youth_employment

Employers: Do you have issues with employees incorrectly filling out 101 forms ?

Moshe

According to income tax regulation 2: “all employees are required to fill out an employee card (101 tax form) at the start of employment with a new employer and on the 1st of January of each subsequent year. The form includes: the employee’s personal information and sources of income. In addition, the employee is required by law to report any change in the information supplied on the form, within a week of the change.” Responsibility for the accuracy of the information is the employee’s only. The employee signs at the end of the 101 form a statement stating that all the information is correct. Supplying incorrect information is a criminal offense. The 101 tax form has instructions, but they are not too explicit.  Employees who do not understand what or how to fill out the form should ask the payroll accountant for help. Veteran payroll accountants attach written instructions to employees along with the form, correctly knowing that any mistakes in filling out the forms will come back to them in the end and they will need to chase after employees to “get it right” or deduct maximum tax, which just causes extra work.

Most employers have issues with employees filling out their annual 101 tax form. In some instances they leave out important mandatory information, in other cases they forget to check the boxes regarding the type of payment they are receiving from the employer or whether they have any other source of income. These things, while correctable in most cases during the tax year, can be very problematic in that until they are rectified, they may incur a maximum tax deduction from the employee’s salary. There can even be serious repercussions, by way of unnecessary fines in the case of an audit by the tax authorities.

The employer in general, and the payroll accountant specifically need to ensure that the proper form is being used (it’s updated frequently and can be found under “forms” on the Tax Authority’s website: http://taxes.gov.il/Pages/TaxesFastForms.aspx

It is important to note that each time a tax form is updated, all previous versions become obsolete and invalid from that point on. Using an outdated form can also result in fine ! However, all computerized payroll systems have the option of printing out pre-printed 101 forms with both the employer’s info as well as the employee’s info as it appears in the program. This is actually a time-saver as it allows the employee to double-check and correct only when information is incorrect or has changed, check the relevant boxes and sign the form, instead of filling out the form from scratch. This usually takes only a few moments. The responsibility for updating the 101 form in the payroll program is the Program’s responsibility.

The employer is responsible for keeping these forms on file along with any letters from the tax authority regarding their employees tax credits, exemptions or reconciliations.

Good news !

The tax Authority has launched an initiative that will not only simplify the 101 tax form process, but it will ensure zero mistakes and do away with the need to get the forms to the employees and get them back in a timely manner, as well as eliminating the need to keep them on file, thus saving space and becoming environment friendly (no more paper) !

So how does this work ?

The tax Authority issued instructions for procuring an electronic 101 tax form which is available here:
http://taxes.gov.il/IncomeTax/Pages/IncoeTaxMeidaMaasikim.aspx
look for the item dated May 20, 2012 – there are two. the top one is the one you need (9 page document) and it includes the application form for the employer (pages 8 and 9)

 

As of Jan 2013, this is voluntary, but highly recommended. Keep reading…….

The employer needs to fill out a request to be included in the criteria for filling out electronic 101 forms and use the system. The request needs to be submitted to the Tax Authority not later than 2 months prior to the end of the tax year in order to use the system for the next year.

(Employers who wish to develop their own system for electronic 101 tax forms or companies who sell payroll programs, or the use of them to employers need to submit 4 months prior to the end of the tax year)

The process

After submitting the form, the employer will receive written approval from the Tax Authority  along with access codes to a secure site and instructions. In general, employees can access the secure site via a unique and personal password ensuring privacy. the employee will update all personal and income information. Any time there is a change in an employee’s information, the employee will log onto the secure site and repeat the process, changing the necessary information. All forms after finalization by the employee become locked PDF files and each update becomes a newer version. All versions are kept on-line and accessible to both the employer and the employee. In cases where employees do not complete the process, it will automatically incur maximum tax (currently 48%) on the employee’s annual salary.

 

The above information is taken from the Israel Tax Authority’s publications and is not a translation of those publications.

Disclaimer:  Israpay has done it’s best to explain this issue in easy to understand terms, however should any discrepancy be found between the information contained in this blog post and the Tax Authority’s referendums and notifications to employers, the latter will prevail. This information is intended as a service and is not legal advise in any way or form. It reflects the author’s opinion only and is not to be taken as more than general information and a friendly recommendation that may be worth checking out. There may be restraints, in the employer’s payroll program or otherwise, that currently will not enable the employer to currently implement use of the electronic 101 tax form.

