This article is a guest post by Israpay's Moshe Egel-Tal, CSPP.
Latest update: October 2020
What are the Israeli employee's termination rights?
An employer is required by law to give prior notice to an employee upon layoff. The employer can waive the employee's services for this period of time but it must be paid in full regardless.
Monthly salaried employees get 1 day's additional notice for each month worked for the first 6 months.
From the 7th – 11th month, it's 6 days plus 2.5 days for each additional month beyond 6.
From 1 year of tenure onward, the employee requires 30 days' advance notice.
If you worked at least a year with the present employer in most cases you are eligible for severance pay. Severance pay needs to be paid within 30 days of termination and is paid by the employer or a severance pay fund.
Unused vacation days
Any unused vacation days that you have accrued must be paid out to you in your last payslip.
This is of utmost importance, especially if you intend on filing for unemployment benefits: make sure the letter is on company stationery, dated and states the reason for termination and the effective termination date.
Pay attention that the effective termination date should be *after* the prior notice period. For example: an employee with 5 years' tenure receives a termination letter dated Jan 1st saying that he will be terminated, effective Feb 1st i.e. after the 30-day notice period. This is legal. However, if the letter had said “effective Jan 11th” – this is illegal.
Other critical documents to get when laid off in Israel
Release letters for any savings, pension or hishtalmut funds
These are a must- without them you will not be able to withdraw from any of the funds.
The letters need to be on company stationary, dated and should be addressed to the fund. Each letter must specify that you have stopped working for the employer and that the employer releases the amounts accumulated in the fund to you, specifically the employer's and the employee's parts.
In each case, the employer sends the letter to the fund and you receive a photocopy. Make sure it is signed and has the employer's stamp on it as well. Keep this in a safe place, preferably with the policy or yearly statements the fund sends you.
Authorization letter of employment
This is required by law and is a proof of employment. Should be kept on file with your records and needs to include name, ID number, job description, start and end dates.
A copy of the 161 tax form
Only when you're eligible for severance pay: if you file for Israeli or foreign tax returns, this is the official document which states your severance pay due and the taxes paid on it. For each year of tenure, there is a ceiling which is tax exempt. In 2009, that ceiling is NIS 10,980. Unless your monthly salary was higher than the ceiling, it should be exempt from taxes.
Recommendation letters or referrals
Always a good idea, especially if you were laid off due to cutbacks, the economic situation, etc., in other words, at no fault of your own. Make sure these are on company stationary, dated and state your name, position held, tenure and responsibilities. Ask your supervisor or boss, who will usually be happy to write a recommendation letter for you.
Internal contact lists
You never know when you might need to contact someone from this place of employment. Write down names, job descriptions and phone numbers of colleagues and key personnel (like the HR dept, payroll). Make sure you have the employer's contact information as well e.g. from an empty envelope or other piece of company stationary.
The above information pertains to employees whose pay is monthly based. Temporary hire through agencies, hourly employees and others – there may be some differences in the law. This article is a general overview and only intended to give a clearer picture and is not meant to be taken for word in every situation. For more information on specific cases, contact Moshe.
About the author
Moshe Egel-Tal is a certified senior payroll professional (CSPP) with over 20 years experience in the finance field. He has vast experience in payroll instruction to end users, setup and implementation of payroll departments and fine-tuning payroll processes for companies. Moshe has lectured at university on labor laws in HR managers' courses and at payroll comptrollers' courses. Born in Chicago, Moshe made aliya in 1978 and resides with his wife and 3 sons in Jerusalem. Get Moshe's book “Tax Benefits for Salaried Employees in Israel“.
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Do you know someone who was laid off recently? Please share this article with them so that they know all their rights.