Understanding the Termination and Notice Period in Israel is crucial for employers and employees navigating workplace transitions. This guide offers an in-depth overview of the Notice Period Law, detailing its purpose, eligibility criteria, and nuances such as overlapping rights with sick leave, maternity leave, or annual leave. It highlights employees’ protections during employer transitions, key obligations for notice near the one-year employment mark, and best practices for managing terminations. Whether you’re an employer ensuring compliance or an employee safeguarding your rights, this document equips you with actionable insights to navigate employment transitions within Israel’s legal framework effectively.

TL;DR: Key Points on Israel’s Notice Period Law

1. Purpose: The Notice Period Law ensures a smooth transition for both employees and employers by mandating advance notice for terminations or resignations.
2. Eligibility: The notice period duration depends on the employee’s tenure and wage type (salaried vs. hourly). Minimum standards are set by law but can be enhanced by contracts or agreements.
3. Qualifying Absences: Maternity leave, sick leave, and military duty count towards tenure accrual, while unpaid leave typically does not.
4. Employer Transitions: Employees’ accrued tenure is preserved during employer transitions (e.g., mergers or acquisitions). Employees retain the right to decline transfer to a new employer, and outgoing employers remain responsible for obligations.
5. Notice Close to the 1-Year Mark: Employers must provide actual notice near the first-year anniversary to prevent loss of employee rights like severance pay or recuperation pay.
6. Overlap with Other Rights:
   • Sick Leave: Overlap depends on timing (illness vs. notice).
   • Maternity Leave: Overlap is prohibited during maternity leave and the 60 days after.
   • Annual Leave: Overlap is allowed if the employee chooses but not if imposed by the employer.
7. Job Interviews During Notice: Employers should allow reasonable absences for job interviews, but the time off is unpaid.
8. Failure to Provide Notice: Employers may face penalties if notice is not provided in writing or fails to comply with legal standards.
9. Employee Certification: Employers must issue a written certificate of employment duration upon termination. Failure to do so can result in fines.
10. Advanced Strategies: Employers can combine notice period obligations with additional benefits to support employees beyond basic requirements.

Table of Contents

Purpose of the Notice Period Law

Eligibility of Employees and Employers for Notice Period

Qualifying Absences for Tenure Accrual Towards Notice Period

Employer Changes and Notice Period Rules

Notice Period for Part-Time Employees

Employer Waiver of Actual Work During the Notice Period

Consequences of Failing to Provide a Notice Period

Rules for Employees Refusing to Work During the Notice Period

Basis and Components of Wage for Calculating Notice Period Payment

Accumulation of Rights During the Notice Period

Does Notice Period Payment Include Late Payment Compensation?

The Nature of Notice Period Compensation and Its Impact on Unemployment Eligibility

Failing to Provide Actual Notice Close to the First-Year Work Anniversary

Overlap Between Notice Period and Other Rights

Can a Terminated Employee Use the Notice Period for Job Interviews?

How to Issue the Notice Period

Terminations and Resignations That Do Not Require a Notice Period

Obligation to Provide Employees with Certification of Employment Duration

 

Purpose of the Notice Period Law

The Notice Period Law for Terminations and Resignations, enacted in 2001 (“Notice Period Law”), mandates both employees and employers to provide advance notice before severing employment relations. The notice period duration is determined by the employee’s tenure at the workplace. The primary purpose of this law is to allow both parties to prepare for the end of their employment relationship, enabling employees to seek alternative work while still employed and earning a salary, and employers to recruit a suitable replacement.

The law is unique in its reciprocity, requiring both employees and employers to comply equally. For instance, just as an employer must provide notice to allow an employee time to transition, an employee deciding to resign must provide notice to allow the employer to adjust and find a replacement before their departure.

Section 12 of the law clarifies that it does not override any superior rights granted to employees under other laws, collective agreements, or employment contracts. It sets the minimum standard for notice periods, allowing enhancements to employees’ rights.

Eligibility of Employees and Employers for Notice Period

Section 2 of the law requires that:

• Employers intending to terminate an employee must provide prior notice.
• Employees wishing to resign must similarly notify their employer in advance.

The duration of the notice period depends on the employee’s tenure and whether the employment is salaried or hourly. Below are the specific durations for each category:

Salaried Employees (Monthly Wage):

Employment Duration	Notice Period
First 6 months	1 day per month worked
7th to 12th month	6 days + 2.5 days for each additional month
After 1 year	1 month

Hourly or Daily Wage Employees:

Employment Duration	Notice Period
First year	1 day per month worked
Second year	14 days + 1 day per every 2 months worked
Third year	21 days + 1 day per every 2 months worked
After 3 years	1 month

Notice periods are calculated in calendar days, not business days.

