illiminate any disputes regarding terms of employment of employees and possible monetary lawsuits for failure to provide this for sums of up to 15,000 sh without need to prove any damage.
A new notification needs to be issued any time that any of the mandatory details change.

2. Make sure all employees have received their salary, payslip and time-sheet by the 9th of the month following the month of salary being paid (For example: June salary – by July 9th). Make sure the payslip is itemized and clear and includes all mandatory information required by law. Eliminate future lawsuits for up to 5,000 sh for each payslip, without need to prove damge. Failure to provide a time-sheet can result in lawsuits for overtime pay and a fine for each month for each employee by the regulation dept of the Ministry of Economics.

3. Do not fire an employee before correctly holding a preliminary hearing according to protocol and avoid lawsuits of tens of thousands of shekels for Illegal termination.

4. Keep track of all employee’s sick days and vacation days balances to avoid unnecessary disputes during employment and possible monetary lawsuits for failure to do so.

5. Insure your employees with mandatory pension plan after six month’s tenure, if they dont have a previous pension plan, or after three month’s tenure if they do have a previous pension plan – in which case its retroactive to the employee’s start date.

6. The more you are transparent with your payslips: itemizing each payment separately and clearly it will be easier understood and avoid any unnecessary disagreemtns and future lawsuits.

Israpay has over 20 years experience in implementation, setup and fine-tuning payroll programs and we will be happy to assist you in ensuring you comply with all the labor laws, regulations and statuary instructions. Get in touch today and see how we can help you save time and money !

Youth minimum wages – Jan 2017

Moshe

Due to the mandatory raise in minimum wages in Israel, the minimum wages for youth was also updated.

up to age 16 = 3,500 sh for a monthly wage or 20.23 sh /per hour.

up to age 17 = 3,750 sh for a monthly wage or 21.68 sh /per hour.

up to age 18 = 4,150 sh for a monthly wage or 23.99 sh /per hour.

In addition, for full time, the work week for youth is 40 hours and 173 hours per month. For partial work (not full time – prorated accordingly)

All youth need to be given an employer’s notification of terms and work conditions within 7 days of their start date and monthly payslips and timesheets, same as adult employees.

Everything you wanted to know about Financial sanctions to employers

Moshe
dollar stacks

The second addition of the Increasement of regulation law empowers the Ministry of Economics, Department of regulation of labor laws to impose financial sanctions on employers who are found in violation of labor laws, such as minimum wage, sexual harassment, failure to supply an employee with notification of terms of employment, etc.
The infringements are divided into three categories of financial sanctions with a distinction made between an employer who is not a business and a business:

Level Business Non-Business
level one ₪5,110 ₪2,550
level two ₪20,420 ₪10,210
level three ₪35,740 ₪17,870

A complete list of the infractions and which level they are assigned to is on the Ministry’s website: http://www.economy.gov.il/Employment/WorkRights/WorkRightsEnforcement/Pages/FinancialSanctionSums

The Ministry of economics can file a suit against the employer in court, which if convicted, is a criminal offense! The names and details of the employers who were fined are listed on the Ministry of Economics website.
To help avoid these situations it is recommended to consult with a payroll expert like Israpay who can help employers fine-tune their payroll practices, payslips, etc according to the law. Get in touch today !

Before you apply for a job – must read !!!!

Moshe

You decide to apply for a job, or better yet, you applied and were invited to an job interview. Wait a second, not so fast !!!
The Ministry of Labor and social affairs within the Ministry of Economics has a list of employers that you are not going to want to miss reading prior to applying for a job with one of them.
This list is a list of offenders of labor laws that were fined by the department of regulation, who do spot checks on employers as well as acting on tips and complaints from the general public.
The full list can be seen here:
http://www.economy.gov.il/Employment/WorkRights/WorkRightsEnforcement/FinancialSanctions/Pages/default.aspx

July 2016 updates

Moshe

Effective in July 2016’s payroll there will come into effect several changes in labor laws:
1.  Mandatory pension law

Correction 12 to this law was updated, adding 1% to employee and employer pension plan contributions in a two step update: 1/2% in July 2016 and another 1/2% in jan 2017.
The current update (July 2016) % are now Employee 5.75% and Employer 6%.
This effects all employers in Israel in all sectors by way of a comprehensive ordinance signed by the Minister of Economy. The only exceptions are if the exsisting % are higher (due to a collective agreement or personal contract) or if an employee has a Bituach Menahalim plan or pension plan with lower rates but the employer contributes to a loss of work ability insurance (IWA), whereas the joint % of the Bituach Menahalim and lWA insurance is equal to or higher than 6%. In this case, only the employee’s contribution will increase, as the employer is already contributing at the new % or more.
For comparison, here is a breakdown of pre-change and after:

 

payroll Employee contribution Employer contribution Severance pay (employer) Total
Jan 2016 5.5%    6% 6% 17.5%
Jul 2016  5.75%  6.25% 6% 18%
Jan 2017  6%  6.5%   6% 18.5%

 

2. Vacation day law
The minimum number of mandatory Annual vacation days allotted is to increase by 2 days starting July 1,2016 (In essence 1 day for 2016 as it for half a year) for the first 5 years of tenure with the same employer. Above 6 years there is no change.

tenure                                      # of days allotted

up to June 30, 2016                                                         1 – 4 years                                              14 days
5  years                                               16 days

From July 1, 2016 – Dec 31,2016                                1 -4 years                                                15 days
5 years                                                 16 days

From Jan 1, 2017                                                                1- 5 years                                               16 days

Note: The number of days listed are calendar days, not work days and as such they include the weekly rest day (Shabbat) which is not a vacation day. For example employees who worked a 5 day work week got 10 days for the first 4 years (.083 days per month * 12) and those who worked a 6 day work week got 12 days for the first 4 years (1 day per month * 12).

