The mandatory pension rates have been updated from Jan 2013 onwards as follows:
Employee – 5%
Employer – 5% + additional 5% towards severance pay.
total 15%
This is the 6th update out of 7. The law which began in Jan 2008 to ensure a pension to all salaried employees in Israel.
In 2014, the last update will come into effect.
All employers know that their monthly payments and reporting to V.A.T., the Tax Authority & the National Insurance Institute (Social Security) (including payments deducted from payroll) need to be filed and paid by the 15th of each calendar month for the previous month.
But is this necessarily true ?
A recent notification to employers, by the Israel Tax Authority, dated December 10, 2012 states the following:
1. According to the wording of the V.A.T. law and the directives of the Income tax directives, periodic reports and payments must be filed by the 15th of each month, each report and payment according to the applicable laws regarding them.
2. As per the above laws it has not been determined that if the 15th of the month falls out on the weekly rest day of the person/entity who is required to file and pay, the date of payment is deferred to the next business day.
3. However, in order to facilitate the members of all religions in Israel, the management of the Israel Tax Authority has decided that if the 15th of the month falls out on the weekly rest day of the person/entity who is required to file and pay, according to his/her religion, reporting and payment will be delayed until the next business day after the aforementioned weekly rest day.
What does this mean ?
Usually, when the 15th of the month fell out on Shabbat or Holiday, people would pay the day before, so as to avoid possible interest charges on tardy reporting and payments. the above referendum makes it clear that the Tax Authority is aware and sensitive to the people and will allow reporting and payment after the 15th when the weekly rest day or a holiday falls out on the 15th of the month, without chancing extra charges for late filing/payment, thus easing pressure to finish up prior to the 15th.
The above referendum can be found on the Tax Authority’s website:
http://taxes.gov.il/IncomeTax/Pages/IncoeTaxMeidaMaasikim.aspx
(they recommend best results using internet explorer browser)
Submitted by Moshe on Tue, 23/11/2010 – 00:12
The Administration of order and enforcement of labor laws takes a lot of action in implementing the directives of the labor laws in the State of Israel. The Labor laws, whom the administration has been trusted with enforcing, are defined as protective laws, that make up the legal infrastructure of the Israeli employment market. the purpose of these laws is to set a minimum Raff and to determine basic social rights for employees. These rights are expressed in setting employment terms for employees, that come to ensure a person’s honor, his ability to self fulfillment, equality, division of justice and more. A good portion of these laws have considerable financial significance and they increase the minimum wage to be paid to an employee, with aim to ensure a relatively appropriate standard of living in exchange for his work.
The Administration, as both the professional and authorized agent, coordinates under it’s auspices the enforcement of 19 labor laws, and locating violators and minimizing the detrimental treatment of salaried employees in the lower pay scales.
Goals:
1) Implementation of labor laws via efficient and effective mechanisms of
licensing and enforcement.
2) Creating and establishing practical basis for cooperation with internal and
external enforcement partners.
3) Intensifying both employer and employee awareness to directives of labor
laws within the administration’s responsibility.
The administration’s actions, both criminal and administrative are accompanied, guided and handled by the legal bureau of the Ministry of Industry, Trade & Labor.
Please note that while all complaints are followed through, a complaint may not necessarily solve your own personal issue with the employer and further action by you may be needed.
The administration can be contacted as follows:
Voicemail for complaints: 1-800-354-354 (can be done anonymously)
Tel: 03-622-3116
Fax: 03-682-8690
Email: achifa-ma@moital.gov.il
The administration of order and enforcement of labor laws
Derech Salameh 53
Tel-Aviv
Submitted by Moshe on Sat, 09/10/2010 – 23:18
The mandatory pension law was recently updated (Sept 7, 2010).
Originally planned for gradual annual updates from 2008 – 2013, when the mandatory % will reach 15% (5% employee, 5% employer and 5% severance pay -employer)
The new revision now ads another year (2014).
Starting Jan 1, 2014 the mandatory pension will be 17.50% as follows:
employee – 5.5 %
employer – 6.0 %
employer (pension) – 6%
The mandatory pension revision also specifies:
1) that it applies to employees who retired at retirement age and receive a stipend from social security (Bituach Leumi).
2) An employee who begins work at a new place of employment and is insured in a pension plan from his previous place of employment, will be eligible to receive the percentages specified in the mandatory mandatory pension law from day one with the new employer.
see the full wording of the mandatory pension plan here:
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 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.
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.
A new law recently passed in the Israeli parliament has determined that employers who fail to pay their employees payroll on time, will be considered to have committed a criminal offense.
Worker’s unions have expressed hope that this new law will help curtail employers taking advantage of employees by repeatedly delaying payments of payroll and social benefits.
The law states that pay for the period ending on the last day of the month needs to be paid by the first of the following month, but this is not enforced until the 10th of the month.
(This basically means that employers can pay on the 9th and not be violators of the law).
Many employers, especially in the private sector use this as an excuse and pay on the 9th on a continuous basis. They say that it is difficult, if not impossible to process payroll in one day. For those employers that want to pay on the 1st of the month, there are creative ways around it but it really comes down to the employer’s willingness to want to pay on time.
