Foreign worker wages in Israel – questions and answers (legal information)
Foreign workers’ wages in Israel raise many legal questions, such as: Is the minimum wage for foreign workers the same as the minimum wage for Israeli workers? Do foreign workers need to be paid overtime and for working Sabbaths and holidays? What deductions need to be made from foreign workers’ wages? How are their salaries to be paid? We are frequently asked about these issues, so we decided to collect the answers to the main questions in this article. Below you will find explanations by attorney Michael Decker from our office, an expert in labor law and the area of foreign workers.
Our firm, with offices in Jerusalem and Tel Aviv, specializes in labor law and Israeli immigration law, with an emphasis on the area of foreign workers. Our attorneys have extensive experience in providing comprehensive and professional legal services to foreign employees and their employers. We offer a variety of legal services in this matter, including, among other things, handling work visa applications for foreign workers, drafting and advising on employment contracts, exercising workers’ rights, and more.
Why do wages in Israel make it a popular destination among foreign workers?
The State of Israel is a particularly attractive destination for foreign workers from many countries. This is, among other things, because of the high quality of life in Israel, which is constantly improving. One aspect that stands out is the relatively high wages. In recent years, the minimum wage has increased significantly, and proposals to raise it further come up for discussion periodically.
Foreign workers and their employers are not always aware of changes regarding workers’ wages, so it is important to follow current legislation in order to make sure that said wages still meet legal requirements. In addition, there is a good deal of uncertainty regarding what can be deducted from foreign workers’ wages and, on the other hand, what wage increases they are entitled to. In this article we will present important information regarding the minimum wage in Israel for foreign workers, as well as the most common compensations and deductions. The information presented in this article is up to date as of September 2021.
How much must foreign workers be paid in Israel?
In the State of Israel there is a minimum wage, which has increased significantly in the last decade. The Minimum Wage Law sets the minimum wage that must be paid to all workers in Israel, including foreign workers. As of 2021, the minimum wage in Israel is ILS 5,300 per month as the base salary, before taxes and deductions. For hourly pay, the base salary is about NIS 28 per hour. As mentioned, this is the base salary, meaning that various payments may be added to it, increasing the final salary which a worker receives.
How much must foreign workers be paid for working overtime, weekends and holidays?
The work week in Israel is currently calculated as 42 hours per week. By law, employers are obligated to compensate employees for every hour they work beyond that amount, from the 43rd hour onwards. The wage calculations vary according to the length of each employee’s work week (see an extended explanation here), as well as the number of overtime hours. For the first two overtime hours in a specific work day, workers are to be paid 125% of their hourly salary, increasing to 150% starting from their third overtime hour. It must be stressed that workers cannot give up their right to be paid for working overtime. Even if certain foreign workers were to come to an agreement with their employer regarding lower wages for overtime, as a rule, the agreement would not be legally binding.
In addition, the compensation for working on rest days and holidays is higher, in accordance with the Work and Rest Hours Law. Workers are to be paid 150% for working on rest days and holidays, with overtime hours on these days amounting to 175% for the first two hours, and 200% from the third overtime hour onwards. It should also be noted that in certain sectors and in some specific cases, the salary for working overtime and on rest days and holidays is higher. Therefore, it is important to carefully evaluate each case according to its circumstances. If there is any doubt on the matter, it is recommended to consult with an attorney specializing in labor law.
What additional salary components exist aside from the base salary, overtime, rest days and holidays?
Another salary component that must be included in the wages of foreign workers who have worked a full year is the component called “recuperation pay” (dmei havra’ah). From the moment a foreign worker has completed a full year of work, this component is retroactively added to theIr wages. Workers receive compensation for 5 “recuperation days” a year. As of 2021, the value of each recuperation day in the private sector is ILS 382. This amounts to an annual payment of 1910 NIS, or 159 NIS per month. Recuperation pay can be paid as an annual payment, as part of the monthly salary or in the form of employee vacations.
Unlike recuperation pay, there are payments which must be paid by law at the termination of a worker’s employment. The most notable one is to redeem any unused vacation days. By law employees are entitled to 14 vacation days per year during their first 5 years of work. If the base wage is equal to the minimum wage (which, as mentioned, is 5300 ILS per month), this amounts to 212 ILS per day. It is important to emphasize that paying for redeeming vacation days before the worker’s termination of employment may lead to double payment in the case of a foreign worker filing a compensation claim. In addition, workers are entitled to sick pay by law, accruing 1.5 sick days per month. Sick pay starts from the second day of illness, and employees are required to present a letter from their doctor in order to receive it.
What deductions must be made from foreign workers’ wages?
In accordance with the National Insurance Law, employers are obligated to report foreign workers to the National Insurance Institute and to pay insurance premiums for them. In the case of foreign nursing workers, National Insurance premiums usually are not deducted from their salary, but for other foreign workers, the premiums can be deducted in this way. In addition, employers can deduct part of the health insurance premiums they pay for the employees. Up to half of the health insurance premiums can be deducted from nursing workers’ salaries, and up to a third for workers in other industries.
In addition, as of 2017, there is an obligation to pay towards a pension and a severance pay component. These payments are made jointly by the employees and their employers. According to today’s standards, the payment consists of 6% of the employee’s pre-tax salary, in addition to 12.5% set aside by the employer. In total, about 18.5% is paid into a pension fund and a severance pay component. These payments are made on the condition that they are transferred into a pension fund, a provident fund (kupat gemel) or a managers’ insurance plan (bituach menhalim). It is of utmost importance to act according to law and avoid mishandling these payments throughout the period of employment. Employers who disregard these obligations will likely run into large expenses upon termination of a worker’s employment.
How are foreign workers customarily paid?
The law defines several ways of paying foreign workers’ salaries. Salaries can be paid in cash or by cheque. In some cases, it is also possible to make a bank transfer. However, this is on the condition that the salary is transferred into an account under the employee’s exclusive management. In some cases the payment must be done exclusively by bank transfer, as is the case with foreign nursing workers. Therefore, here too it is important to make sure that the method of payment implemented by the employer meets the legal requirements in each case.
Is it possible to use an employee’s salary to pay for food and drink, or to pay employees in advance?
Unlike workers living in Israel, foreign workers do not always have the means to support themselves while working. Therefore, it is often necessary to provide foreign workers with meals at work, or alternatively to give them a basic allowance that will enable them to purchase food and basic necessities until they receive their salary. By law, it is possible to use part of an employee’s wages to purchase food and drink for him or her. However, only up to 10% of an employee’s salary can be deducted for this purpose, and it must be done with the agreement of both the employee and the employer. It is also possible to pay part of an employee’s salary in advance. However, it must be emphasized that because payments in advance constitute a kind of loan from the employer, as a rule, the amount paid in advance cannot exceed 3 months’ salary.
Contact an attorney specializing in Israeli immigration law and the area of foreign workers
In this article, we have presented answers to key questions regarding foreign workers’ wages in Israel. If you have a question or a specific issue on the subject, you can contact one of our attorneys specializing in labor law and the area of foreign workers. Our law firm provides comprehensive legal services on this and various other legal issues. You can contact us at the phone numbers and email address below.