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.
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.
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.
- Insurance contributions: Since January 2020 recipients of long-term care benefits, attendance allowance and disabled child allowance, who employ a foreign worker for long-term care purposes -are exempted from reporting and paying insurance contributions on the wage they pay privately to the foreign worker, up to the sum of 5,500 NIS per month.
- If the wage you are paying privately to the foreign worker amounts to up to 5,500 NIS per month – you will be exempted from payment of insurance contribution.
- If the wage you are paying privately to the foreign worker amounts is above 5,500 NIS per month – you have to report and pay contributions only on the wage balance above NIS 5,500 per month.
- 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 – 5,300 NIS (January 2020).
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
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.
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.
* 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.
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