Israeli Waiters Not Entitled to Salary if Tips Are Big Enough, Court Rules

Restaurant was sued for back pay of half a million shekels, but courts rules such a sum would likely pull business under and reflects a 'cynical exploitation of the law' by plaintiffs.

In a surprise decision this week, a Tel Aviv Regional Labor Court ruled that restaurants and cafes don’t have to pay waiters regular salaries if they are making more than the legally required minimum wage from their tips.

The ruling, issued by Judge Ornit Agassi, bucks a growing tendency by the courts to ensure that waiters are paid a full salary plus tips, or at the least that tips make up only part of their salary. In the latter case, waiters are paid the minimum wage by employers and supplement that with tips.

But in the case of Cafe Einstein, a well-known eatery in Ramat Aviv Mall, sales records showed the waiters earned much more from their tips than they would have received if they were getting minimum wage, Agassi noted.

Moreover, the waiters had agreed when they were hired to be paid from their tips only and even expressed a preference for receiving their wages in cash. Thus, she ruled, the tips constituted not just a supplement but the salary itself.

“The plaintiffs’ attempt to obligate a cafe to pay the enormous sum of a half a million shekels, which would likely pull the business under, displays a lack of good will and a cynical exploitation of the law,” Agassi said.

The suit, filed by four Cafe Einstein waiters, asked the court to force the management company that operates the cafe and owner Gilat Abramov to pay them back minimum wages without factoring in their tips, a total of NIS 520,000.

They claimed the cafe had employed them without a signed agreement detailing their work conditions. Because management refused to pay a regular wage, they quit but claimed that the law entitled them to severance pay.

Cafe Einstein’s lawyers told the court that the waiters each earned between NIS 250 and NIS 500 per eight-hour shift, paid in cash at the waiters’ request in order to avoid paying taxes. Furthermore, the managers made clear to the wait staff that if their tips did not reach the equivalent of minimum wage, which today is NIS 23.12 an hour, the cafe would make up the difference.

Cafe Einstein’s management also disputed the four waiters’ demand for severance pay, claiming that the waiters each quit their jobs for personal reasons. Moreover, the waiters did not provide a month’s notice as required under the law, claimed management.

Agassi ruled that the lawsuit personally targeting Abramov was excessive and ordered the four waiters to pay him NIS 10,000 to cover his legal costs. In one small victory for the waiters, however, the judge did order the cafe to pay them severance pay since it hadn’t paid their social benefits and transportation costs as required by law.

Emil Salman