In a significant legislative update, the Israeli Knesset has approved a law affecting the recuperation pay (Dmei Havra’ah) for 2024, directly impacting both employers and employees across various sectors.
What Changed?
Effective from January 2024, employers are required to reduce one day’s worth of recuperation pay from the annual amount typically disbursed to employees. This adjustment is part of a broader strategy to reallocate funds to support benefits for IDF reservists.
Details of the New Law
- Reduction Application: Employers must decrease the recuperation pay by the cost of one recuperation day per employee at the time of payment.
- Part-time Workers: The reduction for part-time employees is proportional to their work schedule.
- Salary Cap: Employees earning a monthly average of up to 6,000 ILS from January to March 2024 and entitled to five recuperation days will only see a half-day reduction.
- Monthly Payouts: Employees paid recuperation benefits monthly will experience a reduction of 1/12th of their recuperation pay at the first payment of 2024. Employers are also required to adjust payments retroactively from the start of the year
Stabilization of Recuperation Day Value
The value of a recuperation day for 2024 will be frozen at the 2023 rate, which is 418 ILS in the private sector and 471.4 ILS in the public sector.
Financial Implications for Employers
The amount deducted will be transferred to the tax authorities as if it were a tax withheld at source. This ‘participation amount’ includes not only the reduced recuperation pay but also any associated costs the employer would have incurred otherwise, such as national insurance, health tax, and other related payments.
Broader Impact
This legislative change underscores the Israeli government’s approach to balancing employee benefits with the financial support for its military reservists. Employers need to be aware of these changes to ensure compliance and adjust their payroll processes accordingly.
As Israel continues to adjust its labor laws to reflect its socio-economic priorities, businesses operating within its jurisdiction must stay informed and agile. These changes, while seemingly administrative, could have broader implications for workforce management and financial planning.
For a detailed look at the law as published in the official records, click here.