Use the Lexology Navigator tool to compare the answers in this article with those from other jurisdictions.

Country snapshot

Key considerations
Which issues would you most highlight to someone new to your country?

Israel has extensive mandatory employment legislation protecting employees’ rights. Employers and officers of companies are subject to criminal and administrative responsibility for breach of employment rights. Further, Israeli employment legislation and case law are continually evolving.  

What do you consider unique to those doing business in your country?

Israel has a combination of outdated employment laws in certain areas and rapid changes in legislation and case law. 

Is there any general advice you would give in the employment area?

Due to dramatic developments in case law and tighter labour laws, legal awareness and guidance are needed at all times.

Emerging issues/hot topics/proposals for reform
Are there any noteworthy proposals for reform in your jurisdiction?

Controversy surrounds the Hours of Work and Rest Law, which arguably needs to be updated and adjusted for modern times. One of the key issues addressed in this regard is overtime.

What are the emerging trends in employment law in your jurisdiction?

In 2011 the Enhancing Enforcement of Labour Laws Law was passed to ensure enforcement of labour laws. In addition, employee unionisation rates have recently increased significantly.

The employment relationship

Country specific laws
What laws and regulations govern the employment relationship?

Israeli labour legislation provides for minimum mandatory requirements, which cannot be waived by employees. This legislation includes:

  • the Minimum Wage Law, which stipulates the minimum wage and is regularly updated;
  • the Wage Protection Law, which regulates the timing and methods of payment of salaries and permitted deductions therefrom, as well as providing penalties for breach;
  • the Hours of Work and Rest Law, which regulates employees’ working hours, overtime, night labour and rest days, as well the payment for each category of work;
  • the Annual Leave Law, which stipulates the minimum annual leave quota and regulates vacations generally;
  • the Sick Pay Law, which stipulates the minimum requirements with respect to paid sick leave;
  • the Severance Pay Law, which stipulates the entitlement for severance pay and the calculation thereof; and
  • the Advance Notice for Dismissal and Resignation Law, which stipulates the minimum requirements for notice before termination by the employer or employee.

Generally applicable expansion orders provide for four additional mandatory benefits, which also cannot be waived by employees:

  • reimbursement of travel expenses to and from the workplace;
  • national holidays;
  • convalescence pay; and
  • a pension scheme.

Who do these cover, including categories of worker?

These provisions cover all types and ranks of employee.

Misclassification
Are there specific rules regarding employee/contractor classification?

Rules (stated in case law), not choice, determines the status of employment.

The main relevant rules cover the following considerations:

  • whether the employee’s function is an integral and regular part of the employer’s business;
  • the extent of control over the employee;
  • whether the employee has his or her own business, takes economic risks, hires employees or maintains a list of clients;
  • the extent of the employee’s financial dependence on the employer;
  • who supplies the means to work (ie, whether the employer or the employee supplies the equipment, vehicles, materials and tools);
  • the place of work (ie, whether work takes place at the premises of the employee or the employer);
  • the length of employment;
  • the method of payment;
  • the method of payment of taxes by the employee; and
  • whether the parties believe that they are entering into an employer-employee relationship and how this is presented to third parties. 

Contracts
Must an employment contract be in writing?

In general, Israeli law does not require an employment contract to be in writing and an oral agreement is legally binding. However, the Notice to Employee (Terms of Employment) Law obliges the employer to provide each employee with a notice of his or her main employment terms using a stipulated form. In addition, the Foreign Employees Law requires a foreign employee’s employment contract to be in writing, in a language known to the employee and including specific terms and conditions.

Are any terms implied into employment contracts?

All statutory rights and mandatory benefits are implied into all employment contracts and supersede contractual stipulations. The provisions of any applicable collective bargaining agreement or extension order may also be implied into an employment contract.

Are mandatory arbitration/dispute resolution agreements enforceable?

Arbitration and dispute resolution mechanisms are common in collective bargaining agreements. However, they are not common in personal employment contracts, as mandatory employment rights and benefits cannot be subject to arbitration (only contractual benefits can be subject to arbitration).

How can employers make changes to existing employment agreements?

The employer must provide the employee with written notice of any change to the terms of employment. Any change is subject to the employee’s consent.  

Foreign workers
Is a distinction drawn between local and foreign workers?

Foreign workers in Israel are entitled to all rights and benefits afforded to employees under Israeli labour law; in addition, they are entitled to special benefits under foreign workers legislation (eg, written employment, medical insurance and accommodation). 

Recruitment

Advertising
What are the requirements relating to advertising positions?

Any employment offers must be advertised referring to both genders and must not include any discriminatory requirements.

Background checks
What can employers do with regard to background checks and inquiries in relation to the following:

(a) Criminal records?

Criminal record checks are forbidden, expect for government security bodies specified by law. Employers providing services to children and disabled or mentally ill people must require that all male candidates provide a police confirmation that they have not been convicted of a sex crime.

(b) Medical history?

This is a legal requirement in some industries and occupations. It may be allowed in other occupations, if relevant to the position and subject to the employee’s consent. 

(c) Drug screening?

Drug screening may be allowed in some cases, if relevant to the position and subject to the employee’s consent. 

(d) Credit checks?

Credit checks are uncommon in Israel and were introduced very recently. No case law is available.

(e) Immigration status?

Immigration status can be checked, as the employer must issue a work permit for the employee and it will affect some tax and national security payments.

(f) Social media?

Almost no case law is available regarding social media. In general, any background check is subject to the general principles and provisions of the law (eg, the candidate’s basic right to dignity and privacy, non-discrimination provisions and general good-faith obligations).

(g) Other?

Employers cannot ask employees for their military medical classifications, indicating their medical condition.

