Legal Updates

‎‎‎‎‎‎‎‎ Only a payment that is not contingent is part of the base salary for severance pay and pension

October 4, 2017
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Published in Afik News 242 25.10.2017

An employee worked for three years until terminated. The employee's salary included a personal premium calculated based on a percentage of sales. The employer refused to pay severance pay and pension on the premium.
The Labor Court held that one need examines whether the payment made to the employee was contingent so that if the condition is not met no payment is made. Only a payment that is not contingent is part of the base salary for severance pay calculation. In our case, the payment of the personal premium was continent on compliance and therefore is not supposed to be included in the determination of salary for the purpose of severance pay, and no provisions should be made in respect thereof to a pension fund.

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