Employment 2025 Comparisons

The expression “manual labour” is referenced in several Israeli legislative texts, yet it lacks a formal legal definition. Under Israeli law, the generally accepted distinction is that a blue-collar worker (ie, a manual labourer) is an employee whose work is primarily the product of physical effort. In contrast, a white-collar worker may use their hands in the course of their duties, but the essence of their work is not the result of manual or physical labour.

Importantly, even work that is not inherently physical may, in certain circumstances, be classified as manual labour. However, for several specific occupations, Israeli regulations and case law have explicitly determined that these do not constitute manual labour. Examples include administrative or clerical work, technical roles involving training and installation of electronic products, electronics technicians, cleaning staff, and caregivers.

A key legal implication for blue-collar workers is their entitlement to a work break at an earlier stage of the workday, as established under labour laws such as the Working Hours and Rest Law.

Beyond the blue-collar/white-collar distinction, Israeli labour law recognises additional employee statuses, including:

• full-time v part-time employees;
• permanent v temporary employees;
• salaried v hourly wage employees;
• outsourced (agency) workers; and
• managerial or “position of trust” employees (with unique terms regarding working hours and overtime pay).

Each classification may influence the applicability of certain labour rights and protections.

According to Israeli law, employees can be employed under two types of contracts: an indefinite contract (ie, work without a predetermined termination date) or a fixed-term contract (for a predefined period or for a specific task). In the case of a fixed-term contract, the employer is obligated to work until the end of the period stipulated in the contract. Even if an employer chooses to terminate the employment before the end of the fixed period, it may be obligated to pay the employee’s wages until the end of the fixed period. At the end of the fixed period, the employment contract automatically expires and the employment relationship ends. In any other case in which an employer wishes to terminate the employment of an employee – whether it is a fixed-term contract or an open contract – a full and proper dismissal process must be followed, including a hearing before a decision is made. The purpose of the hearing is to allow the employee to present their claims and defend their rights before a final decision is made in their case.

According to Israeli law, the length of a standard full-time workday in places that operate five days a week is 8.6 hours. On one day of the week, an employee is entitled to a shortened workday of 7.6 hours. The total duration of a typical full-time workweek is 42 hours. Employees are of course permitted to work overtime. According to the general permit applicable in the Israeli labour market, employees can work up to 12 hours a day (including overtime) and up to 16 hours of overtime per week. Overtime must be compensated at a higher rate – 125% of the regular wage for the first two hours and 150% for each additional hour thereafter. Certain categories of employees, such as those in managerial positions or “trust roles,” may be exempt from the entitlement to overtime pay. Flexible work arrangements are possible and can be agreed upon between the employer and the employee, provided they meet the legal requirements and do not waive any mandatory rights. Part-time employment contracts must specify the scope of employment, including the number of weekly or monthly hours, and the employee’s rights (such as wages, benefits, and time off) are calculated on a daily basis and proportionally to those of full-time employees.

In Israel, the minimum wage is set by law and updated periodically by the government. As of 2025, the legal minimum wage is NIS6,247.67 per month for full-time employees, or NIS34.32 per hour. Employers are required by law to pay at least the minimum wage, and failure to do so may lead to criminal and administrative proceedings. There is no legal requirement for a 13th-month salary (annual bonus) in Israel, although such payments may be acceptable in certain industries or given at the discretion of the employer. Bonuses, commissions, and other incentive payments are generally subject to the terms of the employment contract or collective bargaining agreements (CBAs), and are not required by law unless expressly agreed. The government plays an active role in regulating wages, mainly through periodic adjustment of the minimum wage and through sectoral collective agreements that may set a higher minimum or additional benefits for certain industries. Salary increases may also be determined by CBAs or individual negotiations, but must always meet the legal minimum wage and other legal requirements.

Employees in Israel are entitled to paid annual leave in accordance with the Annual Leave Law. The minimum entitlement is usually 12-14 days per year for full-time employees, and it increases with seniority and varies depending on the structure of the workweek. The vacation payment is calculated based on the employee’s regular salary. Unused vacation days can be accrued within certain limits, but employers are encouraged to ensure that employees use their time off. Israeli law requires different types of paid and unpaid leave, including the following.

• Maternity leave: female employees are entitled to 26 weeks of maternity leave, part of which is paid by the National Insurance Institute, subject to eligibility.
• Paternity leave: fathers may be entitled to a portion of maternity leave or separate paternity leave, subject to eligibility.
• Sick leave: employees accrue 1.5 sick days per month, up to a maximum of 90 days. Sick pay is subject to waiting periods and statutory rates.
• Childcare leave: parents may be entitled to unpaid leave after maternity leave, and there are additional rights for parents of children with disabilities.
• Other types of leave: these include leave for military reserve duty, bereavement, adoption.

