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What are the employer's obligations in Israel?

employer in Israel

The employer's duties and obligations in Israel

We often hear a lot about what an employer should (or shouldn't) do in Israel.Dray & Dray presents a practical summary of an employer's obligations in Israel, from the moment an employee starts work through to dismissal.

At the start of business.

1. Tofes 101 - General employee information.

The employer must have the employee complete the Tofes 101 - Form 101. On this form, the employee must detail his personal information, such as :

  • First & last name,
  • Postal address,
  • Alya date,
  • Name of children, (an important factor in tax deductions)
  • Does he work elsewhere? (In this case, the employee must provide the employer with a Tioum Mas).

Important Tofes 101 must be completed each year by the employee, before 28.02 of the current fiscal year. This applies even if the information has not changed.

2. Notification to employee of working conditions.

Within 30 days of joining the company, the employer must send the employee a document detailing his or her working conditions. This document generally takes the form of an employment contract.

Read also: Bituah Leumi for employees

3. If the employee has another job.

When the employee has another job in Israel, he or she must file a declaration with the tax authorities. This declaration, called Tioum Mas - תאום מס, is intended to indicate the amount of taxes that will have to be deducted for the employee, in each of the companies that employ him.It is important to note that an employer has a legal obligation to check whether the employee has additional employment.This check is carried out using the Tofes 101 form completed by the employee. (see point 1 above).

The employee will also need to fill in Bituah Leumi Form 644, which will indicate how much Bituah Leumi will be deducted by each employer. By default, when an employee indicates that he or she is working elsewhere, the maximum contribution brackets will be deducted.

During the activity period.

1. Minimum wage in Israel.

The minimum wage in Israel is 5,300 Shekels / month, or 29.12 Shekels / hour. A full working week in Israel is 42 hours, or 182 hours per month.

2. Obligation to make pension contributions.

Employers are obliged to make pension contributions for their employees. Retirement rights are acquired from the 3rd month of employment with the same company.

In certain situations, pension entitlement is acquired from the 7th month, not retroactively from the 1st month.

ALSO READ: How does retirement work in Israel?

Watch out!

Company directors in Israel are required to make pension contributions. In fact, the Ministry of Labor may require the company to contribute.
Several companies have already been fined by the Ministry of Labor for not making pension contributions. Don't hesitate to contact us to find out how we can help you optimize your contributions.

3. Transport payment.

In Israel, employer-paid transport is mandatoryThe amount of transportation costs will be determined according to the least expensive option for the employee to reach his or her place of work. In some cases, employers reimburse vehicle and/or travel expenses.

In certain situations, pension entitlement is acquired from the 7th month, not retroactively from the 1st month.

4. Payment of Dmei Avraha.

In Israel, employers must pay their employees an annual vacation package.

This package, called Dmei Avraha, is a kind of annual bonus that varies according to the employee's seniority.

ALSO READ: Dmei Avraha, when your boss pays for your vacations.

5. Paid vacations.

An employee in Israel is entitled to paid vacations, depending on seniority. At the very least, an employee contributes 1 day of paid vacation per month worked. In certain cases, there is a preferential agreement between the parties. This agreement takes precedence over the law.

For part-time employees, the day off will be granted on a pro-rata basis.ALSO READ: Paid vacations in Israel.

6. Sick leave.

An employee in Israel is entitled to 1.5 days' sick leave per month worked.

For part-time employees, the day off will be granted on a pro-rata basis.ALSO READ: Sick leave in Israel.

7. Salary paid by the 9th of the following month.

In Israel, employers must pay their employees their wages by the 9th of the following month, and may be liable to interest and penalties for late payment.

8. Pay slip submitted by the 9th of the following month.

Employers in Israel are required to provide their employees with their pay slips by the 9th of the month following the month in which the service was provided, and may be liable to interest and penalties for late payment.

9. Payment of pension fund contributions.

Pension contribution payments must be transferred to the employee's pension fund by the 15th of the month following completion of the service.

10. Submission of form 106 - Tofes 106.

Employers are required to provide their employees with a Tofes 106 every year, which is a summary of the various pay slips for the past year:

  • The total amount of the employee's gross wages.
  • Total pension contributions for the past year.
  • The total amount of taxes deducted at source.
  • And other information that will give you a detailed report on your working year.

