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Israel Supreme Court: Statutory Provisions Regarding Minimum Wage in the Minimum Wage Law

Submitted By Firm: Naschitz Brandes

Contact(s): Pnina Broder Manor


Yaron Horovitz and Yaron Rossman

Date Published: 3/21/2013

Article Type: Legal Update

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Supreme Court: statutory provisions regarding minimum wage in the Minimum Wage Law and the accompanying criminal sanction also apply to late payment, not only to breach of the obligation to pay.

Court gives a purposive interpretation of the provisions of protective labor laws and reads provisions of the Protection of Wages Law into Minimum Wage Law. 

Background: Enterprise Company Limited, which is engaged in electronic games, was indicted before the Regional Labor Court in Tel Aviv - Jaffa. According to the indictment, between March - June 2002, the company employed three employees to oversee the electronic games area at the Bat-Yam mall, but did not pay them minimum wage for several months. Due to these acts an administrative fine was imposed on the company.

The company appealed to the National Court and then even to the Supreme Court admitting that, although it paid the salaries of the employees two months late, this does not constitute an offense under the Minimum Wage Law. In the claim it is contended that the said law does not set the date for payment of salaries, and this matter is actually handled under a different law - the Wage Protection Law. It is added that if the legislative body or regulator wishes to issue directives on the matter, they could. However, the law remains uncorrected, so there is no link between the two provisions in question, and they remain separate in legislation. In this context, the company added that the ruling of the National Labor Court, which convicted it for offenses under the Minimum Wage Law, constitutes forbidden "judicial legislation" which creates offense out of nothing, contrary to the rule that there is no punishment without proper warning.

In response, the State argued that the interpretation offered by the defendant brings employee, which can not be conditioned, as a way to balance the inherent imbalance of power between employer and employee.

On the merits of the provisions in question, the court noted that the Minimum Wage Law determines the scope of the salaries and also noted that the right to a minimum wage is not limited to that, rather it also deals with the concerns accompanying the receipt of the minimum wage on time. Although there is no provision in the Minimum Wage Law regulating the legal payment time of wages, it is a well known fact that wages are regularly paid near the date of execution of the work, and within a period of one month. Therefore, the interpretation of the term 'wages', which appears in the Minimum Wage Law, should include a time frame for payment. Any other interpretation would allow employers who paid their employees late - even in cases of substantial delay of several months or years - to escape the criminal sanction found in the Minimum Wage Law.

In this context, Justice Rubinstein added to Judge Zilbertal's opinion and ruled that the term "paid", included not only the term "wages", but also the intention to pay wages on time.

In conclusion: the defendant did not pay the salaries of the complainants every month as required, and therefore one cannot say that it paid the minimum wage of the complainants in accordance with Article 14 of the Minimum Wage Law. Completion of the amounts in arrears after a delay is no longer a minimum wage payment, rather it is regarded as suspended wages. The amount of the fine imposed on the defendant was put at a total of 46 440 NIS in the Labor Tribunal (the reduced amount of the fine Regional Court ruled in the about an absurd result. The State argues that this interpretation would be contrary to the criminal offense provided for in the Minimum Wage Law, because - according to this interpretation - failure to pay the minimum wage on time, would not constitute a criminal offense and thus would be less of a deterrent to employers. In addition, the State argued that the defendant's interpretation is not reasonable in light of the purpose of the Minimum Wage Law, which essentially ensures the right to a minimum human dignity. This right embodies the obligation to pay salaries on time. Accordingly, it was contended that sections 2 and 14 of the Minimum Wage Law should be read in conjunction with Section 9 of the Protection of Wage Law, stating that monthly wages should be paid at the end of each month.

The question which was therefore put before the Supreme Court was whether we can turn to the provisions of the Wage Protection Law, which deal with the payment deadlines, in order to complement the provisions of the Minimum Wage Law so as to allow the imposition of criminal penalties provided for in the Minimum Wage Law.

Judgment: The Supreme Court rejected the defendant's interpretation and accepted the claims put forward by the State. The Court explained that all legislation, including criminal legislation, should be interpreted according to its purpose. The Court noted that the Minimum Wage Law was passed in 1987 as a key element in the fabric of protective legislation in labor law. Protective legislation is designed to create a shell of "minimum rights" for amount of NIS 727 000) remains the same.

References: PCA 4717/11 Sega Enterprise (Israel) (1996) Ltd. v. State of Israel - Ministry of Industry (06/01/2013).

For More Information: Please contact Yaron Horovitz, Adv. at or Yaron Rossman, Adv. at

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