Employment contracts usually include confidentiality clauses and a prohibition of defamation. Confidential obligations are enforceable, provided they are reasonable in scope and duration. Defamation clauses are also enforceable in general, but they must not infringe upon statutory rights, such as the right to unionise or report corruption. The employee’s liability for damages caused during the course of work is limited. Under Israeli law, employees are generally not liable for ordinary negligence but may be liable for malicious conduct or gross negligence. Employers are encouraged to maintain insurance to cover potential liabilities arising from employee actions.

Under Israeli law, non-compete clauses in employment agreements are generally viewed with caution and are rarely enforceable. The Israeli courts have established that the fundamental principle is the employee’s right to work and earn a livelihood. As such, non-compete clauses will only be upheld in limited circumstances.

Requirements for Validity

• Legitimate interest: the employer must demonstrate a legitimate interest that requires protection, such as trade secrets, confidential information, or unique business methods. General business knowledge or skills acquired during employment are not sufficient. This is s fundamental requirement.
• Independent consideration: while not an absolute requirement, the provision of independent consideration (such as a special payment or benefit specifically for agreeing to the non-compete) can strengthen the enforceability of the clause. However, even with consideration, the clause must still meet the other requirements. Specific training might also be considered as consideration for the non-compete undertaking.
• Reasonableness: the scope of the non-compete must be reasonable in terms of duration, geographic area, and the type of restricted activity. Overly broad or vague restrictions are likely to be struck down.
• Balance of interests: courts will weigh the employer’s need for protection against the employee’s right to work. If the restriction is found to be excessive or unnecessary, it will not be enforced. The size and strength of the employer will also be considered.

Enforcement

The burden of proof is on the employer. If the clause is found to be too broad or not justified by a legitimate interest, the court might change it and make it smaller or invalidate it.

All types of non-solicitation clauses must be narrowly tailored to protect legitimate business interests. Overly broad or indefinite restrictions are unlikely to be enforced. The courts will balance the employer’s need for protection against the employee’s right to pursue employment and business opportunities.

• Non-solicitation of employees: non-solicitation clauses that prevent former employees from soliciting or recruiting current employees are generally more acceptable under Israeli law than non-compete clauses. However, they must still be reasonable in scope and duration. The courts will consider whether the restriction is necessary to protect the employer’s legitimate interests, such as maintaining a stable workforce or protecting confidential information. It should be noted that it is very difficult to enforce such clauses in practice.
• Non-solicitation of customers: clauses that prohibit former employees from soliciting the employer’s customers are also subject to scrutiny. The enforceability depends on whether the employee had significant contact with the customers and whether the restriction is necessary to protect the employer’s legitimate interest or confidential information. As with non-competes, the restriction must be reasonable in terms of time, geography, and the nature of the prohibited activity.

In Israel, data privacy in the employment context is primarily governed by the Protection of Privacy Law, 1981 (the “Privacy Law”), along with regulations and guidelines issued by the Israeli Privacy Protection Authority (PPA). These laws and guidelines set out the framework for the collection, use, storage, and transfer of personal data, including data relating to employees.

The Privacy Law defines “personal information” broadly, covering any data that can identify an individual, including employees. This includes names, identification numbers, contact details, health information, and more. Employers must collect and process employee data only for legitimate, specific, and clearly defined purposes related to the employment relationship (such as payroll, benefits administration, and compliance with legal obligations).

Employees must be informed about the collection and use of their personal data, including the purposes for which it is collected, how it will be used, and with whom it may be shared. In certain cases, especially where sensitive data is involved or data is transferred to third parties, explicit consent from the employee may be required.

Employers are required to implement appropriate technical and organisational measures to protect employee data against unauthorised access, loss, or misuse. The Privacy Protection (Data Security) Regulations, 2017, set out detailed requirements for data security, including access controls, encryption, and incident response procedures.

Employees have the right to access their personal data held by the employer, request corrections, and, in some cases, request the deletion of data that is no longer necessary for the employer’s legitimate purposes.

The transfer of employee data outside of Israel is subject to restrictions. Employers must ensure that the receiving country provides an adequate level of data protection or obtain the employee’s consent for the transfer, unless another legal basis applies.

The use of monitoring tools (such as email monitoring, CCTV, or GPS tracking) in the workplace is subject to strict limitations. Employers must balance their legitimate interests with employees’ right to privacy and must provide clear notice to employees regarding any monitoring activities.

The PPA is responsible for enforcing data privacy laws in Israel. Non-compliance can result in administrative fines, civil liability, and, in some cases, criminal sanctions.

