Israeli Employment Law – Did You Know? End of Year Employer ‘To-Do’ Check List
8 December 2024
We are pleased to present you with our last quarterly update for 2024. Once again, we present you with our End of Year Employer ‘To-Do’ Check List.
Obviously, the following checklist cannot cover all the important tasks which employers face at the end of the year, but we detail herein some of the most pertinent issues that we recommend addressing.
-
Vacation Accrual and Carry Over of Days:
Except in certain special cases specified below, employers are not obligated by law to allow employees to carry over accrued vacation days from one year to the next. However, if there is no explicit policy that limits or prohibits such carry-over, or if there is but it is not enforced in practice, then the lack thereof / employer passiveness may be considered as a de-facto consent for the accumulation and carry over of vacation days. Therefore, it is always recommended to adopt a clear policy and enforce it in practice (even if it is a “non-accrual policy”).
Did you know? It is not uncommon for employers not to enforce their vacation accrual and carry-over policies. Therefore, when analyzing the situation, the actual practice should be examined and not only any written policy or contractual agreement.
Did you know? Important to Note: Special Rule – Due to the current situation in Israel, an extension order effective from October 7, 2023, to December 31, 2024, provides that employees absent from work for specific stated reasons related to the situation, mainly employees who served in reserves at least five days as of October 7, 2023 and until December 31, 2024 are entitled to carry over any accrued vacation days for the following two years regardless of any contradicting rule under law or company policy (further details can be found in our legal update of March 13, 2024). Meaning, that days not utilized as of October 7, 2023 and until the end of 2023/2024 must be transferred to 2025 as well.
As the vacation year runs from January to December, the ‘To Do’ List includes:
- Enforce the existing policy (subject to certain exceptions listed below), including sending reminders to utilize all remaining vacation days before the end of the year or conduct internal meetings with employees who have high accruals, to decide on action plans for using up the accrued vacation.
- If the Company wishes to change its accrual policy, for example – to limit its vacation accruals and carry-over, this is the time to consult as to how to lawfully implement such changes for 2025.
- Plan – According to the law, in general, employers can schedule compulsory vacations over “shutdown” periods, for their employees. If such compulsory vacation is seven days or longer, then the employer must provide two-weeks advance notice. Furthermore, to enforce such compulsory vacation, employees must have a sufficient accumulation of days. If companies wish to schedule such vacations in 2024, we recommend informing the employees in advance, to allow them to prepare their schedules accordingly.
- Special cases – Confirm the exceptions – which employee leaves must be transferred to 2025 and ensure that such days are registered separately.
-
Recuperation Pay:
Recuperation is a historical entitlement that aims to allow employees “to recuperate”. The benefit entitles employees to an annual sum comprised of a daily rate, calculated by a number of days which is determined according to length of service of the specific employee (and is conditional upon the completion of at least one year of service). The rate of each day of recuperation (in the private sector) is NIS 418.
Did you know? Some employers make this payment in a lump sum, once a year (usually in July before the summer vacations), while others divide the payment into 12 equal monthly installments.
Did you know? Important to Note: Special Rule – As you may recall, following a collective agreement signed between the government, employers’ and employee’s organization, a new legislation was implemented in 2024 by which employers must deduct from the payment of the 2024 recuperation pay, the value of one recuperation day, for each employee. This will be done in order to transfer that amount to the State, as part of sharing in the costs arising from the budgeting of benefits for reservists( all as detailed in our legal update of March 18, 2024). We would like to inform you that similar agreements have been reached for 2025 and it is expected that comparable arrangements will apply in 2025. Stay tuned for additional updates on this.
The ‘To Do’ List includes:
- Examine whether the Company has updated the rate of recuperation pay paid for its employees.
- Stay Updated on the open issue highlighted above – that shall impact the recuperation entitlement.
-
Annual / Periodical Trainings:
The end of the year is always a good time to plan required trainings for the coming year.
The ‘To Do’ List includes:
- Prevention of sexual harassment trainings: The issue of prevention of sexual harassment is highly regulated in Israel and ever evolving with new obligations and requirements each year. Furthermore, although there is no general obligation to conduct trainings, there is a growing tendency in court rulings to take this training into account when examining the extent to which an employer fulfilled its legal obligations. We therefore highly recommend scheduling a prevention of sexual harassment training for the employees. We also suggest conducting separate trainings for managers and for employees, due to the greater responsibilities applicable to managers.
- Last but not least, the law requires every employer to appoint a designated employee responsible for the prevention of sexual harassment in the workplace. This role carries significant responsibility and requires proper training. We offer specialized training programs for appointees, and recommend that your appointee participate in these programs to prepare for future challenges.
Additional Trainings: Examine whether other trainings are recommended, depending on each company’s characteristics, for example, we highly recommend conducting manager trainings on workplace harassment and/or engagement of contractors.
-
Updates to Policies:
The year end is a good time to check that the Company has all the necessary policies for the next year and that they are legally up to date. The decision regarding the relevance of certain policies depends on the characteristics of each employer.
The ‘To Do’ List includes:
- Check which policies are advisable for your specific operations.
- Prevention of sexual harassment: This is a statutory policy for almost all employers. It is therefore recommended to confirm the existence of a local policy and that it is duly updated. For example, they must be updated to also apply on contractors following an amendment of the applicable law.
- IT & Monitoring Policy: This is not a statutory policy. However, based on court rulings, a broad and clear policy is required to lawfully enable monitoring. It is insufficient to merely state that employees should not expect privacy.
- Employees’ Use of Social-Media and Freedom of Speech: Recent times have emphasized the importance of such policies, for several reasons, among which, to ensure an inclusive and free of harassment workplace environment. We therefore recommend adopting a “use of social media” policy and /or code of conduct addressing this relevant issue. The current time of war and conflicts in Israel and worldwide has specifically highlighted the importance of such policy and its advantages.
-
Provident Funds:
In general, all employees in Israel are entitled to mandatory pension and severance contributions financed by both their employer and themselves. Furthermore, many employees are either lawfully or contractually entitled to the generally non-statutory benefit of an education fund. If lawful contributions have not been made, this can be amended, in general, only within the same tax year (without derogating from any legal implication in case of delayed payments).
Did you know? In general, under law, pension contributions must be made following completion of 6 months of employment. However, if the employee joined the company when he/she were already insured by a pension arrangement, then contributions must start as of the earlier of (a) completion of 3 months of employment; or (b) the end of the tax year. Furthermore, it is quite common to have a contractual obligation that requires payment as of the start day of employment.
The ‘To Do’ List includes:
- Ensure that the company has made all lawfully required contributions.
- Correct – if your examination reveals that not all contributions have been made – correct this within the 2024 tax year.
- Special cases: Consult with local counsel on special cases. For example, what to do if the employee fails to choose his/her preferred funds.
We would be happy to answer any questions you may have and offer our assistance in drafting new policies or updating existing ones, conducting trainings for the prevention of sexual harassment, workplace harassment or otherwise and to provide any general, ongoing or ad hoc advice you may need.
Labour Law Department
Herzog Fox & Neeman