This is very general, there are other factors that go into what employees receive in actuality, such as full or part-time, if an employee worked at least 200 or 240 days total during the year. In any case the wording of the law is binding, even if difficult to comprehend and this article is not legal advice. In instances where a personal contract or sectorial/ collective agreement entitles employees to more vacation days than listed above, this update does not apply.

3. Minimum wage update

Effective July 1st 2016 the third step of the gradual update of the min. wage to 5,000 sh per month comes into effect. The new minimum wage starting in July 2016 will be 4,825 sh  for a full time monthly rated position.

The new minimum hourly rate is 25.94 sh

Youth min wage rates

Age % of min wage min monthly rate (40 weekly hours) Min Hourly rate
עד 16 70% 3,377.5 ₪ 19.52 ₪
עד 17 75% 3,618.75 ₪ 20.92 ₪
עד 18 83% 4004.75 ₪ 23.15 ₪
Apprentice 60% 2,895.00 ₪ 16.73 ₪

 

Employee’s Rights Handbook

Moshe

The “Employee’s Rights Handbook”

The first comprehensive, English language guide to Israeli payroll.
Whether  you are an employer or an employee, a new oleh or an English speaker who has trouble with the Hebrew terms, this publication is for you!

 

Employees:

Understand the terminology, layout and the Hebrew terms on your payslip

Know your rights

Understand the labor laws

What mandatory things need to be itemized on the payslip?

What are the things you need to know upon termination?

How many vacation days are you entitled to?

Is Purim a paid holiday?

What are the rights of a pregnant employee?

 

Employers:

Do your payslips comply with all the new regulations?

Do you issue employees “notification of terms of employment” as required?

Are employees given a fair hearing prior to termination?

Understand what obligatory payments exist in Israel

What is allowed to be deducted from an employee’s salary?

Is an employee who is on maternity leave allowed to work from home?

Must I pay travel expenses to all employees?

What can and cannot be deducted from an employer’s salary?

Are you aware of penalties for infringement on regulations and labor laws? (avoid this by knowing what needs to be done)

 

In this guide you will find:
* An overview of labor laws, regulations, expanded regulation orders, collective
agreements and statutes

* The make-up of the Israeli payslip

* Social Security

* Health Insurance
* Income tax

* Holiday pay, sick day payment, vacation, overtime payment, bereavement leave,
maternity leave

* Minimum wage

* Youth employment
* Advance notice

  • Tips             And much more!

 

A must for employers and employees alike. Get your copy today! This 107 page publication in hard-copy is not available in stores OR Anywhere else, get your copy today !

Price: 100 sh

For orders please go to: Order Here and fill out your details. You will receive an E-invoice for payment after which your book will be mailed to you. Self pickup is available in Jerusalem: Please state if you are interested in this option.Employee's Rights Handbook

Updated Min. wage for youth – Apr 2015

Moshe

On April 1, 2015 the minimum wage in Israel was updated. This has implications on min. wage for youth, as well.

The new rates are as follows:

Age                               Monthly Rate            Hourly Rate    

up to 16                        3,255 sh                                18.81 sh

up to 17                        3,487.50 sh                           20.15 sh

up to 18                        3,859.50 sh                          22.30 sh

18 +                               4,650 sh                               25 sh

 

There are other restrictions that apply to youth employment, such as max. number of hours pre day and per week, disallowing overtime and night work.

 

Announcing “Employee’s Rights Handbook” book launch and lectures

Moshe

Book launch and lecture will be held:

In Jerusalem: on May 19th, 2015  19:00  at AACI Jerusalem, The Glassman family center Pierre Keonig st. corner of 2 Poalei Tzedek st., 4th floor (opposite Hadar mall)

In Tel-Aviv: on June 17th, 2015 16:00 at AACI Tel-Aviv, 94 A Allenby st.

 

The “Employee’s Rights Handbook”

The first comprehensive, English language guide to Israeli payroll.
Whether  you are an employer or an employee, a new oleh or an English speaker who has trouble with the Hebrew terms, this publication is for you!

 

Employees:

Understand the terminology, layout and Hebrew on your payslip

Know your rights

Understand the labor laws

What needs to be itemized on the payslip?

What are the things you need to know upon termination?

How many vacation days are you entitled to?

Is Purim a paid holiday?

What are the rights of a pregnant employee?

 

Employers:

Do your payslips comply with all the new regulations?

Do you issue employees “notification of terms of employment” as required?

Are employees given a fair hearing prior to termination?

Understand what obligatory payments exist in Israel

What is allowed to be deducted from an employee’s salary

Are you aware of penalties for infringement on regulations and labor laws? (avoid this by knowing what needs to be done)

 

In this guide you will find:
* An overview of labor laws, regulations, expanded regulation orders, collective
agreements and statutes

* The make-up of the Israeli payslip

* Social Security

* Health Insurance
* Income tax

* Holiday pay, sick day payment, vacation, overtime payment, bereavement leave,
maternity leave

* Minimum wage

* Youth employment
* Advance notice                       And much more!

 

A must for employers and employees alike. Get your copy today! This 107 page publication in hard-copy is not available in stores, on-line orders:

 

http://www.israpay.com/announcing-the-release-date-for-employees-rights-handbook/