Is It Legal to Pay Wages in Cash in Israel?

Job advertisements offering cash payment appear quite frequently online. Prospective employees naturally wonder whether this is legal, whether it could lead to problems with government authorities later on, or whether it might simply be a scam. New immigrants are especially vulnerable: for various objective reasons, their job options may be limited, and they may not yet be familiar with the Israeli labor market and local practices. We decided to explore the issue and asked Yehoshua Maziya, head of the well-established AVRIKA recruitment agency, for his comments.

– Let's start with the basics of wages. How is an employee formally hired in Israel?

– In Israel, as in any developed country, employment must be formally registered. The employee completes Form 101, providing essential personal details based on official documents. Israel has various tax benefits, including benefits for new immigrants and parents of minor children. That is why submitting accurate information is both important and potentially beneficial.

– There are three ways to pay for work in Israel, whether it is a one-time assignment or regular employment. The first, and most common, is a transfer to the employee's bank account. For long-term employment, this means regular salary payments on set dates. This method is familiar and convenient, so let's move on.

The second method is a check made out to the employee. The employee must still be formally employed by the company. This method dates back to the time when bank transfers could take several days. Today it is becoming less popular because of the inconvenience involved. According to the interviewee, cashing the check can take three business days while the bank verifies it. In other words, the money may only become available three banking days after the check is deposited.

– The third method allows wages to be paid in cash, but there is an important qualification. It is used when, for one reason or another, the employee has limited access to a bank account or other financial services. For example, the employee may be undergoing bankruptcy, have a frozen account or face restrictions due to debt or unpaid child support. In such cases, the employer may withdraw the money owed to the employee under a power of attorney and hand it over in cash. The employee must still be formally registered, even though the payment is received in cash.

– Does that mean the employee can receive the money only once or twice a month, as with bank transfers?

– Not necessarily. Under this arrangement, payments may be made weekly or even daily, depending on individual agreements. The interviewee describes this as lawful provided the requirements are met. An employer may also pay cash advances during the month, but should obtain appropriate receipts from the employee and record all payments in the accounts and on the payslip (tlush).

– You said this payment method is used when an employee has account restrictions or attachments. Can a person without such restrictions choose cash payment too?

– Yes. An employee can choose this form of payment even without any restrictions, provided the employer agrees. Israeli employers generally dislike this arrangement because it requires extra effort and administration. In practice, an employer is more likely to agree to cash payments to help an employee through a difficult situation; the human factor comes into play. But, to repeat, according to the interviewee, receiving wages in cash remains legal when the employment is properly registered.

– Thank you for these valuable explanations. Finally, are we right to understand that every lawful employment arrangement in Israel requires formal registration?

– Yes, that is correct. Any offer to work without formal employment registration is unlawful and can have unpleasant consequences for both the employer and the employee.

Yehoshua Maziya, head of the AVRIKA recruitment agency

NOTE: This article is for general information only and does not constitute legal advice.

On our website you can find information about employment in Israel, including information for new immigrants. We also recommend our articles about the working week in Israel and about working-hours legislation in Israel.