David is a small employer. In order not to raise his monthly payroll costs but at the same time abide by the labor laws, he pays the annual Havra’a payment in 3 installments: in April, June and August. The first two payments were paid at the known rate at the time of payment (previous June’s rate) and the last payment in August employees received the updated new rate.
While employees would rather receive the full amount in one payment, it is the employer’s decision and yes, it is legal. There are some employers who divide the payment into 12 installments thus making their monthly payroll costs even more evened out.
This payment needs to be itemized separately on the payslip and the rate must be updated annually, on the 1st of July each year.
David’s employees signed a petition requesting a retroactive payment for all employees on the rate used to for the first two payments.
So, is David required to pay the difference in the rate for the first two installments to his employees in April and June when the new rate becomes known in July or on August’s installment ?
The answer is no. Since the payment is always according to the last known rate, the employer has fulfilled the wording of the general collective agreement.
