A bartender was injured in an accident on her way to work, but the National Insurance Institute calculated her injury benefits based on payslips alone. The court ruled that cash tips may also be considered part of income.
Should tips received by an employee in cash, which did not appear on the payslip, be taken into account when calculating injury benefits after a work accident? A ruling by the Beersheba District Labour Court provides an especially important answer for employees in the service, restaurant and event industries.
At the center of the case stood a bartender from Beersheba, who was injured in a car accident on her way to work. The National Insurance Institute recognized the event as a work accident, but calculated her injury benefits based solely on the salary reported in her payslips, determining a minimal stipend of approximately NIS 2,300. However, according to the bartender, this did not reflect her true income: Along with the reported salary, she received tips averaging about NIS 300 per shift, which constituted a significant part of her actual earnings.
The tips were not recorded, but were distributed regularly
The bartender worked at an event hall for about four months. After the accident, when she realized that the calculation made for her did not include the tip money she received, she appealed the decision of the National Insurance Institute to the Labour Court.
The National Insurance Institute argued that there was no place to include the tips in the calculation, because their amount was not proven through objective evidence. According to the institute, the tips did not pass through the employer’s cash register, were not documented, varied from event to event, and the employer himself did not know what the actual amounts were.
However, the court accepted the bartender's version, after being impressed that her testimony was consistent and credible. The testimony of another bartender who worked with her also supported her version. In addition, the employer confirmed that he was aware that the bartenders received tips, and that these were divided among them equally at the end of each shift, even though he did not maintain an orderly record of the amounts.
"The ruling reflects a consistent trend"
The court ruled that the mere fact that the tips were paid directly in cash from the customers to the employees does not rule out the possibility of recognizing them as part of the wages. That is: The fact that the money did not appear on the slip is not enough, on its own, to ignore it when calculating rights.
However, the court did not accept the full amount claimed by the bartender. Instead of an average of NIS 300 per shift, it was determined that she proved receiving average tips of NIS 250 per shift. Accordingly, it was determined that an amount of NIS 5,500 for 22 shifts should be added to her income in the quarter preceding the accident, and that the injury benefits due to her should be recalculated. In addition, it was ruled that the National Insurance Institute will pay the bartender legal expenses in the amount of NIS 4,000.
Attorney Ali Kamel, whose firm specializes in torts and National Insurance claims, explains that: "The ruling reflects a consistent trend in the rulings of the labour courts to prefer economic reality over the manner in which the employer chose to manage his records. In the service and restaurant industries, tips are not merely an accidental 'bonus' – rather, they sometimes constitute a significant and even primary part of the employee's income."
According to him, the meaning is that when examining eligibility for stipends following a work accident, the actual income of the employee in practice must be examined, and one must not settle for the accounting record alone. However, he emphasizes that this is not an automatic recognition of any claim to income from tips, and the employee is still required to prove the scope of the income using appropriate evidence.