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Hundreds of municipal workers in Tel Aviv will have to repay millions of shekels in backpay to City Hall after an agreement was reached late last week between the municipality and the workers' unions.

Some 700 employees of the Tel Aviv Municipality will have their pay cut and will be liable to pay back millions to their employers, after the two sides agreed that several pay bonuses exceeded the acceptable norms of pay and conditions in the public sector.

The oversight in payment to the 700 workers was exposed after the Finance Ministry commissioned an investigation by external accountancy firms, which examined the pay slips of some 6,000 Tel Aviv municipal workers and retirees. These were checked vis-a-vis collective work agreements signed since 1999. The examination revealed that some 700 staffers had received pay and bonuses that were not commensurate with any signed - and treasury-approved - agreement. These included "global pay" bonuses, as well "regional bonuses" and "management bonuses."

The affected 700 workers will see the reductions in their next monthly pay slips, as well as the retroactive payback for all non-approved bonuses they received since March 1999, the unions and the municipality agreed.

The treasury said that in any deviation of approved current work agreements, the wages director will act according to the powers granted to his office.

Chairman of the Tel Aviv Municipality workers union, Arnon Bar-David, said, "After lengthy negotiations, the workers' representatives managed to reduce the level of harm to the minimum for those affected by the non-approved wages. The agreement reached ends a very tense period and avoids a great crisis in the municipality."

Tel Aviv Municipal CEO Menachem Leibe said, "According to the agreement, the treasury recognized the wages of many workers, and overall the municipal wages are not considered as unapproved or not commensurate with existing agreements. Regarding those whose wages deviated from what had been agreed, it was decided that they should pay back at a rate of 20 to 30 percent spread over five years. The restitution can also be made through other means such as cuts in vacation days. I am proud of the cooperation and willingness of the municipal workers to reach this important solution."