 

New Tax brackets for 2013

Moshe

2013 Tax Brackets


The value of each tax credit point has been updated to 218 sh.

These changes are effective from Jan 1, 2013 (January 2013 salary).

 

Tax Bracket

Gross pay

Tax

10%

5,280

528

14%

9,010

1,050

21%

14,000

2,098

31%

20,000

3,958

34%

41,830

11,380

48%

Each additional sh

 

 

Youth employee ? Download new application to know your rights !

Moshe

The Ministry of Industry, Trade and Labor has launched an application that can be downloaded for free to an Iphone and will soon be available for smartphones too. If you are between the ages of 14-18 and employed or if you have children or grandchildren who are, this is for them !

What will this enable users to do ?
1. Know your rights and the employer’s lawful responsibilities towards youth
they employ.

2. Enable youth to keep track of their hours in an organized manner.

3. Salary calculator to figure out what you are owed.

4. Contact details for complaints to the Ministry’s labor law enforcement dept.
if they feel their employer is not obeying the laws.

5. Enable users to define a goal to save for, and enable them to track how many
more hours of work they need to reach their goal.

 

For now this application is available only in Hebrew.

It is downloadable from the Ministry’s website, here:

http://www.moital.gov.il/NR/exeres/46273C9D-B2FF-4DB3-A4ED-8D80E5BAC62F,frameless.htm

Bituach Leumi – Tax or benefit ?

Moshe

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
  • unemployment
  • health insurance
Each of the above have specific criteria, who is eligible and under which circumstances (see Bituach leumi’s website for more information: http://www.btl.gov.il/English%20homepage/Pages/default.aspx)
Both employer and employee contribute towards the health tax and social security as a pro-rated percentage based on the total gross taxable salary.
The percentages differ between age groups (under 18, 18-62, 62-70, 70 +) as well as between foreign residents and Israeli citizens.
Anyone who is receiving an old-age stipend is exempt from both the health tax and social security.
There are two levels: The lower level is up to 5,171 sh gross (updated Jan 2012) and the percentages are listed as follows (lower rate listed first higher rate (over 5,171 sh and up to a ceiling of 41,850 sh monthly).
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
These are Social laws that enable most employees to be eligible for a series of possible stipends for events that can occur during a lifetime.
Although Bituach Leumi is still far from a service-oriented organization, at least today they have computers. I guess that in itself is a huge accomplishment due to the work-ethics and culture in Government agencies and the educational background of their employees.

 

 

 

Minimum wage update – Oct 1st 2012

Moshe

Great news for all salaried employees who earn minimum wages. After the govt. raised the v.a.t. and the latest price hikes in almost everything we buy, The minister of Industry, Trade and Labor, Shalom Simchon announced today that the minimum wages will be raised from October 1st, 2012. This is the last update according to the last labor agreement signed two years ago between the Histadrut Haklalit and the Israeli Government and the Industry Union. The last update of the minimum wage was in July 2008.

The new hourly rate will be 23.10 sh (prev. 22.04)

The new monthly rate will be 4,300 sh (prev. 4,100)  – a 4.9% increase.

This also effects the hourly rate for youth, as follows:

up to age 16 – 3,010 sh

up to age 17 – 3,225 sh

up to age 18 – 3,569  sh

 

This notification was issued early, prior to the Jewish new year (Rosh Hashana) and according to the Central Bureau of Statistics will effect about 600,000 employees in Israel.

 

 

Youth Employment – Update April 2011

Moshe

As of April 2011 the minimum wage was raised and as a result the youth wages were adjusted accordingly.

Just in time for the summer vacation ! Make sure your teenage kids who found a summer-time job are paid according to the law. The new minimum wages for youth are as follows: Continue reading “Youth Employment – Update April 2011” →

Youth Employment 2011

Moshe

This article was published at the Almost Eden blog.

Just in time for the summer vacation! Make sure your teenage kids who found a summer-time job are paid according to the law. Effective July 2011, the new minimum wages for youth are as follows:

apprentices = 14.22 shekels per hour
up to age 16 = 16.59 shekels per hour
up to age 17 = 17.77 shekels per hour
up to age 18 = 19.67 shekels per hour
from age 18 and up = 22.04 shekels per hour

There are special regulations in effect for employing youth: Continue reading “Youth Employment 2011” →

Information on correct employment of youth

Moshe

Information on correct employment of youth

Submitted by Moshe on Tue, 29/06/2010 – 13:04

 

As summer vacation approaches, it is time once again to refresh everyone’s memory as to the laws regarding youth employment.

