Workers Losing Thousands Due to Pay Slip Errors
Translated & summarized from Bizportal by baba
Israeli workers are losing thousands of shekels annually due to errors on their pay slips, particularly in overtime pay and pension contributions. For example, incorrect overtime calculations can cost an employee nearly NIS 27,700 over seven years. Employers are legally obligated to provide detailed pay slips and timely pension contributions, with penalties for violations. Common errors also affect travel reimbursements and leave balances, with wage claims subject to a seven-year statute of limitations.
The story in 6 lines · by baba
- Workers are losing thousands of shekels due to pay slip errors, especially in overtime and pension calculations.
- An employee could lose approximately NIS 27,700 over seven years from incorrect overtime pay calculations.
- Employers must provide detailed pay slips by the ninth day after payday and face penalties for omissions.
- Pension contributions are mandated at 18.5% of salary, but errors can lead to significant annual shortfalls.
- Wage claims, including those for overtime and pension, have a statute of limitations of seven years.
- Common errors also involve travel reimbursements and incorrect leave balances on pay slips.
Israeli workers are losing significant amounts of money due to errors and omissions on their pay slips, particularly concerning overtime pay and pension contributions. For instance, an employee earning NIS 12,000 monthly who works 20 overtime hours should receive approximately NIS 1,650 for them. However, if these hours are incorrectly listed without the mandatory 25% premium, the employee is shorted about NIS 330 each month. Over a seven-year period, the statute of limitations for wage claims, this deficit can reach nearly NIS 27,700 before interest and indexation.
These pay slips are crucial as they determine net pay, pension and severance fund contributions, taxes, and eligibility for benefits like unemployment, maternity, or injury allowances from the National Insurance Institute. Employers are legally required to provide a detailed pay slip by the ninth day after payday, outlining overtime hours and rates, vacation and sick leave balances, travel reimbursements, and fund contributions. Failure to provide a slip or knowingly providing an incomplete one can result in penalties of up to NIS 5,000 per slip, adjusted for inflation, even without proven damages.
Overtime pay regulations stipulate that work beyond 8.6 hours a day (or 7.6 on a shorter day) or 42 hours a week is considered overtime. The first two overtime hours are paid at 125% of the regular hourly rate, and subsequent hours at 150%. For a monthly employee with a NIS 12,000 salary, the hourly rate is about NIS 65.9, making the first two overtime hours worth NIS 82.4 and later ones NIS 98.9.
Pension contributions, mandated at 18.5% of base salary and regular additions up to the average wage ceiling (NIS 13,769 in 2026), are also subject to errors. If a fixed addition is excluded from the calculation base, an employee earning NIS 18,000 could be shorted around NIS 330 monthly in their pension fund, accumulating to nearly NIS 4,000 annually before returns. Employers must transfer these contributions within seven business days of payday or by the 15th of the following month, whichever is earlier, with interest charged for delays.
Other common discrepancies include underpayment of travel expenses, which are capped at NIS 22.60 per day for actual commute days, and incorrect calculation of vacation and sick leave days. The article also notes that tax credit points, based on personal circumstances, must be correctly reflected, as errors can lead to higher tax deductions. Employees are advised to review their pay slips carefully and address any discrepancies promptly with their employer's payroll department, as wage claims are subject to a seven-year statute of limitations.