Introduction
Employment Termination
In Israel, employment termination is a highly regulated process with specific legal requirements that differ significantly from other countries. Employment termination in Israel is not simply a matter of issuing a letter and cutting final pay. It’s a structured, regulated process with legally mandated stages that protect the rights of employees while providing frameworks for employers. The stakes are high—missteps in the termination process can lead to financial penalties, court proceedings, or reputational damage.
This white paper outlines the full scope of employer obligations and best practices when terminating employment in Israel. It draws on Israeli labour law, common practice, case studies, and insights gathered from years of supporting clients through compliant employee offboarding.
Key Takeaways
- Israeli employment law requires specific procedures for termination
- A formal hearing process is mandatory for non-consensual terminations
- Mutual termination agreements offer advantages for both parties
- Proper documentation is essential throughout the process
Working with an experienced EOR provider helps ensure compliance
1. Introduction to Israeli Employment Termination
1. Introduction to Israeli Employment Termination
Israel’s employment laws provide significant protections for employees, making the termination process more complex than in many other jurisdictions. Understanding these requirements is essential for any company employing talent in Israel. 1.1 Legal FrameworkIsraeli employment law is based on a combination of legislation, case law, extension orders, and collective agreements. The termination process is governed by: · Prior Notice for Dismissal and Resignation Law · Severance Pay Law · Employment contracts and company policies · Extensive case law establishing procedural requirements 1.2 Types Of Termination |
There are two primary approaches to employment termination in Israel:
Consensual Termination When both employer and employee agree to end the employment relationship through a mutual termination agreement (MTA). |
Non-Consensual Termination When the employer initiates termination without the employee’s agreement, requiring a formal hearing process. |
2. The Termination Process in Detail
2.1 Pre-Termination Considerations
Before initiating termination, employers should:
- Document performance issues or business reasons for termination
- Review employment contracts for specific termination provisions
- Consider alternatives to termination (role changes, performance improvement plans)
- Calculate potential severance costs and notice period requirements
- Prepare for the possibility of legal challenges
2.2 Mutual Termination Agreement (MTA)
An MTA is often the preferred approach as it provides clarity and finality for both parties. A typical MTA includes:
- Notice period (generally 30 days, with garden leave option)
- Severance offer (typically one month per year, possibly more)
- Accrued benefits: unused annual leave, recuperation pay, bonuses
- Confidentiality clauses, mutual non-disparagement, and non-compete terms
Important Note: The MTA must be framed as an offer—not a decision. Employees are legally entitled to decline or negotiate. |
2.3 Hearing Process – Mandatory and Formal
A hearing is legally required for any non-consensual termination. The process includes:
Sent in writing, clearly stating purpose and right to representation
Employee may bring a lawyer or a support person
No documents presented. No decision made. Minutes must be taken and shared
Reasons for proposed termination, alternatives, employee response.
2.4 Post-Hearing Procedure
Following the hearing:
- Employer evaluates input from the hearing
- If proceeding with termination, employer sends written decision
- Final Separation Agreement and Decision Letter are shared
- Employee is given up to 7 days to respond or sign
2.5 Calculating Final Entitlements
Final payout includes:
- Severance pay (mandatory unless dismissal is due to misconduct)
- Notice period (30 days, or paid in lieu)
- Accrued annual leave
- Recuperation pay (dependent on tenure)
- Commissions or other variable payments (prorated)
- Equipment return or asset reconciliation
3. Special Considerations
3.1 Remote Work Compliance
Issues may arise if an employee works from a location not agreed upon in the employment contract (e.g. abroad). This may affect tax obligations, social benefits, and the validity of certain contractual terms.
3.2 Constructive Dismissal
When an employee resigns due to unreasonable working conditions, they may claim constructive dismissal and demand full severance. Examples include:
- Change in job duties without consent
- Hostile work environment
- Forced reduction in salary or hours
3.3 Use of Recorded Conversations
Employees may record conversations (e.g. threats or coercion) to support claims. Israeli courts may admit such evidence if it’s relevant and not obtained unlawfully, but outcomes are case-specific.
4. Best Practices and Templates
4.1 Involve Senior Management
Including a Director or HR lead from the client in the process ensures decisions are thoughtful and legally sound.
4.2 Use a Structured Termination Checklist
CWS Israel uses an internal compliance checklist to ensure:
- Proper documentation
- Legal calculations
- Timely delivery of documents
- Clear communication with all parties
4.3 Template: Hearing Invitation Email
Dear [Employee],
We would like to invite you to a meeting regarding your continued employment with [Company]. The purpose of the meeting is to hear your position and any explanations you may have before we consider any further steps.
You are entitled to bring a representative with you. The meeting will take place on [Date], at [Location / Zoom link].
Warm regards,
[Client HR or CWS Israel Partner]
4.4 Orientation Sessions for Clients
For companies unfamiliar with Israeli labour laws, orientation sessions with CWS Israel legal and HR experts can provide training on:
- Termination scenarios
- EOR responsibilities
- Legal obligations
- Crisis mitigation
5. Case Studies
Case 1: Leo N.
Leo was laid off due to department restructuring. The process included
an MTA offer, a formal hearing, and a 30-day garden leave. All entitlements were calculated and paid, with documentation signed within 5 days.
Outcome: compliant, amicable separation.
Case 2: Remote Work Dispute
An employee relocated abroad without formal approval. When terminated, they claimed unfair dismissal. The court ruled that while relocation was unauthorised, the employer failed to update contract terms, weakening their defence.
Case 3: Improper Hearing
A client terminated an employee without a hearing. The employee filed a claim, and the court awarded them 2 months’ salary and full severance, citing procedural failure.
6. Conclusion
The Israeli employment termination process is complex and highly regulated.
Employers—especially international ones—must adhere strictly to due process
to protect themselves and uphold employee rights.
The keys to a successful and compliant termination are:
· Clear and fair communication
· Proper documentation at every stage
· Legal alignment with Israeli labour laws
· Offering employees choice, dignity, and support
For complex scenarios or unfamiliar companies, working closely with an experienced EOR provider like CWS Israel and seeking legal counsel is highly recommended.
About CWS Israel
CWS Israel specialises in Employer of Record (EOR) services, offering compliant employment, onboarding, payroll, and termination support for global companies hiring in Israel. Our mission is to ensure seamless workforce management while protecting both the employee and the employer.
