Israel Raises Minimum Wage

Israel is updating its minimum wage by 5.24% as of April 1, 2024. This update applies to the entire economy and has additional economic implications pertaining to the rights of employees earning minimum wage.

The New Minimum Wage

What is the new minimum wage?

The updated minimum wage for a full-time job will be ILS 5,880.02, compared to ILS 5,571.75 prior to the update. The minimum wage for hourly employees will rise to ILS 32.3, compared to ILS 30.6 prior to the update.

When will the minimum wage update come into effect?

The update comes into effect on April 1, 2024. This means the update must be applied as of the April 2024 salary (which is payable at the beginning of May 2024).

When will employees see the update in their pay slips?

As stated, employees will see the update in their April 2024 salary, which is payable at the beginning of May 2024.

Employers must update their payroll systems and inform their payroll managers. In addition, they must, of course, update the entries in the pay slips (of all of their employees) to reflect the minimum wage, as required pursuant to the Wage Protection Law.

What does the minimum wage include?

Pursuant to the provisions of the law, minimum wage includes base wages, combined wages, cost-of-living allowances, or other fixed increments payable to employees. The minimum wage does not include bonuses, premiums, reimbursements of expenses, seniority, 13th salary, or family allowances. Accordingly, the minimum wage update does not apply to these components.

What other factors does the minimum wage update affect?

The minimum wage update will increase the sums of social contributions to provident and severance pay funds, vacation pay, overtime pay, and sick pay. The minimum wage update is also expected to reduce, to some extent, the number of overtime hours included in the global overtime allowance, if payable to employees.

How does the minimum wage update affect particular sectors, such as the cleaning, guarding and security, and catering sectors?

With regard to employees in these sectors, and to the extent that clients ordering these services have reached agreements about the calculation of the value of an hour of work on the basis of the minimum wage, the value of an hour of work must be updated and the consideration payable to the service contractor must be updated accordingly, in order to avoid engaging in a “loss contract.”

Should employers take further actions as a result of the update?

Absolutely. Every employer must post a notice on its bulletin board about the minimum wage (even if not all employees are being paid minimum wages). Employers must update the minimum wage details in this notice.

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Barnea Jaffa Lande’s Employment Department is at your service to advise you in this regard and to answer any questions about labor law issues.

Adv. Jacki Silbermann is an associate in the Employment Department.