Self-employed individuals who are called up for reserve army duty in the IDF will be getting 25% more than they did up until now. The Knesset approved this update to the law on June 27, 2017 and it will be effective from Jan 2017.
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!
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?
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,
* 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.
Finally, the long awaited Employee’s Rights Book is to be released in Hard copy. The release date is Sunday March 15, 2015
At present, this is the only format. There may be a PDF purchase option at a later date.
The book is 107 pages of vital information for employers, employees and anyone interested in Employee’s rights, labor laws and the makeup of payroll in Israel.
Announcing the first and only English language guide in simple easy to understand language !!!
The Book also contains a dictionary of common Hebrew payroll terms and their English translation, examples of payroll forms, useful contact information, tips and more.
Get your copy today, and know your rights !
price: 100 sh (including mailing). Optional self-pickup in Jerusalem (85 sh).
Payment via credit card or paypal, use this link:
or follow the schedule an appointment on the left hand side of the home page of this site.
If you encounter a scheduling error notice, send the following details:
(Name, mailing address, email address, phone/cell number. If you wish that the invoice be made out to a different name than the one you supplied, please state)
to email@example.com and An invoice will be emailed to you. When you open the invoice you will have the ability to pay.
Check payments option: send a check made payable to Moshe Egel-Tal along with the above info to
P.O. Box 44429
Correction 159 of the Bituach Leumi law goes into effect on January 1, 2015.
According to this correction, Bituach Leumi will no longer be able to demand payment of Bituach Leumi (social security) and Bituach Briut (health insurance) if more than 7 years have passed since their first demand of payment. After this period, the Bituach money shall not be collected, nor shall it have any effect on any rights to a stipend or benefit, if the following two conditions have been met:
1. No additional demand of payment notification was sent during the period of 7 years since the first notice.
2. Said notification in #1 above was sent, however no collection procedures or offsetting of the due amount from stipends or benefits paid were taken.
There are specifics reagrding payments due on January 1, 2015 that a period of 7 years has not elapsed yet, and with certain payments due that allows Bituach Leumi to collect up to June 30, 2016 if 16 years have not yet passed.
The employer’s contribution towards Social Security (Bituach Leumi), on the higher bracket, has been raised from 6.75% (Dec 2014) to 7.25%, for employees age 18 to retirement age, starting in January 2015.
A raise of 0.5%.
The employee’s contribution remains without change.
Many people move, sometimes temporarily, whatever the circumstances are, according to the law, an employee needs to update his/her employer within 7 days of the change (i.e. fill out the changes on your 101 tax form).
Notifying utilities and Municipality, etc can also be challenging, but many allow phone or email notifications. These are almost always done, as it’s in the person’s best interest, so they will recieve their mail, services (or stoppage of service). But people usually don’t have the time to go in to their local Ministry of Interior office and waste several hours in order to update their Israeli I.D. card (Teudat Zehut). People are working or studying and just do not want to be bothered. There should be some form of secure on-line form that can be updated with the relevant information, but that would be too efficient and some public sector employees might lose their jobs.
Well, the following is a completely true story that may make one reconsider taking the time off and updating their I.D. card:
My friend, Yossi lived with his parents and when he married, he moved with his wife to a different town. The town was a few hours travel from his parent’s house. He didn’t update his address on his I.D. card. He got a job in the new town and worked for the same employer for 3 years. One day Yossi gets a letter from Social Security (Bituach Leumi) saying he hasn’t paid social security for the past three years and failure to do so, as legally required by law, may result in fines or imprisonment.
Obviously, Yossi gets scared from the letter and shows up at the local Social Security office in the town where he lives. He brings with him his payslips from the last three years. On the payslips is Yossi’s full name, his Israeli I.D. number and his address of residence. Yossi shows the payslips to the clerk and to his astonishment he is told that the money that was deducted from his pay was not credited to his account because he does belong to this particular branch of Social Security, but rather in the town where his parents live !
The fact that all branches are connected via computer network and it seems just a silly beaurocratic issue, he was told that he needed to physically go into the local Interior Ministry office nad change his address and then travel to his former town, to the Social Security office and ask that his file be transferred to the new town. All his reasonable arguing to no avail. To top it off, while he is sitting in the Social Security office he gets a phone call from his wife who tells him that their car and some possesions have been confiscated by the Social Security office as collateral until he pays his due!
