Payment of Wages to Private-Sector Employees in Israel

The payment of wages to private-sector employees in Israel who were absent from work due to the war was made contingent upon the signing of a collective bargaining agreement and the issuance of an extension order applying its terms to the entire economy. 

The collective bargaining agreement has not yet come into effect.

 Highlights of the collective bargaining agreement:

 Why is the collective bargaining agreement needed?

Until the signing of the collective bargaining agreement, employers had no obligation to pay wages to employees absent due to the war. Regulations published in November 2023, inter alia, allow employers to submit claims for compensation in respect of wages paid to evacuated employees or employees whose workplace is located in high-risk localities and who were absent from work due to the security situation. However, these regulations do not obligate employers to pay wages to such absent employees.

As soon as the collective bargaining agreement is extended by an extension order applicable to the entire economy, employers will be obligated to pay wages to employees who were absent from work during all or a portion of the qualifying period between October 7, 2023, and October 31, 2023, as a result of the war, and the payment of wages to employees absent due to the war will become compulsory across the board.

In what instances will employees who were absent from work be entitled to wages?

Any employee absent from work during the qualifying period and that fulfills one of the following criteria will be entitled to wages from their employer in respect of days of absence during the qualifying period:

1. The employee lives in a location that was evacuated by government decision and was absent from work due to the security situation.
2. The employee works in an educational institution located in a designated locality for the purpose of receiving damages, and was absent due to an order that closed the educational institution.
3. The employee was absent from work due to the need to care for a child under the age of 14 who was at home due to an order that closed the child’s educational institution. The employee must declare that the child is in their sole custody or that they are a single parent, or that their partner was working or was unable to supervise the child. If the absent employee’s workplace provided an adequate childcare framework, the employee is not entitled to a wage payment in respect of absence from work.
4. The employee was absent from work due to an order that prohibited gatherings.
5. The employee is a person with a disability whose place of residence or workplace is located in a designated locality for the purpose of receiving damages, provided the employer is aware of the disability or the employee provided the employer with a medical approval attesting to the disability, and provided the disability prevented the employee from reaching the workplace or or abiding by Homefront Command directives while at the workplace.
6. The employee is a relative of a person with a disability (where the disability is known to the employer or the employer was provided a medical approval attesting to the disability). Under these criteria, the employee’s absence must be due to the need to care for or supervise a relative with a disability who is absent from work due to Homefront Command directives, and the employee declared in writing that they are the only person absent from work for the purpose of supervising or caring for the relative with a disability during those days of absence, and the employee’s spouse was not absent from work during those days.

    

    

   How are wages to be calculated?

   The wage to be paid will be the employee’s daily wage, up to a maximum of ILS 1,510 per day (gross) (this amount is current as of this update and may be revised later). The wage does not include extras additional pay or compensation, such as one-time payments, holiday gifts, nonstandard premiums, annual payments, actual overtime hours, shift premiums, standby pay, reimbursement of expenses, and grossing-up of taxes.

    

   Do employers have to pay social benefits on wages?

   Yes, employers must pay social contributions on the wages.

    

   What about absent employees employed part-time?

   The pro rata of the employee’s wage must be paid according to the employee’s usual hours of work relative to the total hours of work for a full-time position.

    

   What if the employee was absent for only part of the workday?

   The wage should be calculated according to the pro rata of the hours of absence.

    

   Is an employee entitled to the payment of wages if they were placed on unpaid leave during the qualifying period?

   If the employee requests payment of wages pursuant to the collective bargaining agreement and would have been entitled to such wages according to the criteria specified above had they not been placed on unpaid leave, they will be entitled to wages up to the sum of the indemnity the employer is to receive in respect of such employee. This payment is subject to account-settling between the National Insurance Institute and the Israel Tax Authority in respect of that employee.

    

   What about an employee who utilized vacation days to cover their absence due to the security situation?

   If an employee utilized vacation days during the days of their absence for one of the reasons specified above during the qualifying period, the employee will retain the vacation pay paid to them and will not be entitled to payment of wages. The utilized vacation days will be returned to the employee’s quota of vacation days.

    

   If the employer paid the employee for the days of absence, is the employee still entitled to payment under the collective bargaining agreement?

   No. No double payments will be paid. If the employer paid the employee their full salary for the days of absence, the employee will not be entitled to any additional payment from the employer based on the provisions of the collective bargaining agreement.

    

   When must employers pay wages to employees who were absent?

   After the issuance of the extension order, employers must pay wages in respect of the qualifying period by the wage payment date in the month immediately subsequent to the issue date of the extension order.

    

   Must employers pay wages to employees who were absent even if the employer did not submit a compensation claim to the tax authorities in respect of paid wages?

   Yes. Employers must still pay employees even if they did not file a claim for compensation in respect of wages paid to employees pursuant to the regulations.

    

    

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   Adv. Netta Bromberg, a partner and head of Barnea Jaffa Lande’s Employment Department, and Adv. Jacki Silbermann, are at your service to answer any questions in this regard or any other employment law questions.