Overview

Israeli law imposes a range of limitations on the employment of foreign workers, reflecting a balance between the needs of the local labour market, the protection of foreign workers’ rights, and the state’s interest in regulating immigration and employment. The main legal framework governing the employment of foreign workers in Israel is the Foreign Workers Law, 5751-1991, along with various regulations, government decisions, and sector-specific arrangements.

Sectors Permitted to Employ Foreign Workers

Foreign workers are primarily employed in specific sectors, such as:

• construction;
• agriculture;
• nursing and caregiving; and
• hotel and hospitality industry (to a limited extent).

A smaller number of foreign workers are employed in specialised categories requiring expertise such as:

• senior representatives of foreign or international companies;
• senior staff in foreign aviation or shipping companies;
• lecturers or researchers in higher education institutions;
• medical professionals undergoing training or specialisation in hospitals;
• diamond workers;
• foreign photographers or journalists;
• foreign artists;
• representatives of foreign military forces; and
• experts with unique skills not available in the local workforce.

Employer-Specific Permits

Foreign workers are generally tied to a specific employer and position. The permit to employ a foreign worker is non-transferable, meaning the worker cannot freely change employers without going through a formal process and receiving approval from the Population and Immigration Authority.

Duration of Employment

There are strict limitations on the duration of employment for foreign workers, as set out below.

• In most sectors, foreign workers may be employed for a maximum cumulative period of 63 months (five years and three months).
• In the care sector, exceptions may apply, especially if the worker is caring for a specific individual with special needs.
• After the maximum period, the worker must leave Israel and may be subject to a “cooling-off” period before becoming eligible to return.

Wages and Working Conditions

Foreign workers are entitled to the same minimum wage and basic employment rights as Israeli workers, including:

• minimum wage;
• overtime pay;
• paid vacation and sick leave;
• severance pay;
• social benefits (such as pension contributions, in certain cases);
• travel Expenses; and
• annual recreation allowance.

Employers are also required to provide suitable housing, health insurance, and, in some sectors, meals or meal allowances.

Prohibition on Recruitment Fees

It is illegal for employers to charge foreign workers any recruitment fees. Israeli local private recruitment agencies may only charge placement fees for foreign workers in the care and agriculture sectors, and only up to a nominal amount set by law. Foreign recruitment agencies operating outside Israel may charge placement fees up to a maximum amount established by applicable regulations. Excessive fees are considered exploitation and are subject to criminal and administrative penalties.

Enforcement and Sanctions

The Population and Immigration Authority, together with the Ministry of Labor, Social Affairs and Social Services, is responsible for enforcing the laws and regulations regarding foreign workers. Sanctions for violations include:

• administrative fines (for example, up to NIS10,000 for the employment of each illegal foreign employee);
• criminal prosecution (for example, up to one year of imprisonment or a fine of NIS52,500 for each offence of employing an illegal foreign employee);
• disqualification from employing foreign workers in the future; and
• deportation of illegally employed workers.

Overview

The employment of foreign workers in Israel is subject to a comprehensive registration and permit system, designed to ensure that only authorised workers are employed and that their rights are protected.

The process for obtaining a permit to employ foreign workers in Israel varies according to the sector in which the workers are requested. Each sector has its own procedures, requirements, and authorities involved. All applications across all sectors require payment of various fees as determined by regulations.

Care Sector

• Permit applications are submitted via licensed agencies to the Population and Immigration Authority.
• The patient must meet eligibility criteria and provide medical documentation.
• If approved, a B/1 visa is issued for the worker, tied to the specific patient.
• Permits are renewable: caregivers may change employers within the sector under certain conditions.

Agriculture Sector

• Permits are allocated annually by quota.
• Applications are mainly made through authorised agricultural associations.
• Workers are recruited via bilateral agreements.

Construction Sector

• Employers must register and apply through authorised manpower corporations.
• Workers are recruited from countries with bilateral agreements.
• Allocation is project-based.
• The Population and Immigration Authority sets both a minimum and maximum number of foreign worker permits that each corporation must request for each permit year.

Expert Workers

• Employers apply online to the Population and Immigration Authority for a permit and a B/1 expert visa.
• The expert must have unique skills not available in Israel; higher salary requirements apply.
• Permits are usually for up to two years, extendable to a maximum of 63 months.
• Family members may accompany the expert worker in certain cases.
• Before submitting the application, it is important to check that the foreign worker’s passport is valid for at least 18 months and that the foreign worker is not already in Israel (unless it is a permit extension).

Ongoing Reporting and Record-Keeping

Employers must maintain detailed records of each foreign worker, including:

• employment contracts;
• wage payments;
• social benefit contributions;
• health insurance documentation; and
• housing arrangements.

Employers are required to report any changes in employment status, such as termination, resignation, or transfer to another employer, to the authorities within a specified period.

