How to Calculate Overtime Pay in Israel: A Detailed Guide
Translated & summarized from Bizportal by baba
Israeli labor law defines overtime pay based on a 42-hour work week and daily hour limits, with overtime compensated at 125% for the first two hours and 150% thereafter. An online calculator helps determine total monthly earnings, including overtime, by inputting regular and overtime hours, daily workdays, and hourly wage. For example, minimum wage earners with two daily overtime hours can see their monthly pay increase significantly. The law also specifies higher rates for weekend and holiday work, and overtime pay may affect pension and severance calculations.
The story in 6 lines · by baba
- Overtime in Israel is paid at 125% for the first two hours and 150% for subsequent hours.
- A 42-hour work week is the legal maximum, with daily limits varying by sector.
- Working two overtime hours daily at minimum wage adds 1,947 shekels gross monthly.
- Exceeding 12 daily or 16 weekly overtime hours requires special permits.
- Weekend and holiday work have higher overtime rates, starting at 150%.
- Overtime pay may not be fully included in severance pay and pension calculations.
Israeli labor law stipulates a maximum 42-hour work week, with specific daily limits depending on the sector. In the private sector, a standard workday is 8.6 hours for five days, with one day shortened to 7.6 hours. The public sector has an 8-hour standard workday, and night shifts are capped at 7 hours. Any hours worked beyond these limits are considered overtime. The first two overtime hours in a day are paid at 125% of the regular hourly wage, while subsequent overtime hours are paid at 150%.
To calculate total monthly earnings, including overtime, an online calculator considers the regular hourly wage, the number of regular daily hours, the number of daily overtime hours, and the number of workdays in a month. The results provide the total gross monthly salary, the overtime pay amount, the daily wage, the effective average hourly rate, and the total monthly hours. The breakdown details regular hours at 100%, the first two overtime hours at 125%, and any additional overtime hours at 150%.
For instance, an employee earning minimum wage of 35.40 shekels per hour, working two overtime hours daily for 22 days a month, would earn an additional 1,947 shekels gross, bringing their total monthly salary to 8,177 shekels. The average hourly rate in this scenario increases to 37.2 shekels. Working three overtime hours daily results in a difference of over 3,000 shekels per month compared to an employee who leaves on time.
The law also sets daily and weekly limits for overtime, with a maximum of 12 hours per day and 16 overtime hours per week, requiring special permits for exceeding these. Work on Saturdays and holidays incurs higher rates, starting at 150% for regular hours and escalating to 175% and 200% for overtime on those days. It's important to note that overtime pay is generally considered gross income and may not be fully included in calculations for severance pay or pension contributions.
