Israeli Labor Court Rules Cash Tips Count as Wages for Work Injury Compensation
A regional labor court in Beersheba ruled that cash tips received by employees, even if not recorded on pay slips, must be considered when calculating compensation for work-related injuries. The case involved a bartender from Beersheba who was injured in a traffic accident on her way to work. Although the National Insurance Institute recognized the incident as a work accident, it calculated her compensation based solely on her reported salary, granting her a minimal allowance of about 2,300 shekels. The bartender argued that this did not reflect her true income, as she regularly received cash tips averaging around 300 shekels per shift, which formed a significant part of her earnings.
The National Insurance Institute contested including tips in the calculation, citing lack of objective evidence since tips were paid directly in cash by customers, not processed through the employer, and varied between events. However, the court accepted the bartender's consistent and credible testimony, supported by a co-worker's statement and the employer's acknowledgment that bartenders received and shared tips equally at the end of each shift, despite no formal record keeping.
The court ruled that the mere fact that tips were paid in cash and not documented on pay slips does not exclude them from wage calculations for compensation purposes. While it did not accept the full claimed average of 300 shekels per shift, it recognized an average of 250 shekels per shift. Consequently, the court ordered an additional 5,500 shekels to be added to her income for the quarter before the accident, recalculating her injury compensation accordingly. The National Insurance Institute was also ordered to pay her 4,000 shekels in legal fees.
Attorney Ali Kamel, specializing in personal injury and social security claims, noted that the ruling reflects a consistent judicial trend to prioritize actual economic reality over employers' record-keeping practices. In service and hospitality sectors, tips often constitute a substantial part of workers' income rather than occasional bonuses. He emphasized that while tips can be recognized for compensation calculations, employees must still provide appropriate evidence of their income from tips.