Renewal and Termination Procedures

• Renewal: permits and visas must be renewed annually, subject to continued compliance with all legal requirements and within the overall sector quota.
• Termination: upon termination of employment, the employer must notify the authorities, and the worker is generally required to leave Israel unless authorised to transfer to another employer within the same sector.

Regulation, Privacy, and Safety

The rise of mobile and remote work in Israel, accelerated by technological advances and societal shifts during and after the COVID-19 pandemic, has attracted increasing legal attention, although comprehensive statutory regulation remains limited. Mobile work is generally permitted under Israeli law, but employers must comply with various legal obligations drawn from data protection, occupational safety, and social security frameworks.

Data Privacy

The Israeli Privacy Protection Authority published guidelines for monitoring employees’ remote work on 17 October 2023 (the “Guidelines”). Such monitoring is subject to the provisions of the Israeli Privacy Protection Law, 1981 and the regulations promulgated thereunder. The seminal  case regarding monitoring employee use of computers in the workplace is Labor Appeal (National) 90/08, Tali Isakov Inbar v State of Israel – Commissioner for the Women’s Work Law and Others and the Guidelines extensively reference this case. Employee monitoring during remote work must be necessary, proportionate, and aimed at legitimate business purposes. Employers are required to inform employees in advance about any monitoring measures and in most cases obtain informed consent, preferably in writing. High-impact monitoring tools, such as screenshots, keystroke logging, eye tracking, webcam use, geo-location or audio capture, are considered highly invasive and may only be used in extreme cases when less intrusive alternatives are unavailable and a vital need for such monitoring has been identified. Monitoring should be strictly limited to working hours and work-related systems; employers must avoid collecting information unrelated to job performance, particularly any data about employees’ private or family life. Data minimisation and security principles must be followed, including limiting access to the data obtained by monitoring, clearly defining retention periods, and ensuring that unnecessary or sensitive data is not retained or processed. The collected data may only be used for pre-defined and legitimate reasons (purpose limitation).

Occupational Health and Safety

The Occupational Safety and Health Ordinance [New Version], 1970 and related regulations traditionally apply to physical workplaces. While not explicitly extended to remote work, employers are advised to conduct risk assessments and ensure ergonomic and safe working conditions for employees working from home. This includes guidance on workstation setup, work-hour limitations, and rest breaks to avoid fatigue or burnout. Accidents that might occur while working from home will likely to be recognised as work accidents.

Social Security and Labor Rights

Remote and mobile workers remain fully covered under Israel’s National Insurance Law, and their entitlements under general labour law, such as minimum wage, annual leave, and social benefit, are unaffected by work location. However, enforcement challenges may arise concerning hours worked and employee supervision, prompting many employers to adopt electronic attendance systems and transparent policies.

Sexual harassment prevention law and regulations also apply to remote working environments, especially the use of Zoom or similar platforms. Employers are advised to update their sexual harassment prevention policies to include rules on conduct while working remotely.

Framework and Limitations

There is no statutory entitlement to sabbatical leave in Israel’s private sector. However, sabbatical arrangements may be provided through:

• individual employment contracts;
• CBAs; and
• employer policies.

In the public and academic sectors, sabbaticals are more formalised. For instance, university faculty members are often entitled to sabbatical leave every six years, typically for research and academic development, governed by institutional rules and CBAs.

Private-sector sabbaticals are typically unpaid unless otherwise agreed. Employers are not legally obligated to reinstate an employee following unpaid leave unless otherwise specified by contractual terms or a CBA . However, if an employer decides to formally terminate the employment, a hearing must be conducted prior to making such a decision.

During unpaid sabbaticals, employees are not covered by employer-paid social benefits (except for social security payments for the first two months. However, voluntary continuation of certain insurance schemes (eg, health or pension plans) may be arranged.

An employer must receive the consent of the employee in order to place them on unpaid leave. Forced and consensual leave of absence might result in payment of the employee’s salary or be considered as termination of employment.

Other New Manifestations of Work

The concept of “new work” in Israel encompasses evolving trends in workplace organisation, reflecting global shifts toward flexibility, autonomy, and innovation. Common emerging practices include the following.

Desk sharing and hot desking

These are increasingly common in hybrid workplaces, especially in tech and coworking spaces. Although not directly regulated by law, employers should ensure compliance with data privacy (eg, device security) and ergonomics requirements. A clean desk policy is often used to mitigate the risk of data breaches.

Hybrid work models

Many Israeli companies now offer hybrid work as a standard arrangement, blending remote and on-site work. These models are typically governed by internal policies or employment agreements, with key legal implications relating to working hours, supervision, and employee monitoring.

Digital nomadism and cross-border work

While not yet widespread, the trend of employees working remotely from abroad raises complex legal issues regarding tax residency, work visa permit, labour law applicability, and employer liability. Companies must evaluate such arrangements on a case-by-case basis, including potential extraterritorial regulatory exposure.

