Implications of the Israeli Reform of Public Transportation on Reimbursement of Employees’ Travel Expenses

Barnea Jaffa Lande & Co.

Another reform in Israeli public transit fares has taken effect – the “Derekh Shava” reform. The new fares may affect rates of reimbursement for employee travel expenses.

Does the reform eliminate  weekly passes and monthly passes?

Yes. These types of passes, as well as the discount when using “accumulated value” for commuters not entitled to discounted fares, will no longer be available.

What is the new arrangement?

The reform implements a regional monthly pass that covers travel to any destination within selected regions at a fixed monthly cost, and a national monthly pass that covers travel to any destination in Israel (except Eilat) at a fixed monthly cost. The reform stipulates different rates for a monthly pass for bus travel only and a monthly subscription that enables travel on both buses and trains.

What are the implications of the reform for employers in Israel?

To date, many employers in Israel calculated the daily travel cost according to the monthly pass. As a result of the “Derekh Shava” reform, and considering the cancellation of monthly passes and the  separate price for a monthly pass that includes both bus and train travel, employers may be required to recalculate the cost of their employees’ daily reimbursement.

How will we know if the payment arrangement that applies to employees has been changed?

We recommend checking the updated information and using the new fare calculation tools on the “Derekh Shava” reform’s website:

When do employers have to update employee reimbursements?

Reimbursements must be updated (if necessary) in August’s salary, which is to be paid in early September.

Have any statutory changes been made to the rate of expenses for traveling to and from work?

The reform does not change employers’ current obligation to reimburse their employees’ travel expenses to and from work. It also does not change the level of the maximum reimbursement that employers are obligated to pay. According to law, employees are entitled to reimbursement of travel expenses from their employers in an amount of up to ILS 22.60 per day or the cost of a daily travel pass or the daily cost of a monthly travel pass from the employee’s residence to the workplace, whichever is lower, provided that no higher reimbursement is specified in another agreement or arrangement that applies to the employee. Employers should check on an individual basis if and how the reform affects each employee.

Is it obligatory to pay travel expenses for days that the employee does not actually work?

The entitlement to reimbursement of travel expenses is for every day that an employee physically arrives at the workplace (and so does not apply to vacation days, sick days or work from home). Employees who are entitled to organized transport or to a private vehicle from the employer are not entitled to travel reimbursements.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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