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Pension contributions in Israel's Call Centers

Call Center in Israel Cabinet Expert Comptable Dray & Dray

Retirement contributions in Israel's Call Centers: Should retirement be paid on bonuses and commissions paid to an employee?

Hello, I work in a Call Center in Israel. I work 150 hours a month. My pay scale is made up of 2 criteria: 1- A salary based on commissions according to the margin achieved for my employer. The higher the margin, the higher the commission percentage. 2- If the percentage of the margin does not exceed the minimum wage in Israel, which I believe is 29.12 Shekels, then I am paid a fixed salary + transport. I should also point out that I sometimes receive bonuses when there are special operations or challenges.

The Question: Does my boss have to contribute to my pension on the total amount of bonuses and commissions I receive?

  • Does he have the right to contribute only part of the amount?
  • Can he include the remuneration awarded for transport in the remuneration based on my coms?
Thank you for your feedback.
Read 'baussi : Israel's pension contribution law

The answer: Mandatory pension contributions, except in certain cases

If an employee is remunerated on the basis of variable commissions, which are calculated according to a pre-established remuneration scale, this remuneration is an integral part of their salary. In other words, IT IS the employee's salary. The fact that this remuneration changes according to sales, or the margin achieved, does not alter this fact. Some sectors of activity, such as telemarketing, in-store sales, etc., use a system of variable pay. The aim of this system is to motivate sales staff to achieve higher margins. And thus increase the company's productivity. In this case, there's no difference between this type of remuneration and a conventional hourly/monthly wage. As a result, pension contributions are compulsory on all salaries. Please note that this contribution can be capped up to the average salary in Israel, which is around 9,802 gross shekels for 2018.

However, there is one small exception.

When an additional, one-off incentive is introduced by the employer, as in your case, where bonuses are sometimes awarded to you, depending on your results. We call this incentive an "exceptional bonus". Retirement contributions are not compulsory on exceptional bonuses and other premiums granted from time to time by employers to further motivate their teams.

Conclusion: compulsory Israeli pension contribution on commissions, not on bonuses.

In your case, your employer must therefore contribute on your entire salary, but not on the occasional bonus paid to you. Regarding your second question about including transport costs in your monthly salary: As long as the total amount of commission-based remuneration is equal to or higher than the minimum wage in Israel (5,300 Nis gross / month, or 29.12 Nis gross / hour), your boss is entitled to include transport in this remuneration. Provided you have been informed of this fact in your employment contract.

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Boruch Levenson - CPA

A native English speaker qualified in both Israel and the UK, Boruch cares for the English speaking clients.

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