Employee Unions in Israel: Structure and Recognition of Employee Unions

In Israel, employee unions operate either as sector-specific entities ‒ representing distinct professional groups such as physicians or senior academic staff ‒ or as multi-sector organisations encompassing various professions.

The criteria for recognition as a legitimate employee union are not prescribed by statute but have been developed through Israeli labour court jurisprudence.

To be recognised as a labour union, an organisation must demonstrate certain characteristics:

• it must possess a permanent and stable organisational structure;
• it must operate democratically;
• it must have a valid and enforceable constitution or articles of association;
• membership must be voluntary; and
• one of its primary objectives must be to regulate terms of employment through CBAs.

For a union to attain the status of a “representative union” at a particular workplace, at least one-third of the employees must be registered members of the union. In cases where multiple unions are competing for representation, the union with the largest number of members at that workplace will be recognised as the representative union.

Israel is home to three principal general-purpose employee unions, the largest being the New General Federation of Labor (commonly known as the “New Histadrut”). In addition, there are several professional unions representing specific sectors such as education, medicine, and civil employees of the military. Approximately 25–30% of the Israeli workforce is unionised.

At the enterprise level, unions typically establish a workplace committee comprised of employees. This committee acts as the union’s representative body within the organisation and serves as a liaison between employees and management. Together, the union and the workplace committee engage in negotiations with the employer on matters concerning employment terms and workplace conditions.

In the event of a labour dispute, and unless prohibited by an applicable CBA, a union is entitled to declare a labour dispute. Following a 14-day cooling-off period, the union may initiate a strike or take other forms of industrial action.

Representative Bodies and Internal Representation

Under Israeli labour law, only unions are recognised as the legitimate representative bodies of employees, and they act through the workplace committees. These committees do not possess independent authority to negotiate or execute CBAs without the involvement of the union.

An exception exists for so-called internal representative bodies that function as independent employee representatives without affiliation to a general or professional union. However, Israeli labour courts generally view such bodies with scepticism, often suspecting them to be employer-driven or lacking genuine independence. For such a body to be recognised as a valid representative entity, it must not only meet the same requirements as a traditional union but also prove its authenticity as an employee-driven organisation.

The regulation of CBAs in Israel is governed by the Collective Agreements Law, 1957. Under this statute, only an established labour union may lawfully enter into a CBA on behalf of employees.

There are two types of CBAs:

• a special collective agreement, which is executed between a union and a specific employer; and
• a general or sectoral collective agreement, which is executed between a union and an employers’ association representing multiple employers in a given industry or on a general matter such as travel expenses.

Typical CBAs include several key components:

• financial provisions, setting wages and other monetary benefits;
• organisational provisions, outlining rules on working hours, employment policies, protections against termination, seniority, and dispute resolution mechanisms;
• duration, usually specifying a term of three to five years;
• industrial peace clauses, in which the union agrees to refrain from rising new demands, strikes or labour disputes on issues addressed in the agreement; and
• dues collection, which authorises the employer to deduct union dues and other organisational payments (including committee dues) from employees’ salaries ‒ applying both to union members and, in certain cases, to non-members.

Unless explicitly stated otherwise, CBAs generally apply to all employees within a workplace. In some instances, and as an exception to the rule, a bargaining unit may be delineated within the employer’s organisation, in which case the agreement applies only to the employees within that unit.

General (sector-wide) CBAs apply to employees of member employers within the employers’ association that signed the agreement. Additionally, the Israeli Minister of Labor has statutory authority to issue an extension order, which broadens the applicability of a CBA to all employers operating within a given industry or sector, regardless of their membership in the signatory employers’ association.

In Israel, an employer is usually required to present a valid reason (motivation) for dismissing an employee. This reason must be presented to the employee as part of a mandatory pre-dismissal hearing process. The motivation for dismissal must be real and not discriminatory or arbitrary. The law does not require a specific list of grounds for dismissal, but dismissal must be based on reasonable and good faith grounds, such as poor performance, misconduct, downsizing, or business needs. The dismissal process is mostly uniform and includes a number of steps:

• the presentation of the reasons for considering dismissing the employee, in a full and extended manner;
• a hearing prior to dismissal, regardless of the reason for dismissal, during which the employee’s position and the totality of the circumstances are considered; and
• a post-hearing decision regarding the employee’s continued employment.

However, in certain circumstances, the employer may be required to follow additional procedures prior to proceeding with the dismissal;, for example, when the employee in question is in a legally protected period (eg, during pregnancy, fertility treatments, illness, military reserve duty) or when the workplace has a collective agreement that imposes specific provisions for dismissal. Failure to comply with the required procedures or failure to provide a valid justification for dismissal may make the dismissal illegal and expose the employer to lawsuits for unlawful dismissal or a demand for reinstatement.

