Israel Employment Guide

Navigating Employee Termination: A Guide for Global Employers

Terminating an employment relationship requires meticulous adherence to complex regulations specific to the employee's country. The offboarding process must be managed collaboratively by the employer with key stakeholders, often involving specific costs and mandatory steps depending on the termination scenario.

Legally Compliant Termination Methods

To ensure full compliance, employers should understand the valid grounds for termination, which generally include:

• Voluntary resignation by the employee.
• Unilateral termination by the employer, except for legally prohibited reasons such as:
  • Discrimination based on age, parental status, race, gender, or nationality.
  • Retaliation for reporting workplace violations to authorities.
  • Absence due to compliance with security forces during a national emergency.
  • Other reasons protected under collective agreements or case law.
• Mutual agreement between the parties.
• Natural expiration of a fixed-term contract.

Understanding Notice Periods in Israel

Notice periods are a critical component of termination. For employment in Israel, standard notice periods are outlined below:

This framework is typical for Israel's high-tech sector. When an employee is dismissed, the employer is obligated to provide payment for the notice period and all statutory entitlements, such as accrued, unused vacation pay. Employees generally continue working during the notice period unless the employer exercises its right to place the employee on 'garden leave,' which still requires full payment for the notice period.

The Mandate of Severance Pay

Israeli law mandates severance pay for all employees. The entitlement is calculated at 8.33% of the employee's annual salary. This payment is funded through a severance fund to which employers contribute monthly.

SailGlobal integrates severance accruals into all employment agreements for this jurisdiction to shield clients from unforeseen financial liabilities. With extensive experience in managing global litigation risks, SailGlobal's accrual calculations are based on current statutory rights and local best practices. Should an employee resign or otherwise be ineligible for severance, any unused accrued amounts are returned to the client.

Case Study: Mitigating Termination Risks

Consider a multinational tech company that recently had to restructure its Israeli operations. By partnering with SailGlobal, they navigated the complex termination procedures seamlessly. SailGlobal ensured compliant notice periods were served, managed all severance fund disbursements, and provided documentation to prevent potential legal disputes, showcasing the value of expert local support.