Needless to say, he had to take a day’s vacation and waste it on setting the records right with the authorities. After all is said and done, they actually refunded him 600 shekels that he was overcharged.
Food for thought.
Employer’s contribution rates towards Social Security (Bituach Leumi) for salaried employees, on the portion of salary over 60% of the average salary (currently 5,297 sh but due to be updated) will be 7% starting January 2014’s payroll (up until Dec 2013 it was 6.5%).
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 thru 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 trageting.
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 chnaged 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 comunication 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 precident 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 deny ?
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 recieve 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 !
Many Olim do not understand why they need to pay Bituach Leumi and Health Tax from their salary. “I pay my health tax to Kupat Cholim, so this is a double tax” or “I have health insurance from abroad – I don’t need it, so can’t I just tell my employer to cancel it and not deduct it from my pay ?” are just a few of the questions I am asked frequently.
Well, no, you cannot just cancel it. Let’s start at the beginning: Before this started ( the mandatory health tax) in Jan 1995, people could choose not to be a member of a health fund (kupat cholim) and they weren’t insured. Each fund had it’s own criteria and could accept members, or not, according to their own criteria. These included past medical history, so for example, someone who had diabetes would not be able to choose which fund they wanted but were only accepted to Klalit.
The other thing was that each fund had different rates that were based on the member’s gross income. There were problems with this system too. If both husband and wife worked they paid more than if only one of them worked.
Let’s say that someone was wealthy, but was doing internship as a lawyer and thus making minimum wage, they would pay the minimum where someone else who made a bit more than that and maybe wasn’t as wealthy might pay double what the wealthy intern was paying.
Many people would forge payslips in order to get reduced rates.
The Health Ministry by introducing the mandatory health law put all of this in the past. Everyone who has Israeli citizenship must have a health fund. You can choose any fund and they must accept you. Today this is done simply by filling out a form at your local post office with your teudat zehut.
The basic coverage is deducted from the salary and transferred by the employer to Bituach Leumi each month. Each fund has additional coverage packages that are optional and one needs to sign up via the fund directly. payment is between you and the fund and there is no connection to your employer or your payslip.
The problem is that these additions are not cheap, but without them you will not get very much insurance at all. The basic insurance covers only what is specified by the law. (the coverage is updated from time to time – usually when the state budget is passed in the knesset)
So, in a way- Yes it is a double tax. If you work you pay, if not, not. However it is mandatory and not optional. If both Husband and wife are working you’re both paying, if only one works, the other is exempt from payment, either way you get the same coverage.
Employees that are Foreign workers or receiving an old-age stipend from Bituach Leumi are exempt from paying the health tax via payroll. (As opposed to Kupat Cholim payments which are a type of Insurance and non-payroll related. – contact your local Kupat Cholim for rates, etc)
Bituach Leumi is Social Security. The months that you work ensure that you procure credit for them via the deductions from your salary.
You are buying coverage for the following:
- old age stipend (Women from age 62 and men from age 67)
- work-related accident
- maternity leave
- employer bankruptcy
- loss of work ability stipend
- health insurance
|Age||Social Security||Health tax||Who pays|
|18 – retirement age||0.4 % / 7 %||3.1 % / 5 %||employee|
|18 – retirement age||3.45 %||5.9 %||employer|
|up to age 18 or above retirement age and receiving old age stipend||0.38 % / 0.93 %||exempt||employer only|
|From retirement age – (but not receiving old age stipend)||0.27 % / 4.86 %||3.1 % / 5 %||employee|
|From retirement age – (but not receiving old age stipend)||3.15%||5.38%||employer|
|Above old age stipend age (but not receiving old age stipend)||exempt||3.1 % / 5 %||employee|
|Above old age stipend age (but not receiving old age stipend)||0.38 % / 0.93 %||exempt||employer|
|Foreign employee||0.04 % / 0.87 %||exempt||employee|
|Foreign employee||0.49 % / 1.17 %||exempt||employer|
|Employee on non-paid vacation||6.57 % from min wage||exempt||employee|
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.
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 ?
- 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)
- Pension/ Gemel fund if the employer owes money to a fund that the employee is ensured with.
- Member of a co-operative who has been a member of a Kibbutz or a collaborative Moshav for at least 7 years
- 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.
- Foreign workers / Yehuda – Shomron workers are eligible provided they have legal and valid work permits and visa. Illegal aliens 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
- 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.
- 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.
- 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.
- 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)
- 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)
- 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).
- 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.
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.
- 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)