Freezing and Reducing Recuperation Payments in 2025

Last year, due to the deficit caused by the ongoing war and following a collective agreement, legislation was passed to freeze the value of recuperation days for 2024 and reduce recuperation payments to employees.

Given the continued hostilities, similar provisions have been included in the recently enacted Law for Achieving Budget Targets and Implementing Economic Policy for Financial Year 2025 (Legislative Amendments), 5785-2025 (the “Law”).

The Law establishes mechanisms for freezing the value of recuperation days and reducing recuperation payments to employees, mirroring the measures implemented last year.

Freezing of the Value of a Recuperation Day

Under the Law, the value of a recuperation day for calculating recuperation payments in 2025 will remain the same as the value used for calculating payments to the same employee in 2024.

Please Note:

• As a similar provision was included in the law passed last year, the value of a recuperation day for 2025 will be identical to the value for 2023.
• According to the law, the value of a recuperation day shall be no less than NIS 418.
• If an employer is obligated, under a collective or personal agreement, to update the value of a recuperation day for 2025, that obligation will be delayed and considered when calculating recuperation payments for 2026.

Reducing Employees’ Recuperation Payments

Under the Law, employers must deduct the value of one recuperation day from the 2025 recuperation payment for each employee. This amount is to be transferred to the State to help finance the cost of benefits for reservists.

Please Note:

• For employees whose total salary in the last three months of 2024 did not exceed NIS 6,150, half the stated value will be deducted from their recuperation payment.
• The value of a recuperation day to be transferred to the State shall be no less than NIS 418 and no more than NIS 471.40.
• The amount transferred to the State includes mandatory payments under the National Insurance Law or the Value Added Tax Law, as well as contributions to the employee’s study fund. The reduction in recuperation payments does not affect pension contributions.
• If the recuperation payment was made before the publication of the Law, the reduction must be reflected in the July 2025 pay slip at the latest.
• Employers providing recuperation payments as vacation financing or other benefits must reduce the scope or value of these benefits by an amount equivalent to the value of a recuperation day.
• The Law outlines how the reduction should be implemented by employers who make monthly, rather than annual, recuperation payments.
• The amount deducted from the recuperation payment must be transferred to the tax assessor and is considered tax deducted at the source.

We are available to assist with any questions regarding the implementation of obligations related to freezing the value of recuperation days, reducing recuperation payments, and the process for transferring payments to the State.