A turning point for restaurant workers in Israel: The Histadrut leads the fight for fair use of tips

A longlasting debate about the proper use and status of tips in the restaurant industry—a sector long characterized by blurred lines between wages and gratuities – has reached a pivotal moment with a recent decision by the Israeli Tax Authority not to tax restaurant tips. This move clearly shows recognition of the tips as part of workers’ legitimate wages. The Histadrut, through its Youth Organizing Division, led by the Working and Studying Youth Federation (Noal), has played a leading role in driving systemic change to ensure fairness and transparency for restaurant workers, many of whom are young employees.

For years, tips have effectively served as the main source of income for many waiters in Israel. Restaurant owners often rely on customers to subsidize wages via tipping, allowing businesses to avoid paying full salaries. While a 2019 ruling by Israel’s National Labor Court legitimized this practice under certain conditions—namely that tips go directly to workers and that full social rights such as pension contributions and overtime pay are respected—the reality on the ground remains problematic.

Tomer Shrim, head of trade union activity within Noal, emphasized the continued urgency in a statement provided to Ice news:

“We welcome the Tax Authority’s just decision not to impose additional taxation on the wages of restaurant workers. It is encouraging to see restaurant organizations agree that tips are part of employee compensation. However, we are still seeing far too many establishments treat tip money as their own, diverting it to cover business expenses without accountability—contrary to customer intent and worker rights.”

The recent move by the Tax Authority is a step in the right direction, reinforcing the notion that tips are part of lawful compensation. Still, there is a process to go before a comprehansive legislation is passed to secure fair compensation rights for waiters.

As Israel’s labor landscape continues to evolve, particularly with new legislation taking effect, the role of the Histadrut in safeguarding fair employment conditions is more critical than ever. The goal of NOAL remains clear: to ensure every young person in Israel works in an environment that is fair, safe, and respectful—where their contributions are valued and their rights protected.