Israel: Equal Pay Reporting Obligations

​Employers and employees trying to tackle Israel's persistent gender pay gap, which has persisted years after the Equal Pay law was established in 1996, will have a new tool to use as of June 1. An amendment about equal pay reporting obligations that passed in August 2020 will go into effect on that date, creating new ways for employees and employers to understand where the pay gaps at their company exist.

"The equal pay for male and female workers' law was established quite some time ago. This is not a new law," said Netta Bromberg, an attorney with Barnea Jaffa Lande & Co. in Tel Aviv, Israel. "But for many, many years, the enforcement was quite limited. Women were quite unable to prove that they're being paid less than their male colleagues. The new amendment of the law actually aims to reduce gender discrimination and promote equal employment terms between men and women in Israel." 

"The purpose of the amendment is to try and amend the situation via reporting obligations. The idea is that companies are concerned for their reputation," said Orly Gerbi, an attorney with Herzog Fox & Neeman in Tel Aviv. "The obligation for reporting would force companies to deal with the issue."

Three Reports Are Required

The new amendment applies only to large companies with more than 518 employees, as well as other companies that already had reporting obligations, including some public companies and government corporations. 

The amendment calls for three different reports to be released, all aimed at different audiences. The first is an internal report, which requires employers to divide their employees into various categories and then report the average salary for men and women in each group. How employees are divided and categorized is left up to the employers' discretion.

The internal report's main purpose "is to serve the employer in order to find and monitor the gaps in salaries between male and female employees," Bromberg said. 

Companies then are required to release a public report, which can be published on the company's website. "The public report should not relate to specific employees due to privacy matters, and it should generally provide just an overall and a general view of the company's pay gaps, if any," Bromberg noted.

Lastly, employers are required to provide a personal report to each employee. "It could be provided via the pay slips, or in a personal e-mail or text message," Bromberg said. "And each employee should be able to review the gap in the salary between his or her salary and his colleagues."

An Amendment, but No Enforcement

Although the requirements are in the amendment, there is no mechanism for enforcement. "This specific amendment does not include any criminal liabilities," Bromberg said. "For example, an employer that fails to publish a report is not subject to any criminal liability or fine, or any payment to the government or investigation."

This means that the main incentive to follow through with the amendment has less to do with legal consequences and more to do with PR. "You want to recruit good employees. You want the clients to think highly of you. You want a good reputation," Gerbi said. "Today in Israel, it is a market of employees. The employers are doing every effort they can in order to recruit employees."

Companies should look at the new amendment as an opportunity. "Employers understand that this is the time to make an actual change in the way they employ women and promote women," Bromberg said.

Companies Should Be Prepared

With the amendment going into effect on June 1, there is still some time to prepare the reports. "If they didn't start that, they should do it very, very quickly," Gerbi said. "They should start to collect the data, to divide the company into the groups." Companies that have already begun their reports have an advantage, because they've potentially had time to review and react to the findings in the reports. "The law was amended in August 2020, so companies that started in advance had the opportunity to learn, to study, to see whether they have issues, to amend things, if necessary," Gerbi said.

"Based on my experience during the last month, many employers, if not all of them, are using the law and are reviewing [it]," Bromberg said. "They understand that this will impact their ability to recruit new employees, and to make an actual change in the Israeli labor market."

Bromberg noted, "Most of my clients are very keen to follow the amendments. And they understand that this is a huge opportunity for them to help equal opportunity and employment to thrive."

Katie Nadworny is a freelance writer in Istanbul.