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Court: tipping – the income from which will be paid taxes and made social security contributions

Expanded panel of the Israeli national labour court consisting of five judges rendered a precedent-setting ruling on the regulation of the status of the tips received by waiters in establishments of public catering.

In the preparation of judicial precedent was attended by the President of the court, Yigal Flitman (for which this resolution was last before retirement), his assistant and successor on a post of the President of the court of Varda Wirth-Livne, judges Lea Glicksman, Ilan the It and Swarms Pole. The training decisions were made by the representative of the workers of a public catering Mihaly Biron Bar-Gera and representative employers Harel of Buhriz.

Under the new regulation, any tips (even if they are paid directly to the waiter) will be treated as income of the company and will be charged the appropriate tax. At the same time use the tips for other purposes except for payments to employees, the employer will not be able. He will also be required to carry out all statutory social security contributions. Share a tip needs to all employees of the service (bartenders, kitchen staff, waiters, etc.).

The court decision will come into force from 1 January 2019 to allow employers to prepare for changes and to give the Knesset the opportunity to make changes.

Recall that so far there were a resolution of the extended Board of the Supreme court justice from 2013, in which tips was considered the income of the waiter, not the company, and report to the Tax authority and the national insurance institution was the waiter (which in the vast majority of cases do not occur).

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Court: tipping – the income from which will be paid taxes and made social security contributions 27.03.2018

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