Many Israelis find themselves employed abroad for different periods, ranging from a few months to several years.
In Israel, labor laws are well defined, and the legislature often alters them: labor laws are updated from time to time and are adjusted to protect the rights of employees and maintain their well-being.
But what happens when the employee is employed in another country? Do the same rules apply to them? Do those Israelis need to continue to pay social security in Israel a monthly fee?
The following article gives a glimpse into the unique legal world of labor laws of Israeli employees who have left the country in order to work abroad.
Labor law, also known as “employment laws”, include all the legal aspects of work. These laws include the following topics:
1. The relationship between two distinct parties. the employee on the one hand and the employer on the other hand. This includes the rights and obligations of the two entities towards each other. In many countries, the law offers employees extensive protections to prevent exploitation in the employment contracts.
2. The definition of employment. Not in every context paying a person for a service can count as employment, the exact cases are defined by labor laws. For example, whether an electrician you order to your house is in fact your employee, is actually derived from the different ways the law defines working relationships in each country.
3. Collective labor laws address the relations between the employee–employer – and the labor organizations, as well as other rights of employees such as freedom of association, collective bargaining agreements, the right to strike and more.
In most cases, the foreign employee will receive his salary in local currency. This means that an Israeli employee employed in the UK will be paid in pounds, in most European countries the payment will be in euros, and in the United States in US dollars.
There are some exceptions to this general rule, for instance, if the employment is on a short-term basis, the contract may allow for wages to be received in shekels. This can be convenient for both the employing company and the employee himself.
However, the taxes to the state of Israel are paid in shekels since no tax in Israel can be received in foreign currency. In order to calculate the tax rate, all amounts are converted to shekels according to the latest rate, and the conversion fees are inflicted upon the employees.
In most cases, Israeli employees abroad are obliged to pay taxes to the country in which they work. In case the employees do pay taxes in the country they live in, they can deduct the amount they paid from their salary and calculate the taxes paid to Israel on the remainder amount.
Calculation of social security contributions as well as health insurance contributions are calculated individually for all Israeli workers, whether they are working in Israel or abroad. This calculation, like other tax calculations, will be performed in shekels only.
In view of this, employees are given all the rights granted by law in respect of the payment of social security without expectation. The rights include child benefits, even if they were born abroad, insurance for work-related injuries and more.
Naturally, this does not apply to taxes on housing or consumer goods, but only on income tax, i.e. a tax derived from the work itself and not from life abroad.
The answer is yes. The social security fees as well as health insurance fees are the same for all Israeli employees, whether they are in Israel or abroad.
This means Israeli employees abroad get to enjoy all rights and benefits of social security. Among those rights are children’s allowances – even if they were born abroad! – And insurance for work related injuries.
Israel has signed a Social Security Covenant with several countries. This covenant grants an exemption from social security payments to Israeli citizens who work in those specific countries.
The countries signed on this covenant include Austria, Uruguay, Italy, Bulgaria, Belgium, United Kingdom, Germany, Denmark, Netherlands, Norway, Finland, Slovakia, Czech Republic, France, Romania, Russia, Sweden, and Switzerland.
This covenant guarantees the social rights that Israeli workers deserve, without having to pay the Israeli social security institute.
However, to this date, Israel has not signed a health insurance covenant. This means that regardless what country the Israeli employee is in, he should pay health insurance separately.
The employing company is responsible for issuing a work permit to their Israelis employees abroad. This does not mean that the company must carry out the entire process, and it is certainly possible to request and even require the employee to take part in the process. However, the company itself is responsible to take care of this matter.
If the employee is caught without authorization, the company will be held accountable. An employee caught working illegally will face unpleasant consequences like fines, expulsion from the country, and even incarceration.
In this situation, the employing company will have to compensate the employee.
Work abroad should be done with all necessary permits. If you lack the required permits, you take a considerable personal risk. Some countries have strict labor laws and people caught violating them can pay a significant price and not just a fine.
However, remember that the responsibility for obtaining the work permits is that of the employing company, and you must insist they issue them.
Due to the complexity and great differences in labor law in every country in the world, which may greatly affect the employer, as well as the employee abroad – it is very important to work with an experienced global company that knows closely the different subtleties between the different laws in countries around the world.
Adecco is a long-standing and experienced global company providing business solutions to many companies and organizations around the world.
With experience and connections from all over the globe, Adecco Israel can provide your company with the most efficient and professional service needed according to your company’s unique business needs.
Adecco can provide you with the knowledge and data required for your company in order to expand your activities abroad without the fear of uncertainty regarding mandatory obligations for various payments, different administrative arrangements, provisions required in each country and more.
Click that “contact” button and we will love to advise your company with our services.