Employment agreements in Israel are fundamental to establishing a clear and compliant working relationship between an employer and an employee. While not all terms must be in writing initially, Israeli law mandates that employers provide employees with written notification of key employment terms within 30 days of the start date. This document, often serving as the formal employment contract, must detail essential conditions of employment to ensure transparency and legal compliance. Understanding the nuances of these agreements is crucial for businesses operating or employing individuals in Israel.
Ensuring your employment contracts comply with Israeli labor law is vital for avoiding disputes and legal issues. These agreements must reflect the minimum standards set by legislation, collective agreements (if applicable), and extension orders, while also clearly defining the specific terms agreed upon by both parties.
Types of Employment Agreements
In Israel, employment relationships are typically structured under two main types of agreements: indefinite-term and fixed-term contracts. The choice of contract type depends on the nature and expected duration of the work.
| Contract Type | Description | Typical Use Cases | Key Characteristics |
|---|---|---|---|
| Indefinite-Term | Continues until terminated by either party according to legal requirements. | Standard for ongoing roles and permanent positions. | Most common type; requires notice period for termination; severance pay may apply. |
| Fixed-Term | For a specified period or until a specific project is completed. | Project-based work, temporary assignments, seasonal roles. | Automatically terminates at the end of the term; specific rules apply if renewed or extended. |
Indefinite-term contracts are the default and most common type. Fixed-term contracts are used for specific, time-limited needs. If a fixed-term contract is repeatedly renewed or the employee continues working after the term expires without a new agreement, it may be deemed an indefinite-term contract by law, potentially triggering different termination requirements and entitlements.
Essential Clauses in Employment Contracts
Israeli law requires employers to provide employees with written notification of specific employment terms. While a full written contract is common practice, the minimum requirement is this notification which typically forms the basis of the employment agreement. Key mandatory terms that must be included are:
- Full names and identification numbers of the employer and employee.
- Start date of employment.
- Job title, role, or a description of the main duties.
- Name of the employee's direct manager.
- Details regarding the standard working day or week.
- Amount of salary or wage, including all components (e.g., base salary, bonuses, commissions).
- Payment date for wages.
- Details regarding social benefits (e.g., pension fund, study fund - keren hishtalmut), including the names of the funds and contribution rates.
- Amount of annual leave entitlement.
- Details regarding sick leave entitlement.
- Details regarding the collective agreement or extension order applicable to the employment, if any.
- Length of the notice period required for termination by either party.
Any changes to these terms must also be notified to the employee in writing.
Probationary Period
Probationary periods are common in Israeli employment to allow both the employer and employee to assess the suitability of the match. While not strictly mandated by law for all employees, they are widely used and should be clearly stipulated in the employment agreement.
- Typical Duration: Probationary periods usually range from one to six months. A period of three months is very common.
- Legal Status: During probation, the standard labor laws regarding notice periods and termination generally apply, unless the contract specifically states otherwise in a manner permissible by law. For instance, a shorter notice period might be agreed upon during a defined initial period, provided it doesn't fall below statutory minimums after a certain length of service.
- Termination: Termination during or at the end of the probationary period is generally easier than after, but still requires adherence to legal requirements, including providing a notice period (unless the employee has worked for a very short duration, typically less than a month) and conducting a pre-termination hearing.
It is crucial that the terms of the probationary period, including its length and any specific conditions regarding notice or benefits during this time, are clearly documented in the employment agreement.
Confidentiality and Non-Compete Clauses
Confidentiality and non-compete clauses are often included in Israeli employment agreements, particularly in industries dealing with sensitive information or competitive markets.
- Confidentiality: Clauses protecting the employer's confidential information and trade secrets are generally enforceable, provided they are reasonable in scope and duration and genuinely protect legitimate business interests.
- Non-Compete: Non-compete clauses restricting an employee's ability to work for a competitor after leaving the company are viewed more critically by Israeli courts due to the public interest in freedom of occupation. Courts will typically only enforce non-compete clauses if they are necessary to protect specific, legitimate employer interests, such as:
- Protection of trade secrets.
- Protection of unique training provided by the employer that gives the employee a significant advantage.
- Protection of a specific, unique relationship between the employee and clients that was developed at the employer's expense.
- Where the employee received significant compensation in exchange for the non-compete obligation.
The enforceability depends heavily on the specific circumstances, including the scope of the restriction (geographic area, duration, type of work), the employee's role, and the employer's legitimate interests. Overly broad or restrictive clauses are likely to be deemed unenforceable.
Contract Modification and Termination
Modifying an existing employment agreement requires the mutual consent of both the employer and the employee. Any changes to the mandatory terms of employment must be notified to the employee in writing.
Termination of an indefinite-term employment contract by either the employer or the employee requires providing the other party with advance written notice. The length of the notice period is determined by law based on the employee's length of service.
| Length of Service | Notice Period (Employee Resigning) | Notice Period (Employer Terminating) |
|---|---|---|
| First 6 months | 1 day per month of employment | 1 day per month of employment |
| 7th month to 1st year | 6 days + 2.5 days per month | 14 days + 2.5 days per month |
| After 1 year | 30 days | 30 days |
For monthly paid employees, after one year of service, the notice period is one month. For employees paid hourly or daily, the notice period calculation is slightly different during the first year.
Employers must also conduct a pre-termination hearing before dismissing an employee, regardless of the reason for termination (unless in exceptional circumstances). Employees terminated after at least one year of service are generally entitled to severance pay, calculated based on their last monthly salary multiplied by the number of years of service. Specific rules apply to termination of fixed-term contracts before their term expires.
