Quarterly Tip
Pension contributions from bonuses and commissions


Almost every employer knows today that hiring an employee will make him bear the costs of salary and related, meaning:
Gross salary, pension contributions and national security as define by the law.

Once an employer hire an employee, he is familiar with the common practice salary for the role which he’s requesting to hire.

What about the pension?

Are we taking into consider all the salary components that we need to define as insured salary for pension and severance?
Most of the time we do…

Unfortunately, the population that will mainly suffer from lack of knowledge regarding this issue will be the sales people.
Employees that works at sales and receive sales commissions, will be entitled to receive pension contributions from the commission.
In this case the commission will be part of the insured salary for all the relevant matters (severance, notice period calculation and act.).

What about the other bonuses?

Incentive wages, bonuses or premiums, paid to an employee on condition that the employer has set other than part of the regularly paid fees, are not part of the determinant salary for calculating severance pay.

So, next time you’re hiring sales people don’t forget to pay their pension and severance properly.


The Tip was written by Shirley Hoffman, Specialist Payroll Controller at Brooks-Keret