Global Overtime Payments Shortchange Israeli Workers

Many Israeli employees, particularly in high-tech, sales, and field roles, are being underpaid due to a common practice of fixed "global overtime" payments. This arrangement, where a set amount is added to an employee's payslip for overtime, often fails to reflect the actual hours worked. For instance, an employee with a base salary of NIS 12,000 and a NIS 1,200 global overtime payment might be compensated for only 14.5 hours of overtime monthly, while actually working closer to 40 hours. This practice saves employers the complex task of calculating individual overtime but can lead to significant financial discrepancies for workers.

Israeli labor courts recognize global overtime payments only if they are listed separately from the base salary and genuinely reflect the average number of overtime hours worked. If the payment is fixed regardless of actual hours or is not tied to overtime performance, it may be considered part of the regular salary. In such cases, employees can legally claim that overtime should be calculated based on their total salary, and that the fixed amount should be included in pension and severance pay calculations.

The law mandates specific rates for overtime: 125% for the first two hours worked beyond a standard day, and 150% from the third hour onwards. Working on a weekly day of rest incurs at least 150% pay, and overtime on such a day requires at least 175%. The value of a regular work hour for a full-time employee is calculated by dividing their regular salary by 182, the current standard monthly work hours after the workweek was shortened to 42 hours. This calculation includes regular monthly additions like seniority pay but excludes the global overtime amount itself.

Discrepancies can be substantial, even for minimum wage earners. A minimum wage employee receiving a NIS 500 global overtime payment who works two extra hours on ten days a month could be shortchanged by approximately NIS 385 monthly, accumulating to about NIS 4,600 annually. For higher earners, the difference is even more pronounced. A developer earning a NIS 30,000 base salary with a NIS 3,000 global overtime payment, working two extra hours for 20 days a month (40 hours total), could be owed an additional NIS 5,241.76 per month, totaling nearly NIS 63,000 annually, because each unpaid hour is worth more at higher salary levels.

Employees can calculate the number of hours their global overtime payment covers by dividing their regular monthly salary by 182, multiplying by 1.25 to find the rate for the first overtime hour, and then dividing the global overtime amount by this figure. By comparing this to their actual overtime hours logged through attendance records, separated by the first two hours and subsequent hours each day, employees can identify shortfalls. When a consistent gap appears, employees can request an adjustment to their global overtime payment, or employers may opt to switch to hourly overtime calculations. Labor courts consider the average overtime over a period, not just a single month, when assessing claims. If a global overtime agreement is conditional on working overtime, employers may reduce it in months with no overtime. However, if the agreement stipulates payment regardless, it becomes regular salary. Claims for unpaid overtime can be filed up to seven years after the fact, with back pay for up to 84 months, plus linkage and interest. Evidence such as attendance records, building entry logs, emails, and evening calls are crucial in these cases.