This form must be submitted no later than 31.03 of the following year.

When the collaboration ends.

1. Prohibition on dismissing a sick employee.

An employer is not entitled to dismiss an employee in Israel if the latter is on sick leave. However, if the employer has already notified the employee that their collaboration was coming to an end, and only after this notification (הודעה מוקדמת), the employee fell ill, the original date of dismissal remains effective. The dismissal will not be postponed due to illness.

2. Prohibition on dismissal of a Milouim employee (army reservist).

An employer is not allowed to dismiss an employee in Israel if he or she is serving a reservist period with the IDF, and must wait 30 days from the date of return from the reservist period before notifying the employee of the dismissal.

3. Prohibition on dismissal of pregnant employees.

An employer in Israel does not have the right to dismiss an employee if she is pregnant.Exception to this rule: If the employee has less than 6 months' seniority, and the dismissal is not due to pregnancy, the employer may still dismiss a pregnant woman.

Obviously, an employer has no right to dismiss an employee because she is pregnant. It doesn't matter how long the employee has been with the company.

4. No employee may be dismissed within 60 days of returning from maternity leave.

An employer may not dismiss an employee returning from maternity leave for 60 days.

5. Notice period in Israel.

An employer must provide an employee with a notice period, prior to dismissal.He must also carry out a conversation in which the details of his dismissal are explained to him. (שיחת שימוע).To find out the exact period of notice in Israel, we invite you to consult the following article: Notice period in Israel.

6. Certification of the period of collaboration.

When an employer decides to dismiss an employee in Israel, he must provide proof of the period of collaboration.

Example: We certify that Mr. Doe worked for our company from 01/01/2014 to 04/30/2018.

Employment of foreigners in Israel.

Employers who hire tourists (non-Israeli citizens) must comply with certain laws.

here's a brief summary:

1. Obligation to check whether the tourist has a work visa in Israel.

It is the employer's responsibility to check that the tourist's work visa is valid and compliant.

2. Social rights are the same as those granted to Israelis.

Tourists working in Israel are entitled to the same social benefits as Israelis. (Retirement, vacations, sickness, redundancy, etc.).Employers must therefore contribute to their employees' pensions, even if they are tourists!In this case, pension contributions must be deposited in a specific bank account, which will be used exclusively for receiving these contributions. (Contact us for more information).

3. Tax credits for tourists working in Israel.

Until 2016, tax credits were only granted to employees working in personal assistance.Half a point was also granted to female tourists working in Israel.Since 2017, An additional half point has been granted for a man and a woman.So a woman will be entitled to: 1 point.a man will be entitled to : 0.5 points. Since 2018, a man is entitled to 1 point and a woman to 1.5 points. We invite you to consult the following article to understand the tax credit system in Israel:
LIRE AUSSI: Nekoudote zikouye, how it works.

4. Additional employer's contributions when employing tourists in Israel.

An employer will have to pay the Etel Zarim - היטל זרים.This is an additional employer charge, of the order of 20%!"This sort of "taxIn order to encourage the employment of Israeli citizens, employers employing foreigners are required to pay a "minimum wage".

Dear employers, you have been warned: A tourist is a tourist. costs 20% more than an employee with a Teoudate Zeoute

This law was abolished at the end of 2021

In a nutshell:

Are you an employer in Israel?

Compliance with the principles set out in this article is essential, and we recommend that you exercise the utmost vigilance!

Contact our team of experts to safeguard your business and your personal status.

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CONTACT US

Phone : 02 631 9000
Fax: 02 631 9005
Email : office@cpa-dray.com

Boruch Levenson - CPA

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

If you've got questions, don't hesitate to reach out.

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Our firm specializes in Israeli accounting and taxation, with in-depth expertise in Olim Hadashim benefits and tax optimization.

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English speaking accountants in Israel
Address: 31 boulevard Rothschild, Tel-Aviv (Israel)
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Email: office@cpa-dray.com

Our consultants in Jerusalem

English speaking accountants in Israel
Address: Kanfei Nesharim 68. Merkaz Oranim
Phone number: 02 631 9000
Fax: 02 631 9005
Email: office@cpa-dray.com