Employment Law Guide For Expats

The discrimination of employees in the process of recruitment, during employment and upon termination is prohibited whether motivated by sex, religion or age. For example, equal opportunity requires that when placing an advertisement for potential candidates, an employer must include both sexes.

Furthermore, sexual harassment of an employee is a criminal offence, and is subject to severe punishment with the possibility of imprisonment.

In general, a contract of employment between an employee and his employer can be either in writing or oral. However, there are two exceptions to this rule, relating to employees employed by manpower contractors and foreign employees.

Case law dictates that the conditions of employment in manpower companies have to be in written form, or subject to a collective agreement defining conditions of employment according to the new law of regularization.

Foreign employees must have a written contract (in the language of the employee), which should include, among other details, salary details, working hours and social rights.

Employees employed by manpower contractors are considered equal to other regular employees in the same place of work. If a manpower employee is employed by the same employer for a period of more than nine months, the employee will be considered as employed by the employer. In such instances, the seniority of this employee will be counted from the moment they commence work for the plant or company, even though the employee was a manpower contractor’s employee at that time.

Employment conditions that are subject to a collective agreement will be terminated by means of the annulment or expiration of the collective agreement.

A collective settlement is terminated with the consent of the parties unless the settlement in question is unilateral and subject to change.

A contract of employment comes to an end, either due to the completion of a specified period or due to notice given by a party to the contract.

The Prior Notice of Termination of Work Law states the obligation to give a letter of termination and notice in writing.

Employer-employee relations are considered as a contract for personal services and therefore will not be enforced unless the dismissal in question is illegal.

Dismissals may be deemed illegal if the dismissal:

•  A the dismissal of a pregnant employee;
• If  employee’s right to a hearing has not been granted and laws of natural justice have not been maintained;
• Is contrary to the dismissal conditions defined in a collective agreement;
• Is for political or politically-related reasons such as a union membership and activity
• Is of an employee who reveals corruption;
• Is based on sexual or age discrimination;

In these and any other cases in which the relevant court decides that the employer did not fulfill his obligations, the employer may be forced to make a severance payment to the employee, and in some cases (especially in the public sector) to continue to employ the individual.

Employment that is subject to the terms of a collective agreement may be terminated in the event of a serious disciplinary violation or a breach of confidence by the employee, or in any other legally justified circumstance.

The statutory notice period is legally defined depending on the length of employment. A contract of employment may provide for payment in lieu of notice. The employee must also give the required notice to the employer.

An employee who is employed under an indefinite contract and whose employment is terminated without a bone fide cause is entitled to a severance payment of one month salary for each year of employment to be awarded by the relevant court.

An employee who is employed under a fixed-term contract is entitled to severance payments on condition that the agreement has lasted no less than 12 months.

An employee who voluntarily resigns will not be entitled to severance payments unless:

1. The resignation was caused by a worsening economic situation such that it was impossible to continue work;
2. The resignation was on account of the ill-health of the employee or a dependent family member;
3. The resignation was due to a change of employers at the workplace;
4. The resignation was due to moving to an agricultural settlement or developing town, enrollment in the IDF or the police corps or moving away 40 km due to marriage;
5. The resignation by a male or female employee in order to take care of a newly born child provided the resignation is submitted within nine months of the birth.
6. The contract of employment defines liability to pay severance in any case of dismissal or resignation.
7. 7. If it is common practice at the employee’s place of work for employees to receive severance payments.

If severance pay is not paid on time, i.e. no later than 15 days after the termination of the employer-employee relationship, the employee is entitled to compensation for the delay:

1. For up to 15 days’ delay: the severance pay will bear interest (indexation).
2. In certain cases, the rate of the benefits will exceed 20% of the delayed severance pay, for every delayed monthly payment, if the delay is unjustified.

An employee who works 6 days a week is entitled to additional payment, above the minimum wage, if he works more than 8 hours a day. An employee who works 5 days a week is entitled to additional payment for every additional hour worked beyond 9 hours a day.

For each of the first two hours of overtime per day, the employee is entitled to payment at the rate of 125% of his regular hourly rate. For each additional working hour, the employee is entitled to payment at the rate of 150% of his regular hourly rate.

As decided in case law, the above rules regarding overtime pay do not apply to a caregiver who lives in the home of an elderly/handicapped employer.

An employer may deduct the following amounts from the salary of a foreign worker:

1. Payments required by law (income tax and national insurance).
2. Deductions for housing and related expenses, but no more than the limit stipulated in the regulations (see details below).
3. Deductions to cover a portion of the cost of the private medical insurance arranged by the employer for the worker (up to the limit stipulated in the regulations)
4. Set amounts on account of debts owed by the employee to the employer, if the employee has agreed in writing to such deductions. Fees and taxes imposed by law on employers of foreign workers may not be deducted from the worker’s salary under any circumstances.

No other amounts may be deducted from the worker’s salary.

The maximum permitted monthly deduction for health insurance, suitable housing and related expenses, and debts owed to the employer, is 25% of the employee’s salary.

It must be emphasized that this is not an automatic deduction and the employer may only deduct actual expenses. Thus, when the permitted deductions add up to less than 25% of the salary, the employer may not deduct the entire 25%.

In addition, in cases where the actual permitted deductions exceed 25%, an employer is not entitled to deduct more than 25% monthly. An exception is made for the final month of employment in which all permitted expenses may be deducted.

