Law Decision (6) for 2016

Social Security in Palestine

The Social Security insurance includes-

1-     Retirement , Disability and Death

2-     Work Injury

3-     Maternity

4-     Sickness

5-     Health Insurance

6-     Unemployment

7-     Family Compensation

  • Only the first three categories will be implemented according the law, and the other items will wait for Cabinet Decisions.
  • Who is included in the Social Security System?

Every employee who works for at least 16 days a month and is not included in the governmental Social Security System.

  • The Salary subject to Social Security calculation is the basic salary in addition to the increments and allowances. Moreover, the salary declared must be at least the minimum wage of NIS 1,450 but not exceeding NIS 11,600 .Other than that, the additional amount will be subject to complimentary provident system.
  • The employer must submit a list of detailed information about the employees and trainees with their salaries on the accredited forms.

The employer must declare new employees within two weeks from the date of employment.

  • The employee contribution is equal to 7.5% of the salary and 8.5% contributions from the employer for Retirement, Disability and Death fund.
  • Before starting to contribute in the social security, the employer must pay the employee the accumulated severance pay benefit and sign a settlement with the employee
  • The monthly employee contribution will not be exempt from the monthly salary income for tax purposes, unlike the private provident funds in companies and societies.

Retirement

  • The retired employee is entitled to the retirement salary at the age of 60 and must have paid at least 180 monthly contributions.
  • The Retirement Salary = (1450*2%*B) + ((A-1450)* 1.7%*B)
  •  If the retired employee is not entitled to the retirement salary, upon retirement he/she will receive the accumulated fund from employee and employer contribution plus any interest revenue.
  • If the employee have not paid the 180 monthly contributions. She/he can be entitled to the retirement salary by completing the number of monthly contribution by himself by paying both percentages (7.5%+8.5%= 16%).
  • The Disability Salary = (1450*2%*B) + ((A-1450)* 1.7%*B)
  • In case of partial disability, the salary will be calculated based on the percentage of disability.
  • If the disabled employee is not entitled to the disability salary, upon disability, he/she will receive the accumulated fund from employee and employer contribution plus any interest revenue.

In Case of early retirement at age 55 the employee must have paid at least 360 monthly contributions for men and 300 monthly contributions for women.

A= Average monthly salary for the last 3 years before retirement

B= Years subscribed in social security

The retirement salary cannot be less than 50% of minimum wage (currently stated at NIS 1,450)

Disability

The employee is entitled to a disability salary if the disability is incurred within insurance period, or has at least 60 monthly contributions and the disability incurred outside the insurance period.

A= Average monthly salary for the last 3 years before disability

B= Years subscribed in social security

The Disability salary cannot be less than %50 of minimum wage (currently stated at NIS 1,450) or %40 of average salary for the last 10 years.

Death

The legal heirs is entitled to employee death salary if

-         The death incurred within insurance period and the employee had 24 monthly contribution, or

-         Has at least 60 monthly contributions and the death incurred outside the insurance period.

-         If the deceased employee was paid a retirement salary or was entitled to be paid.

The Death salary cannot be less than 50% of minimum wage (currently stated at NIS 1,450) or 40% of average salary for the last 10 years.

  • If the deceased employee is not entitled to the death salary, upon death his/her legal heirs will get the accumulated fund from employee and employer contribution plus any interest revenue.
  • The Salary will be allocated to the legal heirs according to percentages stated in this law.
  • The death salary will be ceased when the legal heirs’ works or the widow or daughter are married.
  • An amount equal to three times of minimum wage will be paid to legal heirs to cover the funeral expenses.

Workers Injury Benefits

  • The employer contribution equal to 1.6% of the salary for Work injuries.
  • The employee contribution equal to 0.2% of salary and 0.3% contribution by the employer for the maternity fund.

The Benefit for the injured employee consists of medical care expenses, related transportation and rehabilitation expenses.

The injured employee is entitled to disability compensation or monthly salary in case of permanent or temporary disability.

In the Case of temporary disability from work injury, the employee will be entitled to a salary equal to 75% of last salary paid for the employee.

In the Case of Death or permanent disability from work injury, the employee or the legal heirs will be entitled to a salary equal to %80 of last salary paid for the employee.

Maternity

  • The (female) employee is entitled to twelve-paid week’s maternity leave equal to the average salary paid for the last six month.