AGE OF EMPLOYMENT

It is strictly forbidden to employ youth under age 14.
Youths between the ages of 14 – 15 can be employed in light work only. Light work is defined as work that will not hinder or impair their health or development.
During the school year and in certain dangerous jobs, it is permitted to employ youth only from age 15 and up, under condition that the mandatory learning law does not apply to them.
(examples of dangerous jobs: heavy cutting machines, manufacturing and processing of flammable substances or items, work at temperatures below 4 c or above 40 c.
As for youth employed in commercials, preformances, etc. a special permit is needed from the Ministry of Industry, Trade and Employment, Other special regulations as to employment conditions and hours apply.

WORK NOTEBOOK & MEDICAL APPROVAL

The law mandates the employer to demand from youth employees (under age 18) to produce a work notebook, as a prior condition of employment.
This notebook is issued by the local employment services office. In order to procure a work notebook, applicants need to show up in person with their Israeli I.D. card (or one of their parent’s I.D. card where they are listed), a doctor’s note from the family practitioner, that they are healthy and able to work, 2 passport pictures. There is no fee to procure the work notebook and it is issued on the spot.
The work notebook needs to be on premises at the place of employment.

NOTIFICATION LAW

The purpose of this law is to make clear the conditions and terms of employment, rights and obligations of the employee.
Each youth must receive a written notification. signed by the employer, within 7 days of start of employment and it must include all of the following:
the ID number of the employee, employee’s name, address, start date and length of employment, work hours, job description, houly rate and all benefits and payments (i.e. travel expense), name and job description of the employee’s direct superior adn any other information which can help the youth understand his job and what is expected of him.

WORK HOURS

Youths can be employed for up to 8 hours maximum per day and no more than 40 hours per week.
Youths aged 16 and above can be employed for up to a maximum of 9 hours per day, as long as the maximum of 40 hours per week is complied with.
The above does not apply to youths that are employed and who are covered by preferential terms of employment or a collective agreement and also handicaped youth (physical, mental) who are employed in protected factories (factories that the State of Israel participates in their financing).

OVERTIME employment of youths in overtime is completely forbidden by law !

Weekly day of rest

It is forbidden to employ youths during their weekly day of rest (Shabbat) and there is no possibility of receiving a permit for this.

Breaks

After 6 hours of work, it is mandatory to allow youth a 45 minute break for rest and to eat, at least 30 minutes must be consecutive.
The break is usually on the employee’s time (i.e. unpaid) but this should be agreed apon before employment commences in order to avoid future misunderstandings.

NIGHT WORK

The law states that between the hours of 20:00 and 08:00 A.M., it is forbidden to employ youths under age 16.
Employment of youths, between ages 16 – 18 is forbidden between the hours 22:00 and 06:00 A.M. unless a special permit has been granted
from the Ministry of Industry, Trade and Employment.

RECORDING WORK HOURS

All employers are required by law to keep track and record the exact hours of work of all youth employees, and if such is done manually, each youth who is employed, and the employer need to authorize their hours by signing off on them daily.

ANNUAL VACATION

For the first four years at the place of employment a youth is entitled to 18 calander days (14 actual work days) of vacation time per year.

TRAVEL EXPENSES

In addition to pay, youth are entitled by law to re-imbersement for travel expenses from their home to work and back. The maximum rate per day for travel expense is 23.70 shekels. The employer is obligated to ensure that the youth employees have means to return safely home after work. youth who work 18 days or more, are usually paid the rate of a monthly free bus pass (chofshi chodshi). Those who work less than 18 days would be paid per day at the rate of cost (up to the max 23.70 sh)

FINES & DEDUCTIONS

It is illegal to fine or punish youth by means of salary deductions, unless specifically permitted by law. This includes any dedections for “damages”.

TAXES AND SOCIAL SECURITY

A youth’s income is taxable, just as a regular (over age 18) employee.
The only difference is that youth between 16-18 are eligible to receive an extra tax point each month. Male youth (16-18) receive 3.25 tax credit points, while female youth (16-18) receive 3.75 tax credit points. Each tax credit point is worth 205 shekels (as of Jan 2010).
Working youth are exempt from payments towards social security (bituach leumi) and health insurance (bituach briut), however the employer is obligated by law to pay the employer’s portion of social security as follows: (as of Jan 2010) 0.38% of the total gross pay – up to 4,809 shekels and 0.61% of every additional shekel up to 79,750 shekels.