Qualifying Absences for Tenure Accrual Towards Notice Period

The term “month of work” is used to determine eligibility but does not explicitly define whether actual workdays or permitted absences count towards tenure. However, certain absences explicitly qualify for tenure accrual under related laws:

1. Maternity Leave:
   • According to the Women’s Employment Law, maternity leave does not interrupt tenure accrual for calculating notice period eligibility.
2. Pregnancy Bed Rest:
   • Time off due to pregnancy complications, whether eligible for related benefits or not, contributes to tenure under the same law.
3. Other Permitted Absences:
   • Absences like sick leave, annual leave, or military reserve duty also accrue tenure, as they are treated as workdays by law.

Absences such as unpaid leave (leave without pay) typically do not accrue tenure unless specified otherwise.

Employer Changes and Notice Period Rules

Employer transitions generally preserve an employee’s tenure unless there is a termination during the transition. The Supreme Labour Court has established that the workplace should be viewed not solely as an ownership entity but also as a repository of employee rights. Thus, the cumulative tenure at the same workplace, including under prior employers, is recognised for determining the notice period.

In cases where employees are terminated during employer transitions, employers must provide notice or equivalent compensation, even if the employees continue to work under the new employer. Courts have clarified that this obligation aims to protect employees’ accrued rights and ensure fairness in employment transitions. For example, in cases involving mergers and acquisitions, the Labour Court has emphasised that the acquiring entity inherits responsibilities related to tenure and continuity of employment, unless explicitly stipulated otherwise. Furthermore, courts have consistently asserted that employees are not mere “chess pieces” to be transferred without their consent. Employees have the right to choose whether they wish to transition to the new employer, and outgoing employers must honour this choice. When employees decline to transition, the outgoing employer remains responsible for fulfilling notice period obligations and compensations. This interpretation underscores the critical role of notice periods as a safeguard in complex employment arrangements, ensuring employees’ autonomy and rights are respected during organisational changes.

Notice Period for Part-Time Employees

Part-time employees are entitled to the same duration of notice periods as full-time employees. The scope of employment (e.g., reduced hours) does not impact the required notice period length.

Employer Waiver of Actual Work During the Notice Period

Employers may choose to waive the employee’s obligation to work during the notice period. In such cases, employers must compensate employees with payment equivalent to their regular wages for the waived period. This compensation, referred to as “notice period compensation,” does not include additional benefits or conditions.

Typically, employers have two primary options:

1. Require the employee to continue working during the notice period, maintaining all regular wages and benefits while the employee completes their duties.
2. Waive the employee’s obligation to work, providing compensation equivalent to the base salary for the notice period without additional benefits.

A third option, which exceeds the base legal requirements, allows employers to not only waive the work obligation but also offer enhanced compensation. This may include benefits such as accrued leave payout, extended health insurance, or performance bonuses. Employers opting for this approach can create goodwill and demonstrate commitment to employee welfare, especially in situations involving long-term employees or high-value transitions.

Consequences of Failing to Provide a Notice Period

If either party fails to provide the requisite notice, they are obligated to compensate the other party:

• Employer: Must pay the employee an amount equivalent to regular wages for the unprovided notice period.
• Employee: Must compensate the employer with an equivalent amount if they resign without notice.

Employers are allowed to deduct this compensation from the employee’s final salary, provided it is a fixed and undisputed amount.

Rules for Employees Refusing to Work During the Notice Period

Employees who refuse to work during the notice period are not entitled to wages or compensation for that period. If an employee’s refusal occurs during resignation, they may also be required to compensate the employer. Employers, however, have the right to adjust the notice period to align with accrued annual leave days. By mutual agreement, annual leave may be used concurrently with the notice period, reducing the required working days. If annual leave is applied, employees may still receive notice period compensation for days that extend beyond their accrued leave, ensuring compliance with legal obligations.

Basis and Components of Wage for Calculating Notice Period Payment

Notice period compensation is calculated based on the regular wage, including:

1. Base salary
2. Seniority increments
3. Cost-of-living adjustments
4. Family allowances
5. Departmental or professional increments

Contractual bonuses or commissions may also be included if deemed part of regular earnings.

Accumulation of Rights During the Notice Period

Rights such as leave accrual and seniority are preserved when the employee continues to work during the notice period. However, when notice period compensation replaces actual work, no additional rights are accrued during that time.

Does Notice Period Payment Include Late Payment Compensation?

Notice period compensation is classified as a “payment” rather than “wages” and is therefore not subject to late payment penalties under wage protection laws.