Some employers just do not care. After all, how many employees are willing to take their employer to court and risk losing their job ?
The new law gives the Minister of Trade, Industry and Labor the power to issue a warning or fine of 35,000 shekels to violating employers. The minister can even increase the fine for each additional day that payroll isn’t paid. For repeating offenders the fine can double itself.
The minister is also empowered with the ability to press criminal charges when the delay of payroll payment is 90 days or more and in such cases the court can send the employer to prison for half a year.
The above is not in place of an employee filing a complaint with the labor court. The ministry has a department that deals with enforcement against employers who fail to comply with the law.
Anyone can leave information anonymously on the ministry’s hotline voice mail and each case will be looked into by the authorities.
The hotline number is: 1-800-354-354
There is generally some confusion as to the exact number of vacation days an employee is entitled to. This is due to the fact that the wording of the law uses the term “days” and not “work days”
According to the directives of this law, all employees are entitled to paid annual vacation. Vacation days are included in the basic labor laws and cannot be waived.
Special employees, as defined by additions to the annual vacation law, may be entitled to enlarged allotment of vacation days under certain conditions. For example: Employees who deal with radiation that comply with the conditions in the addition to the law are entitled to 21 days annually, Nurses, Doctors, and others who come in contact with sick people, under certain conditions outlined in the addition to law are entitled to 42 day annually. But in these cases the vacation days cannot be accumulated beyond the year, they need to be utilized.
The vacation days must be consecutive, unless both employer and employee agree, then at least one week must be consecutive and the rest can be sporadic. This is probably the reason for the wording of the law to begin with.
Vacation days are not allocated in one shot, neither at the beginning of the year nor at the end. The net annual allotment (the allotment less the weekly rest days) are divided into 12 and each month that the employee works, entitles him to the monthly allocation. Of course the percentage of the employee’s position is also a factor, so if an employee was employed at a 50% position, he would be entitled to half the vacation allocation that a full-time positioned employee would be entitled to and so forth.
Another important thing is that in many work places there is an enlarged annual vacation allotment. This is usually due to a work agreement. Special attention should be given when an employee is entitled to a larger allotment than the law. The law provides certain protective restrictions which are meant to ensure
If an employee has acrued vacation days that haven’t been utilized, some employers erase them at year’s end. others allow acrual up to a maximum number of days.
Both of these are legal, provided the employer notifies the employees in advance.
In addition, the balance at the start of the month, monthly acrual, used days and new balance for the end of the month must all be shown on the payslip.
Employers must also allow employees to take vacation, but can dictate when it is convenient for them that the employee take vacation.
Tenure of 1 -4 years = 14 vacation days *
Tenure of 5 years = 16 vacation days *
Tenure of 6 years = 18 vacation days *
Tenure of 7 years = 21 vacation days *
Tenure of 8 years = 22 vacation days *
Tenure of 9 years = 23 vacation days *
Tenure of 10 years = 24 vacation days *
Tenure of 11 years = 25 vacation days *
Tenure of 12 years = 26 vacation days *
Tenure of 13 years = 27 vacation days *
Tenure of 14 years and up = 28 vacation days *
* The allotment of vacation days in the table above includes one weekly rest day for each seven days of vacation. For Jewish employees, this would be Shabbat for an employee who is employed 6 days a week and Friday and Shabbat for an employee who is employed 5 days a week.
According to this, for example, an employee who is employed 5 days per week would be entitled annually to 10 paid vacation days, whereas an employee who is employed 6 days per week would be entitled annually to 12 paid vacation days.
When an employee is terminated from his/her position they are entitled by law to advance notice from the employer. The amount of advance notice is based on an employee’s tenure with the employer as well as his pay rate.
For employees being paid at an hourly or daily rate the employee is entitled to:
During the first year = 1 day for each month worked.
During the 2nd year = 14 days + 1 day for each two months worked.
During the 3rd year = 21 days + 1 day for each month worked.
From 4 years and on – one month’s notice.
For employees being paid at a monthly rate, the employee is entitled to:
During the first 6 months = 1 day for each month worked.
From the 7th month until the completion of 1 year = 6 days + 2 1/2 days for each month worked.
After completion of 1 year tenure = one month’s notice.
Due to increasing request and popular demand, work has commenced on the new ‘Employee’s Rights in Israel Handbook” soon to be released.
The handbook is in English and explains, in easy to understand language, basic payroll and labor law issues that are relevant to anyone who works as a salaried employee or is an employer of employees. The handbook is a means for employees and employers alike to become familiar with employee rights according to the Israeli Labor laws and avoid unnecessary confrontations in the future.
The Handbook will be available through this site only – stay tuned !
Place your order for the the handbook today and receive a 10% discount on the price ! This offer is for a limited time only.
send an email to Moshe.israpay@gmail.com to reserve your copy today !
On May 11th at 19:30 there will be a mini-seminar at the AACI – 11 pinsker st. Jerusalem. The topic is “what does the employer need to put on the payslip”
speaker: Moshe Egel-Tal, CSPP
Don’t miss this important topic !