MINIMUM WAGES FOR YOUTH (in Israeli Shekels) – updated June 2010

Age—— Monthly salary **—– Hourly Rate
——————————————————–
up to age 16 —– 2,695.13 —— 15.58
up to age 17 —– 2,887.63 —— 16.69
up to age 18 —– 3,195.65 —— 18.47
apprentices * —– 2,310.11 —— 13.35

* apprentices are in accordance with the apprenticeship law only)
** The monthly salary is for full-time position – no more than 40 weekly hours or 173 monthly hours. Partial positions are configured accordingly.

Even if a youth agrees to work for less than the amounts in the table above, it is illegal and the employer cannot pay less than the minimum.

IMPORTANT NOTE: There is no such thing as a “trial period” or “training” where the youth employee would not be paid !
Every period of employment carries mandatory payment for work from the first hour of work. Payment is mandatory for training, explanatory meetings, etc. such as pre-work meetings for summer camps.

Everything you wanted to know about sick pay but were afraid to ask

Moshe

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.

Delayed payment of payroll to employees is a criminal offense

Moshe

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

According to the law, what info needs to be included on my payslip ?

Moshe

According to correction 24 of the protection of salary law which went into effect on Feb 1, 2009, The following is a list of mandatory items that must be listed on an employee’s monthly payslip:

1. Employer and Employee ID details
a. Employee’s last name, first name and
Israeli ID # (or passport #)
b. Employer’s name, ID # (company #) and
address
2. Details about Employee’s employment
a. Start date of employment
b. Accumulated tenure in place of work
with employer (the higher of the two)
c. For monthly-wage employees – percent
of position
For salary-wage employees (hourly,
daily, commission)- the base of rate
(hourly,daily, way of calculation of
commission)
For employees on the rank and level
pay scales (public sector and any
connected collective agreements)
the rank and level must be detailed.
3. The pay period
a. Calendar pay period for which the
payslip is paid
(for example: FEB 2009)
b. Total number of max. possible
workdays and work hours in the place
of work in the pay period.
c. Total number of actual days worked
in the pay period. (not including
vacation, holiday and sick leave,
reserve army duty)
d. Total number of actual hours worked
in the pay period. (including
overtime hours, not including
vacation, holiday and sick leave,
reserve army duty)
NOTE: If there is no possible way to track an employee’s hours due to their conditions of work and employment – this needs to specified on the payslip.
e. Total number of vacation days
accrued in the pay period, total
number of paid vacation days taken
in the pay period and remaining
vacation day credit balance.
f. Total number of sick days
accrued in the pay period, total
number of paid sick days taken
in the pay period and remaining
sick day credit balance.
Note: If the employer has insured his employees in a sick insurance fund, (not to be confused with Kupat Cholim medical insuance) he is exempt from this.
4. Salary paid to the employee
a. hourly rate
b. base pay (regular hours for
hourly-waged employees)
c.Additional (other) payments to
base pay or regular hours need to
be itemized separately. These
include:
overtime hours, payment for work
during weekly rest day shabbat),
Havra’a, vacation and sick days,
etc. All of these items must
include the type of payment,
number of units, rate and sum of
payment.
d. Total amount of salary and other
payments that are taxable as well
as the total yearly accrual of
these payments to date.
e. Total amount of salary and other
payments that are taxable for
social security as well as the
total yearly accrual of these
payments to date.
f. Total amount of salary taken into
account for pension or other
social benefits purposes,
itemized specifically per type of
benefit, as well as their yearly
accrual to date.
NOTE: If any of the above (4. a-f) is paid for a period different than the specified pay period, the corresponding pay period for which it is paid needs to be specified
(for example: difference for previous pay period)
5. Deductions
a. Income tax
b. Social security
c. National health
d. Savings or pension plans. each
plan needs to be itemized
separately, including name of plan
and sum.
e. any other deductions, itemized
including sum.
Note: all of the above (5. a-e) need to also include the total yearly accrual to date.
f. Total deductions
6. Employer’s contribution to employee’s
social benefits:
Itemization of the payments, not paid to
the employee and not deducted from the
employee’s salary, including savings and
pension plans.
7. Settlement details
a. Total gross pay for pay period
b. Total net pay
c. way of payment (check, bank
transfer). If bank transfer, bank
account details. If paid through
3rd party – needs to be specified.
8. Minimum wage
min. wage per hour and monthly min.
wage in effect on pay date. for
employees under 18, the relevant min.
wage must be stated.