Three updates to the above three employee rights came into effect this past July. The following is important news about the next update to employee rights, which is expected to come into effect on 1.1.2017.
Update to the Minimum Wage
The 2015 amendment to the Minimum Wage Law prescribed four stages for the updates to the minimum wage, three of which have already come into effect, with the last update scheduled to come into effect in January 2017.
Accordingly, as of the January 2017 salary, which will be paid to employees at the beginning of February 2017, the monthly minimum wage will be updated to NIS 5,000, while the hourly minimum wage will be updated to NIS 26.88.
Increase of the Minimum Annual Paid Leave
Pursuant to the amendment to the Annual Paid Leave Law, employees’ minimum annual paid leave quota was increased this past July.
As of 2017, one more day will be added to the minimum annual paid leave rights, so that, during the first five years of employment, employees will be entitled to 12 days of paid leave if they work 5 days per week, or 14 paid vacation days if they work 6 days per week.
Update to the Contribution Rates to Employees’ Pension Insurance
Pursuant to the extension order regarding an increase of the contributions to employees’ pension insurance, as of January 2017, employers must update the contribution rates to the pension funds according to the following:
- The employer’s contribution to the pension component will increase to 6.5%.
- Concurrently, the employee’s contribution will be increased to 6%.
- If an employee is insured under managers’ insurance policy, the employer is also required to purchase disability insurance cover, at its expense, at the ratio required to secure 75% of the employee’s wage. When the monthly contribution rates specified above are increased, they will also apply to the employer in this case, whereby, the minimum contribution to the pension component must not be less than 5%, the total contribution to the pension component and the disability component together will reach 6.5%.
- Furthermore, if the cost of the insurance cover for disability insurance exceeds 1.5%, then the employer will be obligated to bear such increased cost, however the employer’s contribution to pension and disability components together shall not exceed 7.5%.
Employers should take appropriate action to update their payroll systems and pension systems in a timely manner, to make sure that their employees receive all of the benefits that are due to them as of 2017.