Many of us dream of resigning but fear losing our accumulated severance pay. As it turns out, in Israel there are many cases where an employee can resign and still retain severance pay. One only needs to know when the law allows it.
This article is a guest post by Moshe Egel-Tal, CSPP. If you’d also like to guest post here on JobMob, follow these guest post guidelines.
The employed-job sector has gone through many revolutionary changes in recent years that are characterized mainly by a huge turnover of positions. The days when an employee was secure and stable in his position for life – that were a major factor in accepting a position – are no longer. Employees aren't afraid anymore to change jobs and if someone stays at a position for 3-4 years it is considered a long-term position. Due to high employee mobilization, many employees would like to resign in order to pursue other job opportunities but refrain from doing so because they know they will only get severance pay if they are terminated by their employer.
There is a pending law that is waiting for Knesset verification, which if passed will enable employees to resign after completing one year of tenure with an employer and still receive severance pay. Many are skeptical about this law's chances, especially since it was already voted upon in the 16th Knesset and defeated.
Update 18/11/10: the law still hasn't passed yet.
The most common case of resignation that is recognized by law as a “forced situation” on the employee – thereby granting him severance pay rights as if he was terminated – is called a tangible worsening of his employment conditions or reasons that as a result one would not be expected to continue in his position. The wording “a tangible worsening” includes a very wide range of situations which aren't clearly explicit in the wording of the law. So what is “a tangible worsening” ? The rulings of Israel's National Labor Court have defined this as a situation in which the employer has narrowed an employee's steps or worsened his working conditions to a point where he has no alternative but to resign.
The classic case is regarding an employee's wages, which are a basic and integral part of any employee's terms and conditions of employment in a contract between the employee and the employer and cannot be disregarded unilaterally by the employer. Valid instances that are determined to be “a tangible worsening” of terms of employment are:
There are, of course, other reasons that fit well into this category. For example, failure to transfer social benefits that have been deducted from employee's payslips to their destination, or employing an employee at less than minimum conditions as specified by the law. One example of the latter is requiring an employee to work on Shabbat or a holiday without ample compensation as required by law. Another would be an employer ignoring significant breaches in safety, health issues. Unfortunately, a one-time case isn't usually regarded as “a tangible worsening”.
Here is a list of 15 cases where an employee can resign and claim severance pay according to the Israeli severance pay law (Hebrew):
This list is not comprehensive. There may be other instances that warrant the same end result, including some which have been ruled upon by the Labor Court and some which have not. Obviously, in instances where the employee instigates trouble or purposely causes damages to the employer, he would not be entitled to severance pay.
This article is a general guideline and by no means should it be used except in clear cut cases. It is advisable to consult with a labor law specialist or a lawyer who deals in labor law issues.
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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