What do you know about Israeli Employment Law? Termination of Employment under Israeli Law
3 July 2023
Dear Clients and Friends,
We are pleased to present you with our third quarterly update for 2023. This time, we have chosen to devote our update to an issue that, unfortunately, is always relevant: Termination.
Third update: what do you know about termination under Israeli Law?
This update obviously cannot cover all aspects of this complex issue, but it will hopefully provide you with some important insights and tips.
Employment At-Will?
The concept of employment at-will does not exist under Israeli law. However, as a general rule, employers may terminate their employees’ employment at any time, if based on a legitimate reason and after conducting a due process. Termination should also be compliant with general principles such as good faith and equality, any applicable laws and any other binding legal sources, whether written or oral, including employment agreements, customary workplace practices, and collective bargaining agreements, if applicable.
Did you know? There is no set list of grounds for termination. Any reasonable and legal reason may be sufficient.
Hearing Procedure:
The hearing procedure is intended to inform the employee that the employer is considering the termination of his/her employment, to specify the reason/s for such intent, provide any relevant background information, and give the employee the opportunity to share his/her views before the employer reaches its decision as to whether or not to terminate the employee. It is a three-stage process consisting of: (a) an invitation to the hearing; (b) the actual hearing meeting; and (c) the notification of the decision following consideration of all relevant information.
Did you know? The hearing process was put into place by court rulings and not by legislation. Therefore, it is important to keep updated on all relevant rulings (so please click here to register to receive all our legal updates, in order to remain updated.
Did you know? The hearing process is compulsory for all employers, in all cases of termination, even in cases of redundancy or termination for cause.
Notice Period:
If a decision to terminate is reached, the employer is obligated to provide the employee with prior notice. Israeli law provides for a minimum prior notice period for both termination and resignation, which ranges, for monthly employees, from one day to one month, depending on each employee’s length of service. The parties may, of course, contractually agree to longer notice periods.
Did you know? In general, the employer is free to choose between prior notice, “garden leave” (a non-working period), or payment in lieu of notice, all provided that the agreement between the parties does not state otherwise.
Severance Pay:
Employees, whose employment is terminated after the completion of a full year of employment, are generally entitled to statutory severance pay in the amount of one month’s salary multiplied by the number of years of service (pro-rated where applicable).
Did you know? There is no specific severance entitlement that must be given in cases of redundancy. However, in many companies it is customary to pay extra benefits in such cases.
Did you know? In Israel, it is generally obligatory to contribute to pension and severance funds for all employees. Most of the statutory severance entitlement, and in some cases all of the severance entitlement, is accrued in the severance component of the employee’s mandatory pension arrangement. Accordingly, sometimes it is sufficient to release the accrued severance fund in order to satisfy the statutory severance pay requirement. Remember this tip – If the term “Section 14 Arrangement” is mentioned, you should generally be relieved.
Protected Groups:
Did you know? There are two unique protected groups in Israel: (i) employees undergoing fertility treatments; we should also add that fertility treatments are generally covered by local state health insurance, and that contrary to other jurisdictions, a low birth rate is not much of an issue in Israel; (ii) an employee on army reserve duty and thirty days thereafter; we remind you that reserve duty service is obligatory in Israel.
Did you know? Specific ministerial approvals for the termination of protected employees may be obtained under certain circumstances, if the employer demonstrates that the termination is not due to those special circumstances of the employee (for example, the employee being pregnant).
Settlement of Accounts and Letter of Waiver and Release:
Did you know? Employees cannot be forced to sign waivers. However, any ex-gratia benefits can be conditional upon their signing waivers. We remind you that statutory severance pay is generally mandatory and not a benefit that can be made conditional upon signing a waiver.Law & Culture:
Did you know? Israelis are generally warm, open, and informal. Israeli employees will therefore usually choose to share their views in the course of the hearing procedure. Furthermore, it is quite common to negotiate in local culture, another detail of which employers should be aware.We would be happy to answer any questions you may have and provide you with any further advice needed.
The Labour & Employment Department
Herzog