Under Israeli law, both employers and employees are generally required to provide advance notice before terminating employment. The length of the notice period depends on the length of the employee’s employment at the workplace and the terms of the employment agreement, subject to statutory minimums. For employees on monthly wages, the minimum notice period ranges from one day per month of work (during the first year) up to 30 days after completing one year of employment. For hourly or daily wage workers, the notice period is shorter and increases with seniority. Notice must be given in writing. By default, employment continues throughout the notice period. In the event of dismissal, the employer may terminate the employment relationship immediately and compensate the employee in lieu of the notice period (in whole or in part). Since, according to Israeli law, the vast majority of employees are entitled to pension contributions in the framework of which the employer also sets aside funds for the severance pay component, employees covered by this legal severance pay arrangement are entitled, at the time of termination of their employment, provided they are entitled to compensation, only to the release of the funds accumulated for them, without any additional entitlement to supplemental funds. In the case of an employee to whom the severance pay arrangement does not apply, the employee’s entitlement to severance pay will be examined according to the circumstances (if the employee is entitled to it under the Severance Pay Law, such as in cases of dismissal or certain resignations that are considered equivalent to termination). There is no requirement for external advice or government approval for the termination of employment, except in special cases (eg, protected workers such as pregnant women or workers on parental leave, military reserve duty workers), where prior approval from the Ministry of Labor or the Employment Committee is required. Employers must also comply with all procedural requirements, including holding a hearing before termination. Failure to comply with the notice or procedural requirements may result in liability for additional compensation.

Immediate termination, also known as termination due to serious cause, is the immediate termination of the employment relationship without notice or severance pay due to the employee’s serious misconduct or a fundamental breach of trust. Under Israeli law, aggravated cause may include acts such as theft, violence, gross disobedience, or other conduct that irreparably harms employment relations. Even in cases of a serious cause claim, employers must follow due process. This includes giving the employee written notice of the allegations, holding a pre-termination hearing where the employee can respond, and considering the employee’s explanation before making a final decision. Failure to comply with these procedural requirements may render the dismissal unlawful, regardless of the underlying behaviour. If the immediate dismissal is carried out lawfully, the employee loses their right to advance notice and, in some cases, to severance pay as well. However, if the dismissal is found to be unjustified or procedurally improper, the employer may be required to pay compensation, reinstate the employee, or both.

Termination agreements are permitted under Israeli law and are common for the purpose of formally arranging the termination of employment by mutual consent. While there is no legal requirement for a specific procedure, best practice requires that the agreement be in writing, clearly detailing the terms of the separation, including effective date, financial arrangements (such as severance pay, notice, and additional payments), and any waiver or release from claims. In order for a waiver of claims to be enforceable, it must be specific, clear, and done with the informed consent of the employee – preferably after the employee has been given the opportunity to receive independent legal advice. In most cases, the waiver should also be accompanied by compensation that exceeds the employees’ statutory entitlement. General waivers that attempt to release any future or unknown claims may not be recognised by the courts, especially if the employee did not fully understand the implications. Termination agreements cannot waive statutory rights that are non-waivable, such as minimum wage, pension contributions, or accrued vacation. Any attempt to circumvent mandatory protections may render the termination agreement, or parts of it, unenforceable.

Israeli law provides specific protections against dismissal for certain categories of employees. These include, but are not limited to, pregnant women, workers undergoing fertility treatments, workers on maternity or parental leave, employees in military reserve service (or spouses of reservists), employees who are bereaved parents, and employees on sick leave. The dismissal of such employees usually requires prior approval from the Ministry of Labor/Employment Committee. Dismissal without such authorisation is considered illegal and null and void. Additional protections apply to representatives of workers and trade union activists, whose employment conditions cannot be dismissed or changed due to their representative role without prior approval from the relevant labour authority. These protections are designed to prevent harassment and ensure the effective functioning of employee representation and collective bargaining. Failure to comply with these requirements may lead orders for reinstatement and compensation for the affected employee.

Grounds for Unlawful Dismissal Claims Under Israeli Law

Procedural defects in the dismissal process

A termination may be deemed unlawful if the procedure was flawed, for instance, if the employee was not given a proper pre-dismissal hearing (known as a Shimua) or if the hearing was conducted improperly. Examples include failure to provide a written notice specifying the reasons for the hearing, or evidence that the decision to terminate had been made prior to the hearing (eg, a replacement was hired before the hearing).

Dismissal during protected periods

Terminations are restricted during specific protected periods, such as pregnancy, maternity and parental leave, the 60 days following the end of such leave, fertility treatments, periods of illness during which the employee is entitled to sick pay, military reserve duty and the period following such duty.

