By KTA Media Team |

The Ministry of Labor published policy recommendations on Wednsday 14 January 2025 for public comment, suggesting updates to the deduction rates from the salaries of foreign workers to better reflect employers’ housing expenses. The recommendations aim to allow employers to deduct additional hundreds of shekels from workers’ salaries to align the amounts with actual expenses.

Current Housing Deduction Regulations

Currently, employers of foreign workers are required to provide suitable housing, according to regulations detailing the conditions and requirements for housing, such as the provision of electricity and water, minimum living space, facilities, furniture, and electrical appliances. The law permits employers to deduct fixed amounts from workers’ salaries to cover these expenses.

As of now, employers are allowed to deduct between 305 and 560 shekels for housing expenses (in some cases, such as caregiving or agriculture, the amounts are lower). Additionally, up to 107.3 shekels can be deducted for ancillary expenses. These amounts are based on the Consumer Price Index and the rental index. However, an inter-ministerial team, including representatives from the Ministry of Labor, the Ministry of Finance, and the Population and Immigration Authority, found that actual housing expenses are about 931 million shekels higher than the amounts employers are allowed to deduct.

Proposed Changes to Deduction Calculations

According to the new proposal, the calculation of deduction amounts will be based on the type of housing offered to the worker. For residential apartments, the deductible amount will vary according to the region in the country and will be indexed to the Consumer Price Index. In the case of mobile homes, a uniform amount will be set for the entire country. The proposal includes property tax, water, electricity, and furniture costs as part of the housing expenses. Additionally, it seeks to eliminate the distinction between different employment sectors and between employer-owned and non-employer-owned properties.

Regional Disparities in Housing Cost Gaps

The gap between the currently permitted deductions and actual costs averages about 414 shekels per month. In the northern district, the gap is the smallest (about 290 shekels), while in the Tel Aviv district, it is the largest (about 560 shekels). The Ministry of Labor noted that:

“This alternative seems to best balance the protection of foreign workers’ rights with the continuation of the original regulations’ principles, allowing employers to receive reimbursement close to their actual expenses.”

Consultation Process and Stakeholder Engagement

The recommendation formulation process included discussions with employers of foreign workers in the agriculture, construction, and caregiving sectors, as well as with workers’ and employers’ organizations. Additionally, a survey was conducted among the foreign workers themselves to characterize the actual living conditions. The chosen recommendation aims to balance workers’ rights with addressing employers’ expenses, considering alternatives such as maintaining the current situation or charging the full housing costs from workers’ salaries.

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