Israel’s Minimum Wage Is Rising

Minimum wage in Israel is being updated for the first time in five years, and will rise by 5.12%. This update applies to the entire economy and has additional economic implications pertaining to the social rights of employees earning minimum wage.

Minimum Wage Now

What is the minimum wage after the update?

The minimum wage for a full-time job will be ILS 5,571.75 as of April 1, 2023, compared to ILS 5,300 prior to the update. The minimum wage for an hourly worker will be ILS 30.6 per hour of work, compared to ILS 29.12. 

When will the minimum wage update come into effect?

The update is effective as of April 1, 2023. This means the update will apply as of the April 2023 salary (paid in early May 2023).

When will employees see the update in their pay slips?

As stated, employees will see the update in their April salary, paid in early May 2023. Employers must be diligent about updating their payroll systems and payroll providers, respectively, and, of course, about updating the minimum wage entries in all employees’ pay slips, as required pursuant to the Wage Protection Law.

What does the minimum wage include?

According to the statutory provisions, the minimum wage includes base wage, combined wage, cost of living allowances, or other fixed increments the employee receives. The minimum wage does not include bonuses, premiums, reimbursements of expenses, seniority, 13th-month salary, or a family allowance. 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 funds and severance pay, vacation pay, overtime pay, and sick pay. Furthermore, the minimum wage update is likely to somewhat reduce the volume of overtime hours included in global overtime pay, if paid to employees.

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

For workers in these sectors, and to the extent those ordering services have reached an agreement about the calculation of the value of an hour of work on the basis of minimum wage, the value of the hour of work should be updated. Accordingly, the consideration payable to the service contractor should be updated, in order to avoid an engagement constituting a “loss contract.”

Are there other actions that need to be taken as a result of the update?

Absolutely. Every employer must post a notice on its bulletin board about the minimum wage rate (even if not all employees are paid minimum wages). The minimum wage information in this notice must be updated.

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Barnea Jaffa Lande is at your service to advise you about this issue and about all labor law issues.

Adv. Netta Bromberg heads Barne Jaffa Lande’s Employment Department.

Adv. Lior Girshevitz is an associate in the department.