How to Switch to a Digital Form 101
Form 101 is what each employee's tax credit points and withholding rate are based on. When employees fill it in and sign it digitally, collecting the forms in January takes far less time and payroll makes fewer mistakes.
If you have worked in HR or payroll in Israel, you know what early January looks like: a pile of printed forms, missing signatures, ID copies nobody can read, and the employee who forgot to mention a new baby or a change of address. Form 101 is about as basic as payroll paperwork gets, and that is probably why it gets so little attention. It can be handled differently, and the change is less work than most people expect.
What the form decides
Form 101 (Tofes 101), formally the "Employee Card and Request for Tax Relief and Tax Coordination by the Employer", is where employees give their employer their personal and family details. From those details the employer works out which tax benefits the employee is entitled to (for example credit points for children, a completed degree or military service, or the credit for residents of qualifying towns), whether a second job means tax coordination is needed, and what rate of tax to withhold from the salary.
A missing or outdated form can push withholding too high, and the employee feels money is being taken from them. It can also push it too low, which creates a tax debt that turns up later. Either way, payroll is the first to hear about it.
When employees fill it in
A new employee fills in Form 101 when they start work. At the beginning of every tax year, in January, all employees submit an updated form for the new year. During the year, employees should update it whenever something changes: a birth, a marriage, a move or a second job. Encourage people to do this as soon as it happens, because a change that waits for January means months of withholding based on old details.
The employer has to keep the forms and their attachments so they can be produced in an audit.
What changes when the form is digital
Filling in and signing the form digitally is acceptable, provided the process is set up properly: the employee is reliably identified, the signed form is stored and the time of signing is recorded.
Beyond convenience, there are practical gains. With required fields and validation checks, a form can't be submitted without a valid ID number or marital status. Employees photograph the relevant certificate on their phone and attach it to the form. Payroll can see at any moment who has finished and who hasn't, including anyone who started and stopped halfway. Every version is kept with a date and time, so it is easy to pull up when someone asks for it. And the data goes straight into the system, so nobody retypes it from paper.
What to check before you choose a system
Start with how the system identifies the employee. A personal account, for example, makes it clear who filled in and signed each form. Check that the signed form is stored in a format that can't be altered afterwards, and that access is limited by role, since not every manager needs to see the family details of the people on their team. The data also has to be secured and stored in line with privacy protection requirements.
Preparing for January
Send the first reminder in late December, with a two-line note on what the employee gets out of it: an up-to-date form means the right amount of tax comes off their salary. Set a clear deadline, ideally before January payroll is run, and let the system send automatic reminders to anyone who hasn't filled it in. It saves a lot of phone calls.
Name one person to answer questions. Most of them will be about credit points and tax coordination, and employees are better off getting answers from one person who knows the subject.
When the forms start coming in, look for the ones that don't add up. The familiar example is an employee who reported a second job but didn't attach a tax coordination certificate.
Clockey's digital forms module includes a ready-made Form 101: employees fill it in and sign from the app or a browser, attach documents from their phone, and the signed form is saved to their employee file. Managers can see who hasn't completed it yet, and payroll gets the data without anyone retyping it.
This article is for general information only and is not legal advice. For a specific case, consult an employment lawyer or a payroll advisor.