Freezing and Reduction of Recreation Pay in 2024 for the Purpose of Budgeting Benefits for Reserve Soldiers Law, 5784-2024

In this Law –

"recreation pay" – recreation pay, recreation allowance or another payment similar in nature, even if differently named, paid to an employee pursuant to law, agreement or custom, or financing of a vacation or another benefit in kind given in lieu of such payments;

"agreement" – a collective agreement, an extension order as defined in the Collective Agreements Law, a collective arrangement including a unilateral arrangement, administrative directives, or an individual employment contract including a special contract under section 40 of the State Service (Appointments) Law, 5719-1959;

"collective agreement" – a general collective agreement or a special collective agreement as defined in the Collective Agreements Law;

"update obligation" – an obligation, pursuant to a commitment in an agreement or pursuant to custom, to update in 2024 the amount of one recreation day by which the recreation pay for an employee is calculated in 2024, which would have applied but for the provisions of section 2;

"National Insurance Law" – the National Insurance Law [Consolidated Version], 5755-1995;

"Head of Authority Pensions Law" – the Local Authorities (Pensions for Head of Authority and Deputies) Law, 5737-1977;

"Collective Agreements Law" – the Collective Agreements Law, 5717-1957;

"Budget Foundations Law" – the Budget Foundations Law, 5745-1985;

"Provident Funds Supervision Law" – the Financial Services Supervision Law (Provident Funds), 5765-2005;

"Jewish Religious Services Law" – the Jewish Religious Services Law [Consolidated Version], 5731-1971;

"recreation day price" – as set out below, as the case may be:

"public employer" – any of the following:

"salary" – employment income as defined in section 2(2) of the Income Tax Ordinance [New Version];

"office holder" – any of the following:

"participation amount" – the total amount of all of the following:

"employee" – an employee who is entitled pursuant to an agreement or custom to recreation pay in 2024, excluding an employee employed by an individual other than in the framework of a business or occupation;

"employee in a partial reduction" – an employee who, but for the provisions of this Law, would have been entitled in 2024 to five recreation days, and whose average monthly salary during the period of the three months January 2024 to March 2024 does not exceed NIS 6,000, and if that employee is employed on a part-time basis – does not exceed the said amount multiplied by the part-time fraction of that employee's position; however, if the employee was not entitled to a salary in respect of any month of the said months, the three last months preceding April 2024 in which the employee was entitled to a salary shall be taken into account instead of the said three months; for this purpose, the part-time fraction in relation to an employee whose salary is paid on an hourly basis shall be calculated as the quotient obtained by the following formula, and shall not exceed 1:

"budgetary pension" – payments paid monthly, on a continuous basis, pursuant to law or agreement, from the State Treasury or from the employer's fund, to an employee who has retired from employment for the duration of that employee's life, and after that employee's death – to that employee's survivor;

"assessing officer" – as defined in the Income Tax Ordinance [New Version];

"provident fund for pension" and "training fund" – as defined in the Provident Funds Supervision Law.

For the purpose of calculating any of the following, the reduction of recreation pay or the reduction of salary under this Law shall not be taken into account:

An employer is liable to pay the participation amount to the assessing officer, and for this purpose the provisions of section 246 of the Income Tax Ordinance [New Version] shall apply.

Without derogating from the provisions of section 5, the participation amount paid to the assessing officer shall not be regarded as income in the hands of the employee for the purposes of the Income Tax Ordinance [New Version].

The portion of recreation pay or the portion of salary, as the case may be, that was not paid to an employee under this Law shall not be paid to the employee even after the end of 2024.

The provisions of this Law applying in relation to an employee and the employee's employer shall apply in relation to an office holder and the person who pays the office holder's salary even where there is no employment relationship between them, with the necessary modifications, and in relation to an office holder to whom recreation pay is not paid in 2024 – also with these modifications:

The provisions of this Law applying to an employee and the employee's employer shall apply to a soldier serving in the Israel Defence Forces pursuant to a commitment for regular service and to the Israel Defence Forces, even where there is no employment relationship between them, with the necessary modifications.

The provisions of sections 29a, 29b, 33a(b1), and (d) to (f), 34(a)(1) and (b), 35, 35a, 36, 37(d) to (f) and 39 of the Budget Foundations Law, in relation to changes in wages or the granting of other monetary benefits connected with employment, including the powers conferred therein, shall apply, with the necessary modifications, in relation to the payment of salary or another payment from a public employer's fund, made by a public employer in contravention of the provisions pursuant to this Law.

During the period from the date of commencement of this Law until the 25th of Tevet 5790 (31 December 2029), the Income Tax Ordinance [New Version] shall be read as if after section 245 there were inserted:

"The participation amount to be paid to the assessing officer under the Freezing and Reduction of Recreation Pay in 2024 for the Purpose of Budgeting Benefits for Reserve Soldiers Law – Temporary Provision

The participation amount to be paid to the assessing officer under section 6 of the Freezing and Reduction of Recreation Pay in 2024 for the Purpose of Budgeting Benefits for Reserve Soldiers Law, 5784-2024, shall be regarded, for the purposes of the provisions of this Ordinance, as tax withheld at source under section 164 at the time the recreation pay is paid to the employee in 2024, and in relation to an office holder to whom recreation pay is not paid in 2024 – at the time the office holder's salary is paid in July 2024, and which is to be paid to the assessing officer under section 166; for this purpose, "office holder", "participation amount" and "employee" – as defined in the said Law.".

14. In the supplementary budget law for the fiscal year 2024, an amount shall be determined corresponding to the estimated revenues expected by the State Treasury under this Law, as part of the amounts included in the said budget for the purpose of granting benefits to reserve soldiers.

15. The Minister of Finance is charged with the implementation of this Law, and may, with the approval of the Labour and Welfare Committee of the Knesset, make Regulations for its implementation; in such Regulations the Minister of Finance may, in consultation with the Minister of Labour, prescribe provisions regarding the manner of reducing recreation pay under section 3 in relation to an employee whose recreation pay is not paid as a separate component.

16. The Minister of Finance shall report to the Labour and Welfare Committee of the Knesset, from the 25th of Sivan 5784 (1 July 2024) until the end of 2026, once every three months, on the matters listed below, in relation to the period preceding the date of the report: