bituach_leumi

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 !

Work disability insurance אובדן כושר עבודה

Moshe

Loss of work ability is a serious problem and usually results in a sudden and drastic loss of income as well. All salaried employees in israel are protected against a loss of work ability situation by The national social security (Bituach Leumi). In order to receive a stipend a form needs to be filled out and submitted. The form needs to include the employee’s salary information and payroll information for the months preceeding the loss of work ability, as well as the employer’s signature confirming the salary information. Employee’s with pension plans, these usually have loss of work ability insurance built in to the policy. This will usually cover 70% of the employee’s gross pay. Bituach Leumi and pension plan for loss of work ability payments offset each other. An employee can purchase additional coverage so that it will not offset at additional cost. Speak to your pension plan company for more details.

The criteria for payment of loss of work ability insurance are the following:
1. 75% or more of loss of work ability. Approved by employment doctor for as long as this condition continues or the policy ends, which ever comes first. There usually is a waiting period when an employee joins a pension plan until they can file. If the loss of work ability occurs before then, the employee will only receive payment after the waiting period is over.
2. Complete coverage in case of acts of terror.
3. During the period of payment for loss of work ability, the employee is exempt from contributions to the pension plan.

Loss of work ability – rights and benefits

Moshe

An employee who loses his ability to work due to illness or accident may find himself in a situation of loss of income and livlihood. In order to avoid this scenario all residents of Israel are insured against loss of work ability due to illness or accident by Bituach Leumi (Israel’s social security), this via their mandatory monthly contributions via their payslip. These contributions cover many different types of social security: unemployment, old age stipends, child stipends, employer bankrupcy, reserve army duty, maternity leave – just to name some of them).

In addition to Bituach leumi, many employers insure their employees in loss of work ability insurance, although it’s not mandatory. Employees can also purchase loss of work ability insurance privately. All pension plans also include loss of work ability insurance built in to the policy.

It is extremely important that you understand the implications on this subject so that if one finds themselves in this situation they know where to turn and what to do in order to minimize the beaurocracy and ensure they receive what they are eligible for.

    So, what is loss of work ability?

Loss of work ability is when an employee loses their ability to work and earn income due to injury as a result of illness or accident.

Loss of work ability can be temporary (usually up to 3 months – 90 days, after which the employee recovers and returns to work at full capacity) or permanant (non reversable and the employee will not be able to return to prior ability) and may occur in several situations:

1. Complete loss of work ability: the employee is unable to work in any type of work due the injury he/she has incurred.
2. An employee who, due to injury, his/her ability to earn income has declined and his/her pay has reduced considerably.
3. An employee who cannot continue to work in a position that fits his profession or knowledge and education due to injury.

It is important to note that insurance companies include explicit definitions for loss of work ability in the profession of the employee who is insured in the policy.

    Bituach Leumi

The coverage is dealt with by several departments, depending on the type and severity of the injury.
General disability dept

Via a monthly stipend to employees injured due to illness or accident and as a result their income earning ability has been reduced by at least 50%, or by 60% if permanent loss of work ability or 45% if temporary loss of work ability.

    Work related accidents dept

Employees who were injured during the course of work or due to a work related illness (one recognized as a profession causing illness).

    accident dept.

Employees injured in accidents that are not work related (traffic accidents that were not on the way to or from work, household accidents, etc) and as a result are unable to work. This type of injury usually will enable employee to receive monetary compensation for up to 90 days. If the damage is not remedied after 90 days, the employee will need to file for general disability stipend.

Note: The amount of compensation is not based on the employee’s actual income, but rather defined in the Bituach Leumi law and equal for all employees. Someone who had a high income may find he gets less compensation than his/her salary was, sometimes substantially. In addition, Bituach leumi usually pays stipends to those eligible between the 17th and the 20th of the month for the previous month (as opposed to salaries which are paid by the 9th of the month).

    Private insurance policies

Private insurance policies, whether via a collective policy for employees by the employer or via a personal insurance policy the employee took out privately, usually include a waiting period of 3 months prior to eligibilty for compensation. Many policies will include a clause under which the insurance company commits to a retroactive payment for the first three nmonths when the injury is prolonged. There is a provision that excludes monthly contributions in case of a claim on the policy due to loss of work ability. There usually is a separate clause committing to payments according to the policy in addition to Bituach Leumi stipends. The payment from the insurance policy is at least 75% of the average wages in the year previous to the injury (as opposed to Bituach Leumi which is different and much lower).