It should be noted that each situation specified above has criteria for the application of the restriction on dismissals, for example, seniority at the workplace, duration of reserve duty, absences due to fertility treatments, etc. Therefore, each situation must be examined to determine whether a restriction on dismissal applies,, according to the personal circumstances of each employee.

Dismissals for improper reasons prohibited by law

A dismissal may be deemed unlawful if it was carried out for improper reasons prohibited by law, for example, due to an employee’s membership or activity in a labour organisation, for exposing corruption, or for reasons that constitute wrongful discrimination prohibited by law.

Legal Consequences and Remedies

In cases of wrongful termination, the employer is generally liable for compensation. This may include:

• statutory damages under specific laws (eg, the Women’s Employment Law entitles eligible employees to compensation equal to 150% of their salary for the protected period);
• non-pecuniary damages for mental distress, as determined by court based on the severity of the violation; and
• compensation for proven economic loss, where the employee demonstrates and quantifies actual financial damage.

In rare and exceptional cases, the court may grant reinstatement ‒ an enforcement remedy obliging the employer to return the employee to work ‒ where the procedural flaw is so severe that the termination is deemed void. Reinstatement is subject to a prompt request from the employee and the absence of compelling reasons against reinstate. It may be granted in addition to financial compensation.

Discrimination Claims

Under Israeli law, employees and job candidates may file discrimination claims in a wide range of employment-related matters. These include recruitment, terms and conditions of employment, promotions, training and professional development, termination of employment, and benefits or payments related to retirement.

Grounds for prohibited discrimination claims may be based on alleged discrimination due to one or more of the following characteristics:

• sex and gender;
• sexual orientation;
• marital status;
• pregnancy;
• fertility treatments;
• parenthood;
• age;
• race, religion, nationality, or ethnic origin;
• place of residence;
• political or philosophical belief;
• military reserve service;
• refusal to work on the Sabbath (even if not for religious reasons); and
• disability of the employee or of a close family member.

Burden of Proof in Discrimination Claims

Unlike the general legal principle in civil litigation (“he who asserts must prove”), discrimination cases under labour law are subject to an eased burden of proof in favour of the claimant, including the following.

• If the plaintiff proves that their actions or behaviour were not grounds for dismissal or that the conditions set by the employer regarding employment, promotion, working conditions, training, and retirement payments are met in their case, the burden of proof shifts to the employer to prove that they did not act discriminatory toward the plaintiff in one or more of the above matters.
• In addition, if the plaintiff proves that the employer demanded information from them on a subject in which discrimination is prohibited (for example, information about pregnancy planning or fertility treatments), the burden will shift to the employer to prove that they did not engage in prohibited discrimination toward the employee.

Remedies

If the labour court determines that unlawful discrimination occurred, it may grant the following remedies:

• non-pecuniary damages, such as compensation for emotional distress, based on judicial discretion and the severity of the violation; or
• pecuniary damages, if the employee has demonstrated measurable financial loss.   

Reinstatement or an injunction to prevent termination may also be ordered, but only in exceptional cases, due to the practical challenges of enforcing continued employment relationships against the will of one or both parties.

Digital Service of Process and Remote Proceedings in Israeli Labour Courts

Pursuant to Regulation 161 of the Civil Procedure Regulations, 2018 (the “Civil Procedure Regulations”), which applies to labour courts by virtue of Regulation 129 of the Labor Court Regulations (Procedure), 1991, court documents may be lawfully served via digital means through the official online judicial system, “Net HaMishpat”. In addition, Regulation 161 permits the service of court documents on other parties by email, and in certain cases, even by text message to a mobile phone.

With respect to remote hearings, the labour courts have permitted the conduct of preliminary proceedings and mediation hearings via videoconferencing ‒ particularly during the COVID-19 pandemic, in accordance with temporary emergency regulations enacted for that period. These practices are grounded in the courts’ inherent authority to determine procedural rules necessary to ensure the proper administration of justice.

Moreover, under Regulation 129 of the Labor Court Regulations and Regulation 72 of the Civil Procedure Regulations, witness testimony may be heard via videoconference, provided the statutory conditions for such testimony are met.

Employment Forums

In Israel, there are labour courts, which are a unique judicial body specialising in labour law. This system includes:

• five regional labour courts, operating throughout the country (when a claim is filed with the court located in the jurisdiction of the employee’s workplace or residence in accordance with the rules of local jurisdiction) and
• the National Labor Court in Jerusalem, which serves as an appellate court and also as a court of first instance in cases involving a general collective agreement or disputes between labour organisations and employers.

