Beendigung in Israel

Terminating an employee in Israel involves navigating a complex legal landscape governed by labor laws, collective agreements, and judicial precedents. Employers must adhere to strict procedures and provide appropriate compensation to avoid potential legal challenges. Understanding the nuances of Israeli termination law is crucial for ensuring compliance and minimizing risks.

Israeli law distinguishes between resignation and termination, with different implications for severance pay entitlements. Severance pay is generally mandatory for employees terminated by their employer, but not for those who resign, except under specific circumstances defined by law. Proper documentation, adherence to notice periods, and justification for the termination are all critical aspects of a lawful termination process in Israel.

Notice Period Requirements

The length of the required advance notice period in Israel depends on the employee's tenure and whether they are paid on a monthly or hourly/daily basis. The law specifies minimum notice periods, but collective agreements or individual employment contracts may stipulate longer periods.

• Monthly-paid employees:

  Tenure	Notice Period
  Up to 6 months	1 day per month
  6 months to 1 year	6 days + 2.5 days per month exceeding 6 months
  1 year to 2 years	2 weeks
  2 years to 3 years	3 weeks
  3+ years	1 month

• Hourly/Daily-paid employees:

  Tenure	Notice Period
  Up to 1 year	1 day per month
  1 year to 2 years	14 days + 1 day for each additional 2 months exceeding 1 year
  2 years to 3 years	21 days + 1 day for each additional 2 months exceeding 2 years
  3+ years	1 month

Employers can provide payment in lieu of notice, allowing the employee to leave immediately while still receiving their regular salary for the notice period.

Severance Pay Calculations and Entitlements

Severance pay ( פיצויי פיטורים, pitzuei piturim) is a mandatory payment to employees who are terminated, or who resign under specific circumstances that entitle them to severance. The standard calculation is one month's salary for each year of employment.

• Calculation: Last monthly salary x Number of years of employment
• Partial years: Pro-rated based on the portion of the year worked.
• Salary inclusions: Base salary, plus recurring payments like cost-of-living allowances, professional allowances, and vehicle allowances.
• Circumstances entitling resignation with severance:
  • Deterioration of working conditions
  • Relocation of the workplace
  • Health reasons
  • Mandatory military service
  • Certain family circumstances (e.g., childbirth, parental care)
• Release and Waiver: Severance payments are typically conditioned upon the employee signing a release and waiver, relinquishing any further claims against the employer.

Grounds for Termination With and Without Cause

Israeli law distinguishes between termination "with cause" and "without cause." Termination without cause requires severance pay, while termination with cause (justified reasons) may, under certain circumstances, exempt the employer from paying severance.

• Termination Without Cause: This is the most common type of termination, where the employer decides to end the employment relationship for business or organizational reasons, or due to performance issues that do not rise to the level of "cause." Severance pay is mandatory.
• Termination With Cause: This is reserved for cases of serious misconduct, breach of trust, or criminal behavior by the employee. To justify termination without severance, the employer must demonstrate:
  • The employee's actions were sufficiently severe.
  • The employee was given a fair opportunity to be heard.
  • The termination was a proportionate response to the misconduct.
  • Approval from a labor court or a collective agreement.

It is important to note that proving "cause" for termination is difficult in Israel, and employers should proceed cautiously and seek legal advice before terminating an employee without severance pay.

Procedural Requirements for Lawful Termination

Following proper procedures is essential to minimize the risk of legal challenges.

1. Written Notice: Provide a formal written termination letter stating the reason for termination and the effective date.
2. Hearing (שימוע, Shimu'a): Before making a final decision, the employer must conduct a hearing where the employee is given a chance to respond to the reasons for the intended termination.
   • The employee must be informed of the allegations against them in advance.
   • The employee has the right to present their case and provide evidence.
   • The employer must listen attentively and consider the employee's arguments.
   • The hearing must be documented in writing.
3. Final Termination Letter: After the hearing, the employer must issue a final termination letter confirming the decision.
4. Severance Pay Release: Prepare a severance pay release and waiver agreement for the employee to sign.
5. Final Wage Payment: Pay all outstanding wages, including severance pay, accrued vacation days, and any other entitlements, no later than the legally mandated deadline.
6. Pension Fund Notification: Notify the employee's pension fund of the termination and ensure the transfer of severance funds.

Employee Protections Against Wrongful Dismissal

Israeli law provides several protections for employees against wrongful dismissal.

• Unfair Dismissal: Employees can claim unfair dismissal if the termination was discriminatory, arbitrary, or not carried out in good faith.
• Discrimination: Termination based on gender, religion, race, sexual orientation, disability, or other protected characteristics is illegal.
• Protected Whistleblowers: Employees who report illegal or unethical conduct within the organization are protected from retaliation, including termination.
• Pregnant Employees: Terminating a pregnant employee is highly restricted and requires special permission from the Ministry of Labor.
• Remedies for Wrongful Dismissal: If an employee successfully proves wrongful dismissal, they may be entitled to:
  • Reinstatement to their former position.
  • Financial compensation for lost wages and emotional distress.
  • Punitive damages.

Employers should be aware of these protections and take steps to ensure that all terminations are conducted fairly and lawfully. Seeking legal counsel before initiating a termination process is highly recommended to mitigate potential risks.