The Nature of Notice Period Compensation and Its Impact on Unemployment Eligibility

Recent rulings suggest notice period compensation, though previously treated as “payment,” may, in specific cases, be treated as “wages” for unemployment eligibility calculations. Employees receiving notice period compensation are considered employed during the compensated period for the purposes of unemployment benefit eligibility.

Failing to Provide Actual Notice Close to the First-Year Work Anniversary

When an employee is terminated shortly before completing one year of service and is not provided with an actual notice period, they risk losing rights granted only to those who complete a full year of employment, such as severance pay or recuperation pay. This issue has been adjudicated in case law:

1. Severance Pay: Section 1 of the Severance Pay Law (1963) establishes the right to severance pay for employees who complete at least one year of continuous service and are terminated. Section 3 creates a presumption that terminations occurring shortly before the one-year mark are intended to evade severance obligations. The burden of proof lies with the employer to demonstrate otherwise.

Courts have ruled that dismissals without actual notice close to the end of the first year make it challenging for employers to prove the termination was unrelated to avoiding severance obligations. This effectively increases the employer’s burden of proof, as observed in cases like Avner Waxman v. ITC 24.

1. Recuperation Pay: According to the expansion order for recuperation pay, employees become entitled to this benefit only after completing one year of service. Case law confirms that if a termination occurs without an actual notice period near the one-year mark, and the notice period would have resulted in the completion of a year, the employer may still be required to pay recuperation benefits for that year. The rationale is that the failure to provide notice caused the employee to lose a right they would otherwise have earned.

Overlap Between Notice Period and Other Rights

Sick Leave:

Whether notice period days can overlap with sick leave depends on the circumstances:

• If the illness predates the notice period, overlap is generally not permitted.
• If the notice period precedes the illness, overlap may be allowed.

Maternity Leave:

Section 9(c) of the Women’s Employment Law prohibits the overlap of notice periods with maternity leave and the 60 days following it, unless authorised by the Minister of Economy.

Annual Leave:

Section 5(a)(7) of the Annual Leave Law specifies that notice period days cannot overlap with annual leave days unless they exceed 14 days. Courts have clarified that:

• Overlap is permissible if the employee chooses to take leave during the notice period.
• Overlap is not permissible if the employer unilaterally forces the employee into leave during the notice period.

Can a Terminated Employee Use the Notice Period for Job Interviews?

When the notice period is served as actual work, the employment relationship ends only upon its conclusion, and it remains a period of full employment with associated rights and salary. Therefore, absences during this period are considered as they would be during regular work.

However, the primary purpose of this period is to allow the employee to prepare for the transition, including finding a new job. Courts have indicated that employers should reasonably accommodate such absences for job interviews, aligning with the intent of the law to facilitate smooth transitions. Employers are not required to cover the costs of these absences, and employees should ensure that such absences are reasonable and do not unduly disrupt workplace operations.

How to Issue the Notice Period

According to Section 2 of the law, the notice must be issued in writing, specifying the issuance date and the effective date of the termination or resignation.

Terminations and Resignations That Do Not Require a Notice Period

Under Section 10 of the law, certain circumstances exempt parties from providing a notice period or compensation for its omission:

1. Employers are not obligated to provide notice when employees are terminated under circumstances denying severance pay, per collective agreements, court rulings, or disciplinary actions by authorised bodies.
2. Employees are exempt from notice requirements when extraordinary circumstances make it unreasonable to expect them to work during the notice period. Such cases include extreme safety violations, hazardous working conditions, or severe misconduct by the employer. These exceptions must be approved by the Minister of Labour and Welfare.

Courts have clarified that justified resignations granting severance pay do not automatically exempt employees from providing notice. Only extraordinary circumstances that prevent any further work justify such an exemption. For instance, resignations due to unsafe work conditions or acts of violence may qualify. Similarly, employees suffering from health issues preventing work during the notice period are exempt,

Obligation to Provide Employees with Certification of Employment Duration

Under Section 8 of the Notice Period Law, employers are required to provide employees with a written certificate stating the start and end dates of their employment upon termination. Failure to do so within 14 days of the last working day, or within 7 days of an employee’s written request, constitutes a criminal offense punishable by fines.

Additionally, the law imposes responsibility on corporate officers to ensure compliance. Non-compliance can lead to personal liability and fines unless officers can prove they took all reasonable steps to prevent violations.

 

This document is intended for informational purposes only and does not constitute legal, financial, or professional advice. While every effort has been made to ensure accuracy, the content provided should not be relied upon as a substitute for consulting qualified legal or accounting professionals regarding specific matters. Readers are advised to seek appropriate professional guidance tailored to their individual circumstances.

Based on the translated content from Heshev Avoda.