In short, an employee who has been injured and as a result loses work ability is eligible for money from Bituach Leumi and if insured via a loss of work policy via an insurance company, he would be eligible for money from them as well. If the injured employee is totally dependant on a family member for daily routine (dressing, bathing, eating. etc) the family member may also be entitled from Bituach Leumi and the tax authority. This applies in case of death of the employee as well.

In all cases, it is highly recommended to consult with a certified and professional insurance agent or lawyer who deals with labor laws and loss of work ability. The above advice does not replace the need for such professional advice, is not legal advice and may not be applicable to all cases. It is merely a post with basic knowledge to help employees understand the issue better.

In work contracts for “net pay” who gets the new “family net” benefits, employer or employee ?

Moshe

The “family net” plan, or Kachlon law (named after the Finance Minister Moshe Kachlon) which recently went into effect retroactively from January 2017 added tax credit points for parents of children under 5 and made equal the tax credit points for those children given to men and women. The law will be in effect for the tax years 2017 and 2018 only, unless the knesset decides to add in additional years. If not, the tax credits will return to present state in Jan 2019. Everyone knows that employees with regular gross salaries will receive a larger net pay as a result of this law. But what happens when an employee’s work agreement lists his salary as net ? In general, changes that occur to the tax brackets in a net pay salary will lower the employer’s expense by lowering the gross pay and as a result the taxes, while the employee’s net pay remains unchanged.
In general it seems that this is acceptable practice. But in cases where substantial tax benefits are given to employees, such as the 2001 Negev residents tax benefit, the lawmakers intent was to give this benefit to the employees and not to employers of Negev residents. the same would apply here regarding the Kachlon law. A recalculation of the new net pay would need to be done by using the gross pay, pre change and after adding the change configuring the new net pay.

The above is not legal advice nor is it a replacement for seeking such legal advice. It is the professional opinion of the author based on a labor court decision regarding net pay and tax benefits.

The Israeli Pay Slip – An In-depth Explanation for The Perplexed

Moshe

As with most things, payroll is much more complicated in Israel than in other countries. In January 2009 a new law was passed to ensure uniform mandatory information that must be specified on all pay slips.

The purpose of this article is to familiarize you with the terminology and help you understand what is printed on your pay slip. For those of you working, it is highly advised to examine your pay slip each month in order to ensure that there are no mistakes. Understanding what was paid/deducted from your pay is critical and to your benefit.

Continue reading “The Israeli Pay Slip – An In-depth Explanation for The Perplexed” →

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

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/

Is an employer required to give holiday gifts to his employees ?

Moshe

There is no directive or law that makes holiday gifts to employees mandatory. It is however, a nice gesture and one usually well appreciated by employees. The right of employees to a holiday gift may be embedded in an individual work contract or a collective work agreement, an expanded regulation order based on a collective agreement or common practice in the past in the place of work. In any of these cases, the employer would be bound to the agreement.
In the public sector, this is specified in the collective work agreement.

If an employer does give employees holiday gifts, with regard to eligibility of employees who are currently on non-paid leave, maternity leave, etc, if it is common practice at the palce of work, it is the employer’s discretion whether to give employees currently not receiving pay or not and how much.

Some employers give permanant employees one gift and a lesser gift to part-time or temp employees.

With regard to taxes; section 2 (2) of the Income Tax Order specifies that “any benefit given to an employee by an employer, whether money or value of money (coupons, actual gifts), whether directly given or indirectly given, are considered taxable income”. The result is that gifts, or their actual worth, are taxable  (income tax, social security and health tax) and they need to be separately itemized on the payslip. Most employers will pick up the tab on the taxes (although it is not mandatory), as it’s not the employee’s fault that the employer decides to give him a gift. That basically means that if the employer gives say 350 sh in coupons, he would add a separate item on the payslip for 350 sh net, the taxes would be deducted but the employee’s net pay would not be efeected due to the gift.

gift

Announcing the release date for Employee’s Rights Handbook !!!!

Moshe

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:

<a href=”http://www.vcita.com/v/israpay/make_payment?pay_for=Employee’s%20Rights%20Handbook&amount=100″ target=”blank”>pay</a>

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 moshe.israpay@gmail.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

Israpay
P.O. Box 44429
Jerusalem 9144302

 

 

 

 

Change in Bituach Leumi law 1.1.2015

Moshe

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employer’s Social Security contributions to rise from January 2015

Moshe

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.