Mandatory Pension Deposits for Foreign Workers and Asylum Seekers in Israel
What are the requirements for pension payments to foreign workers and asylum seekers in Israel who are expected to retire there? Do employers still have to pay them the equivalent allocations for a pension fund?
Our law offices specialize in matters relating to immigration and entry into Israel, labor laws, and the points where they intersect — labor laws for asylum seekers and foreign workers. In the past, we wrote articles on pension for Israeli workers, the procedure for obtaining status for asylum seekers, employing asylum seekers in Israel in a legal manner, as well as how to invite foreign expert workers to Israel. In this article, Attorney Michael Decker will explain the obligations of employers to allocate pension funds for the foreign workers they employ.
The Legal Infrastructure replacing Pension for Foreign Workers and Asylum Seekers in the State of Israel
As of 2008, every male worker over the age of 21, and every female worker over the age of 20 is eligible for pension insurance allowances according to the Mandatory Pension Extension Order under the Collective Agreement Law, 1957.
Every Israeli employer must deposit funds into the pension account of their employees. The allowances are considered obligatory for the employer to pay. At this is an obligatory right for the employee’s benefit, no employee may voluntarily restrict this right. In other words, the employee or employer cannot agree to draw up an agreement that permits the employer to not pay pension allowances.
Pension insurance allowances for salaried employees are, in fact, legally mandatory for employers. An employer who does not fulfill the obligation of allotting funds to the relevant pension account violates these labor laws, and also runs the risk of committing a felony.
Employers Still Obligated to Allocate Pension Funds Even to Foreign Workers
The aforementioned obligation is not restricted only to Israeli citizens or permanent residents. The employer must also pay pension insurance to each and every employee, including foreign workers from any country in the world, Palestinian workers, asylum seekers, illegal residents, and so on: anyone who works in the sovereign territories belonging to the State of Israel.
Cy-Près Doctrine When Monies Cannot be Deposited into a Pension Fund
In the past there has been a claim that employers cannot deposit pension funds to certain migrant workers. For example, in cases where those migrant workers did not hold a valid visa. Those employers asserted that they had no obligation to deposit monies into the pension fund due to the impossibility to practically do so. Nevertheless, the employers’ claim was rejected by the National Labor Court by means of the Cy-près Doctrine.
The Cy-près Doctrine is a doctrine that was developed in British law (literally translated from French as “so near/so close” or “as near as possible”) which allows the person harmed by breach of contract to carry out the relevant obligations to the nearest possible extent when the obligation in question can no longer be carried out.
Concerning this, the Labor Court ruled in case 36959-06-15 Musabal Abdalla vs. Telran Holdings and Cleaning (2000) Ltd. that if an employer cannot actually deposit funds into the pension account, then the employee is entitled to compensation, since the pension allowances were not provided. This will be provided at the appropriate rate that the employer had to allocate, had he been able to do so.
In order for the employer not to accumulate debts when no pension fund exists at all to deposit into, it is recommended that he take the initiative to deposit these sums on a monthly basis into a separate account designated for this specific purpose.
Unique Pension Arrangement for Asylum Seekers
According to Section 1יא 1(a) of the Foreign Workers Law – 1991, the employer must set aside the high sum of 36% each month from the salary of the employee who is requesting asylum (who holds a 2A2 or a 2A5 visa). 20% of the pension fund amount will be deducted by the employer from the employee’s gross salary, and 16% of the aforementioned amount will be paid by the employer as a sum that exceeds the employee’s gross salary.
It is important to remember that according to the Supreme Court’s ruling and the agreement of the State, many asylum seekers are permitted to work in Israel. Asylum seekers may withdraw these deposits deducted from their salary only upon leaving Israel. If there is a delay/postponement in the asylum seekers’ departure from Israel, after a due date to leave was set, significant sums shall be withdrawn from their pension fund.
Note that these are especially high amounts, and these workers belong to an already low-income group (even if in their own countries they would earn much less). Thus, there was much criticism against this policy, and there was also a petition filed with the Supreme Court against this policy in case 2293/17 Garsghar vs. The Knesset. As of the date this article was written—April 12, 2020—the petition has not yet been ruled on.
Conclusion — Contact a Lawyer Who Specializes in Employment of Asylum Seekers
As you can see, the obligation to allot pension funds to each and every employee cannot be shirked. Therefore, the employer would be advised to ensure that these funds are deposited into the appropriate account designated specifically for this purpose. Alternately, he should deposit them into an account opened just for this reason (when there is no designated pension account, in accordance with the Cy-près Doctrine).
Asylum seekers in Israel are forced to deposit higher sums than normal into their pension accounts. As a result, even the low gross salaries they receive are cut by 20%, and they cannot receive these monies, except for in special emergency cases (such as through a special permit issued by the State of Israel due to the Coronavirus epidemic) and they are even deducted if these asylum seekers left the country after a delay.
Attorney Michael Decker from our law office, specializing in representing asylum seekers in Israel, as well as representing employers and employees in all matters relating to labor law, would be happy to answer any questions you may have.