An employer who hires a foreign worker in his business must give his employee, every month, an itemized wage slip, setting out the salary, its components and all deductions from the salary prescribed by law. An elderly/handicapped individual employing a Foreign Caregiver in his home is not required to issue the Caregiver a payslip.

Following are details of the above permissible deductions:

1. Income Tax: income tax payments are deducted from the employee’s salary by the employer and transferred to the tax authorities. An employer is not entitled to deduct from the foreign worker’s salary any levies or fees imposed on employers of foreign workers, and these amounts must be paid to the authorities by the employer over and above the worker’s salary.
2. National Insurance (in Hebrew, Bituach Leumi): for the purposes of this insurance, an employer may deduct 0.04% of the first 6,331 NIS of a foreign workers’ salary, and 0.87% of every shekel of the salary over that amount. The amounts deducted must be transferred by the employer to the National Insurance Institute. The above sums are updated yearly. Additional rules and deductions may apply to foreign workers who are citizens of countries that have signed social security treaties with Israel. For more information, contact the National Insurance Institute.
3. Deduction for Related Expense for foreign experts – An employer may deduct a monthly amount from the foreign worker’s salary for the use of water and electricity, and for property tax, not exceeding the following amounts (as updated from time to time as per the rise in the cost of living index): 93.65 NIS
4. Deduction from salary for health insurance: The health insurance must be paid for by the employer, and the employer may deduct a part of the expense from the foreign worker’s. salary up to the maximum amounts specified below which are updated yearly as per the rise in the cost of living index: For foreign worker employed in the foreign Expert’s sector: a maximum of one-third of the amount paid by the employer for the insurance, and no more than 125.47 NIS, whichever is lower.
5. Deduction from salary for housing expenses in the Expert’s field – the permitted deduction for housing and related expenses will be figured as follows:

When the residence supplied to the worker is not owned by the employer, the employer may deduct from the worker’s salary amounts for housing in accordance with the area of the country in which the employee lives, according to the following table:

• Jerusalem: 423.91 NIS
• Tel-Aviv: 482.02 NIS
• Haifa: 321.37 NIS
• Centre: 321.37 NIS
• South: 285.69 NISNorth: 262.87 NIS

Important: if the residence of a non agricultural worker is owned by the employer, the maximum permissible amount deductible from the salary  is only half of the amounts specified above. The above sums are updated year as per the rise in the cost of housing index.

Weekly Rest Period: Under the Hours of Work and Rest Law, 1951, workers are entitled to a weekly rest period of at least 36 hours, which must include Friday or Saturday or Sunday.

As set out in case law, the above 36 hour rule does not apply to live-in caregivers, who must nonetheless receive a weekly day of rest of at least 25 consecutive hours.

Paid Vacation: every worker is entitled to an annual quota of paid vacation days as detailed below:

• For each of the first five years of work for the employer – : 16 paid vacation days per year.
• For the sixth year of employment by the employer: 18 paid vacation days per year.
• For the seventh year of employment by the employer: 21 paid vacation days per year
• For the eighth year of employment by the employer onwards: one additional paid vacation day for each year of work up to a maximum of 28 paid vacation days per year

Please note: the number of vacation days listed above refers to actual calendar days, which also include weekend days, which are not actual work days Therefore, a person working five days a week will actually receive 12 paid vacation workdays during the first five years of employment, while a worker working six days per week will actually receive 14 paid vacation workdays during the first five years of employment etc.

Usually the vacation entitlement must be used by the end of the year for which the vacation days are given. Nonetheless, if the worker would like to save up his vacation and use it the following year or the year after that, and if the employer agrees, the worker can use only 7 vacation days each year and save the rest for use in the following year or in the third year.
Religious holidays: all workers employed on a monthly basis are entitled to payment for up to 9 religious holidays days a year, when the said holidays do not fall during the weekly rest period.
The holidays can be those of the worker’s religion, or the Jewish holidays, as the employee chooses.
Sick Pay: employees are entitled to sick pay according to the length of their employment with the current employer (a day and a half for each month worked) up to a total of 90 days, upon presenting a doctor’s note stating the need for absence from work.
Employees are not entitled to payment for the first day of illness. For the second and third days of illness, the employer must pay the employee 50% of his regular salary, and from the fourth day on, pay the regular salary, up to the maximum period.

An employer who has not fulfilled his obligations under labour law, including an employer who has not paid a foreign worker the minimum wage, who has deducted from the worker’s salary amounts beyond those which are permitted, or not fulfilled his obligations concerning the employment contract, housing, health insurance, detailed wage slip or prior notice of dismissal, is liable for the administrative penalties or criminal charges as set out in law. 

A worker whose employer has not fulfilled the above obligations, or who has a complaint concerning breach of other employment conditions prescribed by law, can file a complaint with the Ombudsperson for Foreign Workers’ Labour Rights in the Ministry of Labour by calling Tel: 074-7696161, by sending a text message to : 0506-290758 or by emailing: foreignr@labor.gov.il. A complaint can also be filed with the ombudsperson through an online form on the Labour Ministry website: www.molsa.gov.il.

Under Israeli law, every person must carry an official identity document such as a passport.

Important: Providing the passport to the employer or its lawyers is acceptable for visa processing purpose only. In such cases KTA recommends to have a copy of the passport and visa and our office contact details. 

Withholding a worker’s passport against his will is a criminal offence. An employee whose passport is being held against his will by an employer, Manpower Company, placement agency or any other person, may file a complaint with the Israel Police.