Are you employed in Israel? Here's what's changing on January 1, 2017.

salary in Israel Cabinet Expert Comptable Dray Dray
As we told you in this articleThe Israeli government has adopted a number of changes affecting salaries in Israel. From January 1, 2017, employees will have a better salary, even more vacations and more money for their retirement. But that's not all, there's a new surprise that has been voted in concerning the limit on pension contributions.

Minimum wage

The minimum wage will now be 5,000 shekels gross per month, i.e. an hourly rate of 26.88 shekels / h. (To date, the amount was 25.94 shekels / h).
In the space of a year and a half, the minimum wage has risen by 700 shekels a month. an increase of over 16%.
Israel confirms its ambitions to be a much more social country by helping Israeli households to meet the cost of living.

Pension contributions

From January 1, the employer will have to contribute 6,50% to the pension, and the employee 6%. (To date, the amount was 6,25% for the employer and 5,75% for the employee).
This increase of 0.25% for each party involved aims to increase personal contributions to pension funds, and encourages Israelis to take their future into their own hands. Read also: Bitouah Léoumi takes care of your children's future!
It is important to point out that the amount of contributions for redundancies (פיצויים) remains unchanged.
It will therefore always be 6% monthly, payable by the employer.

Number of paid vacations

Following the reform passed by the Knesset on 07/02/2016, from January 1, 2017, you will receive an additional day of paid vacation per year. In addition to the one already received on July 1 if you have been with the company for less than 4 years.
As of January 1, 2017, total annual paid leave will be as follows :
  • 12 days / year, as opposed to the current 11 days for employees working 5 days a week.
  • 14 days / year, as opposed to the current 13 days for employees working 6 days a week.

La Petite surprise: Contribution limits for retirement annulmentée

The changes in contributions will affect all workers, not just those earning the minimum wage. In fact, the law now requires that pension contributions be made on the employee's entire salary, unlike the previous situation, which allowed the employer to contribute on the average salary of 9,500 shekels.
This means that pension contributions will always be calculated on the base salary, whether it is 9,000 shekels or 30,000 shekels.
As these changes take effect on January 1, the December salary remains the same. You will notice the difference when you receive your January salary.



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