The labour courts have exclusive authority to hear claims between an employee (or their successor) and an employer (or their successor) that are based on a labour dispute and that do not originate in the Torts Ordinance (except for cases involving trespass on real estate and movable property, breach of contract, and breach of statutory duty). In addition, there are other types of claims that the court has exclusive jurisdiction to hear, even though they are not necessarily between an employee and an employer, which are listed in Section 24 of the Labor Court Law, 1991. For example:

• a claim between an employer and an employee or a job candidate or an employee whose employment has already ended, which is based on negotiations for signing an employment agreement or on the employment agreement itself or on the acceptance or non-acceptance of employment;
• claims between provident funds and employers or between members of the fund;
• claims between parties to a special collective agreement or those who may become parties to such an agreement;
• claims between a labour organisation and its members; and
• claims arising from defamation involving an employee, employer or officer where the cause is in connection with a labour dispute.

Class Action

The labour courts have the authority to hear class actions related to the first three grounds mentioned above, including:

• claims between an employee and an employer based on a labour dispute;
• claim arising from negotiations of an employment contract or regarding the contract itself, or the acceptance or rejection of employment by an employer; and
• claims between a collective bargaining unit and employers or member of the collective bargaining unit.

Representation

Representation in the labour courts is not fundamentally different from representation in the civil courts. However it should be noted that the labour courts are not usually subject to the rules of evidence and that the court has broad discretionary authority to handle any matters not regulated by the Labor Court Regulations (Procedures), 1991, in the manner it deems most appropriate to do justice. The courts have interpreted the rule as directing them to follow the civil procedures used in civil courts.

Arbitration in labour law is possible in Isreal and is referenced in the Labor Court Law of 1969. Section 28 of the law states that the labour court will have the same powers as a civil court in arbitration matters and the exclusive jurisdiction to hear claims resulting from an arbitration award.

However, according to case law, the scope of arbitration in labour law is very limited, and it is not possible to entrust arbitration with resolving a dispute concerning rights arising from a cogent provision in law or in a case. For example, arbitrators cannot decide on issues such as:

• the existence of an employment relationship;
• the existence or denial of mandatory rights (eg, annual leave, sick leave, minimum wage, prohibition on  wage deductions, convalescence pay, pension provisions);
• factual decisions that impact statutory rights, such as resignation or dismissal and the circumstances of the resignation.

It was also determined that claims concerning the rights granted to an employee by virtue of the Whistleblower Protection Act or the Sexual Harassment Prevention Act are also considered mandatory (cogent) rights that should not be referred to arbitration for a decision.

This means that even if a written agreement has been drawn up and signed by the parties stipulating that all or part of their disputes between will be resolved through arbitration, the agreement is not valid in so far as it concerns matters and issues governed by mandatory protective legislation.

On the other hand, issues that are not governed by protective legislation, for example, the interpretation of an agreement related to contractual rights that originate from agreements rather than mandatory legal provisions or commercial disputes (eg, regarding options), can be referred to arbitration. In such cases, an arbitration clause in the employment agreement will be considered valid. Arbitration clauses are generally included in collective agreements, where the parties ‒ the employers and the representative organisation ‒ often choose to submit disputes regarding the interpretation of the agreement and its implementation to arbitration. These arbitration clauses are often enforced.

Legal Costs

The labour courts have the authority to award legal costs, including attorney’s fees, in favour of the party who has won their claim, in whole or in part. The court is granted broad discretion in determining the amount of costs Unlike the regulations applicable to the civil court system, which stipulate that the costs incurred by the losing party shall not be less than a minimum attorney’s fee established by law, the labour court is not bound by a statutory minimum rate. In addition, while in ordinary civil proceedings the rule is that actual legal costs must be awarded in favour of the winning party and any deviation from this rule requires justification, the labour courts have a different approach. The labour courts consider it important to preventing an increase in the cost of proceedings concerning labour and social security rights. This approach means the courts tend to award much more moderate costs, which often do not reflect the actual costs incurred.

The court considers a number of factors in determining the amount of expenses to be awarded in favour of the winning party, including the nature of the claim, the grounds of the claim, and the identity of the parties. In cases where the claim concerns rights under protective legislation and involves modest amounts, or raises important public and social questions that deserve examination, the court will tend not to award real costs against the plaintiff, even if the claim is unsuccessful in whole or in part. On the other hand, real costs will not be awarded against the employer if the employee is successful with claim.

Conversely, where the cause of action is based on contractual agreements and involves significant amounts of money, and the dispute is of a more commercial nature, the court will tend to award expenses that are closer to the real costs incurred.

The identity of the parties also has a bearing on the range of expenses awarded. If the plaintiff is from a disadvantaged population group whose ability to access the courts easily is a protected interest, the court will tend to award moderate expenses. On the other hand, if the case involves parties who are both considered sophisticated businesspeople (for example, a CEO and an employing company), the expenses awarded are more likely to reflect the real expenses incurred.