Expenses Involved in Hiring a Foreign Worker
How much does a foreign worker earn? And what is the full cost for the employer and his family?
Employing a foreign worker involves many expenses besides the actual salary of the worker. The process of obtaining a license to hire and bring in a foreign worker from abroad entails fees to government offices, commissions to employment agencies, insurance and social benefits. The following article lists all payments involved in the employment of a foreign worker, beginning with the procedures for obtaining a license, through the period of employment, all the way to its termination. The figures change from time to time, and are correct for january 2016.
Expenses involved in obtaining a license for hiring a foreign worker
- Fee due to the Ministry of Interior when the license is issued or renewed – 300 NIS
- Fee paid to the Ministry of the Interior when the foreign worker enters Israel – 175 NIS
- Commission to the employment agency for mediating and bringing in the foreign worker – the law stipulates that private employment agencies may charge a fee of up to 2,000 NIS for these services. Most agencies include a one-year guarantee in this fee – which means that the agency is responsible for bringing in another foreign worker if the first worker leaves or is dismissed during the first year.
For a set of forms & fees for obtaining a permit to employ a foreign worker click here.
For a list of private employment agencies licensed to bring in and deal with foreign workers for home care only click here.
Expenses during the period of employment
- Medical insurance – the employing family is responsible for acquiring medical insurance for the foreign worker, to meet his or her medical needs. You may conduct a market survey to compare various offers, or purchase an insurance policy through the employment agency. Most medical insurance policies cost approximately $1.8 per day.
- Bituach Leumi – the employing family must pay Bituach Leumi a sum equaling 2% of the worker’s wages. To arrange this, apply directly to Bituach Leumi. An employer who is entitled to the Long-Term Care Benefit will only pay the Bituach Leumi fee for his share in the worker’s salary.
As of January 2014, persons receiving the long-term care benefit who employ a foreign worker through a private agency are exempt from reporting to Bituach Leumi and paying the fee on the supplementary sum paid to the foreign worker. This is on condition that the employer has opened a Bituach Leumi file for the worker, and that his share in the monthly salary does not exceed 3000 NIS. If the additional wages exceed 3000 NIS per month, the employer must report and pay the Bituach Leumi fee for his whole share in the worker’s salary.
- Contract fees – a monthly fee charged by the employment agency for ongoing supervision and assistance in solving problems that may arise regarding the foreign worker. This fee should not exceed 70 NIS per month. Note that, in addition to registering the worker, the employment agency is also required to provide the services of a social worker who accompanies both the employing family and the worker.
Components of the foreign worker’s salary
According to the booklet of foreign workers’ rights (Zchuton) published by the Ministry of Industry, Trade & Labor, the foreign worker’s salary is linked to Israel’s minimum wage – raised in April 2015 to a gross sum of 4650 NIS. This is the first of 3 increases, which will ultimately bring the sum up to 5000 NIS in 2017.
Pl ease note: the weekly pocket money paid to the foreign worker (100 NIS) for his/her day off – even if he/she dies not take the day off – is part of the workers gross salary.
Deductions from the worker’s gross salary
From the worker’s salary, an employer can deduct the worker’s share in payments for room and board, water, electricity, health insurance and pocket money. A foreign worker is entitled to 100 NIS of pocket money per week, on his day off (even if he/she does not actually take the day off).
The Zchuton for foreign workers emphasizes that the maximum deduction for health insurance, adequate living arrangements, related costs and money owed to the employer is 25% of the worker’s salary. The employer may not deduct more than this percentage, and if all permitted deductions add up to less than 25%, the employer may not deduct the full 25%.
Read here about the permitted deductions from the worker’s salary
Please note: even though the minimumum wage was raised to 4650 NIS in April 2015, if the worker earns a net salary of 3600 NIS or more – this is still within the law. This is because 25% may be deducted from the gross sum of 4650 NIS (as noted above).
A new foreign worker, recently arrived in Israel, earns less than one who has been here for a period of time, and asks for higher wages.
Additions to the worker’s gross salary
- Convalescence pay (d’mei havra’a) – during the first year the worker is entitled to 5 days x 378 NIS per day in convalescence pay. In the second and third year he/she is entitled to 6 days x 378 NIS per day. A worker who has not worked a full year is not entitled to any convalescence pay.
- Pension – Foreign workers are entitled, just like any other worker in Israel, to have a certain percentage of their salary set aside in a pension fund after a certain period of employment. The sums accumulated in the pension fund will be given to the foreign worker when he/she stops working for the employer. To date, no official regulation has been made to allow opening a special account for a foreign worker’s pension; therefore, the employer must save this money for the worker.
- Payment for working on holidays or on the worker’s weekly day off – foreign workers are entitled to one day off (36 consecutive hours) every week, and 9 free days on holidays, which they may choose according to their religion. Payment for working on a day off or holiday is 279 NIS.
- “Cashing in” vacation days – a foreign worker is entitled to 14 vacation days a year. A vacation day may be exchanged for 186 NIS.
Read here about the vacations and holidays of foreign workers.
It is a good idea to keep an organized list of all payments made to the worker, and ask the worker to sign every time he/she is paid.
Paying the foreign worker through the long-term care benefit of Bituach Leumi
The hours of the Long Term Care Benefit can be exchanged for money towards the foreign worker’s salary.
This may be done in two different ways:
* Persons eligible for a long-term care benefit who employ a caregiver for at least 12 hours a day, 6 days a week can receive the benefit in cash directly into their bank account, without the mediation of an agency. This is subject to certain conditions. For more information about receiveing the benefit in cash, press here.
* Payment is transferred to the family through nursing care companies that provide services in accordance with the long-term care benefit law. For a list of companies authorized by bituach Leumi click here. Not all manpower companies are also recognized as nursing care companies. When the relevant company is not recognized, the employing family must also register at a nursing care company, through which the cash benefit for paying the worker will be transferred.
- It is important to note the a person who is entitled to a license to employ a foreign worker but does not do so, is entitled to a higher Long-Term Care Benefit: a 150% benefit will be worth 19 hours of home care ( or 9.5 hours in case of high income) , and a 168% benefit will be worth to 22 hours of home care (or 11 hours in case of high income).
Terminating the employment of a foreign worker
Dismissal compensation – a foreign worker who is dismissed from his/her position is entitled to lawful dismissal compensation – a month’s salary for every year he/she has worked. It is important to keep an organized list of all payments made to the foreign worker. When he leaves your employment, ask him to sign a statement declaring that he has received everything he is entitled to, and the does not owe him any more money.
For the full detailes about Terminating the employment of a foreign worker, press here
The information presented in the english website is partial. For full info please visit our hebrew website
More on the subject:
- Bituach Leumi – National Insurance Institute of Israel Long-Term Care Benefit: an Explanation
- Acquiring a Quick Permit for a Foreign Worker- A Special Procedure before Release from the Hospital
- Everything You Need to Know about Employing a Foreign Worker
- The Duties of the Bituach Leumi Caregiver
- The Supportive Community – Staying at home doesn’t have to mean staying alone