Damage to Goods or a Work Vehicle: When May the Damage Be Deducted from Wages?

Damage Does Not Yet Mean There Is a Debt

Section 25 of the Wage Protection Law, 1958 contains a closed list of permitted deductions. An employer may not add its own “fines” for broken goods, a shortage, an error during work, or damage to property. If the employee disputes responsibility, the amount of the damage, or the very existence of an obligation to pay, the matter concerns a disputed claim, not a due and payable debt. The employer may file a claim with the Labor Court, but may not determine the amount and then immediately deduct it from wages.

When Written Consent May Be Sufficient

During employment, a debt owed to the employer may be deducted when there is a written undertaking by the employee. However, the debt must be specific and undisputed, and the monthly deduction may not exceed one-quarter of the gross wage. For example, if the wage is 12,000 shekels, the maximum is 3,000 shekels per month—but only if the basis of the debt itself is lawful and undisputed. Signing a general clause in an employment contract concerning liability “for any damage” does not automatically turn a future incident or malfunction into an undisputed debt.

Work Vehicle: Repairs, Deductible, and Fines

After a traffic accident, an employer often attempts to deduct the repair cost or the insurance deductible directly from the next wage payment. However, Section 25 does not provide for a separate automatic deduction due to damage to a work vehicle, an insurance deductible, or traffic and parking violations. For a deduction as a debt, there must be a written undertaking, a specific amount, and no dispute; during employment, the limit of one-quarter of the gross wage also applies. If the employee disputes responsibility, the connection between the damage and the accident, or the calculation of the repair cost, the employer must prove the claim separately.

The Final Wage Is Not Free Access to Funds

After employment ends, the employer may deduct the outstanding balance of a debt from the final wage without being subject to the one-quarter limit. However, this applies only to a specific, proven, and undisputed debt. The National Labor Court, in Emmanuel v. Shufersal, No. N.D./3–101, published in 1995, emphasized that an employer may not determine on its own how much the employee owes it, why, and in consideration of what. Therefore, a disputed valuation of damaged goods or a damaged vehicle does not become a permitted deduction merely because the employment has ended.

What the Court Will Examine

If the employer claims compensation, presenting a photograph of the damaged property is not enough. Evidence of the amount of the damage, the connection between the actions of the specific employee and the malfunction, the circumstances of the incident, and the content of the signed documents is important. A disciplinary fine may be deducted only if it is provided for by law or by a collective agreement, not by an individual decision of the manager. Likewise, an ordinary error during work and intentional causation of damage should not automatically be assessed in the same manner.

How to Demand Repayment of the Deducted Amount

First, the wage slip, employment contract, correspondence, incident or malfunction report, photographs, and the employer’s calculations should be retained; every deduction must be shown on the wage slip. It is then possible to state in writing that the debt or its amount is disputed, request the legal basis for the deduction, and demand repayment of the specific amount. If a violation of labor legislation is suspected, a report may be submitted to the Regulation and Enforcement Administration at the Ministry of Labor, including anonymously. The issue of recovering the money may be referred to the Labor Court; an administrative complaint and a monetary claim serve different functions.

FAQ

Sources

• Ministry of Labor: Permitted and Prohibited Deductions from Wages
• Kol Zchut: Deductions from an Employee’s Wages
• Wage Protection Law
• National Labor Court Judgment in Emmanuel v. Shufersal
• Knesset: Bill to Strengthen Oversight of Deductions from Wages

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