Wages and working time

Pay
Is there a national minimum wage and, if so, what is it?

Under the Minimum Wage Law, the statutory minimum wage is IS4,825 per month for a full-time position. This is accurate as of July 1 2016 and will be adjusted again on January 1 2017 to IS5,000. Further adjustments will be published. 

Are there restrictions on working hours?

A typical working week in Israel runs from Sunday to Thursday and is 43 hours long. Accordingly, the regular working day of an employee employed for a five-day week (Sunday to Thursday) is 8.6 hours. Employees employed for a six-day week will work eight hours a day from Sunday to Thursday, with an additional three working hours on Friday.

Any working hours in excess of the regular daily hours (ie, more than eight or 8.6 hours per day) and/or in excess of the regular weekly hours (ie, more than 43 hours) are considered overtime.

Generally, the Hours of Work and Rest Law forbids overtime. However, a general permit issued by the Labour Ministry permits overtime, subject to the following restrictions:

  • Employees working a six-day week cannot be employed for more than four hours of overtime per day and 12 hours of overtime per week.
  • Employees working a five-day week cannot be employed for more than four hours of overtime per day and 15 hours of overtime per week.

Under the law, a break of no less than eight hours must divide one working day from the next; otherwise, the two days will be considered one working day and the employee will be entitled to overtime pay for the second day.

Every employee is entitled to weekly rest of no less than 36 consecutive hours. With respect to Jewish employees, Saturday must be included in the weekly rest; an employee of any other religion may choose his or her weekly rest between Friday, Saturday or Sunday. The Labour Ministry is authorised to issue regulations deviating from the general provisions regarding weekly rest, reducing it to a minimum of 25 weekly hours. Employment is forbidden during weekly rest unless permitted by a general or specific permit issued by the Labour Ministry. An employee is entitled to special weekly rest work compensation of no less than 150% of his or her regular salary for every hour of work during weekly rest hours.

Hours and overtime
What are the requirements for meal and rest breaks?

Section 20 of the Hours of Work and Rest Law provides that in any working day of six hours or more, the employee is entitled to rest and refreshment for not less than 45 minutes, including one continuous break of not less than 30 minutes.

However, a permit from the Labour Ministry allows for employment of eight to nine hours without a break for employees carrying out non-manual work.

Another permit allows for 30 minutes’ continuous break when the work is conducted in a three-shift pattern.

The law also states that an employee is entitled to pray during the working day according to his or her religious beliefs. Prayer time will be established in the workplace in accordance with work requirements and taking into consideration the employee’s religion. 

How should overtime be calculated?

Any working hours in excess of the regular daily hours (ie, more than eight or 8.6 hours per day) and/or in excess of the regular weekly hours (ie, more than 43 hours) are considered overtime. The calculation is made on both a daily and weekly basis. The employee is entitled to overtime compensation of 125% of his or regular salary for the first two hours of overtime per day and 150% for every additional hour of overtime.

What exemptions are there from overtime?

The Hours of Work and Rest Law does not apply to certain categories of employee, including those in management positions, employees whose duties require a special fiduciary relationship and employees whose working hours cannot be supervised by the employer. Labour courts can reclassify as non-exempt an employee who is defined as exempt in his or her employment contract; case law provides for a very small group of employees being classified as exempt.

Is there a minimum paid holiday entitlement?

The Annual Leave Law provides that an employee is entitled to 11 to 13 days’ paid annual leave on commencement of employment, increasing yearly according to the employee’s seniority to a maximum of 28 days. As of 2017, the annual quota of annual leave during the first five years of employment will be adjusted to 12 to 14 days. In addition, according to the generally applicable expansion order, all employees are entitled to nine paid public and national holidays.

What are the rules applicable to final pay and deductions from wages?

Deductions from wages are limited to specific cases listed in the Wage Protection Law, including:

  • deductions required by law;
  • employee donations instructed in writing;
  • union membership fees;
  • disciplinary fines imposed under a collective bargaining agreement;
  • contributions to pension and similar funds; and
  • fixed and agreed debts to the employer.

Deductions from monthly salary are limited to 25% of the employee’s pay.

Deductions from final pay are not limited.

Record keeping
What payroll and payment records must be maintained?

The employer must keep records of working hours, annual leave, sick leave and pay slips. 

Discrimination, harassment & family leave

What is the position in relation to:
Protected categories

(a) Age?

The Employment Equal Opportunities Law prevents age discrimination in hiring, employment terms, promotion, training, termination, severance and termination benefits.

(b) Race

The Employment Equal Opportunities Law prevents racial discrimination in hiring, employment terms, promotion, training, termination, severance and termination benefits.

(c) Disability?

The Equal Rights of Person with Disability Law prevents discrimination on the grounds of disability in hiring, employment terms, promotion, training, termination, severance and termination benefits.

(d) Gender?

The Employment Equal Opportunities Law prevents gender discrimination in hiring, employment terms, promotion, training, termination, severance and termination benefits.

(e) Sexual orientation?

The Employment Equal Opportunities Law prevents discrimination on the grounds of sexual orientation in hiring, employment terms, promotion, training, termination, severance and termination benefits.

(f) Religion?

The Employment Equal Opportunities Law prevents discrimination on the grounds of religion in hiring, employment terms, promotion, training, termination, severance and termination benefits.

(g) Medical?

The Equal Rights of Person with Disability Law prevents discrimination on the grounds of disability in hiring, employment terms, promotion, training, termination, severance and termination benefits.

(h) Other?

The Employment Equal Opportunities Law also prevents discrimination based on pregnancy, infertility treatment, parenthood, marital status, nationality, country of origin, place of residence, beliefs, political views and military service.

Family and medical leave
What is the position in relation to family and medical leave?

The Sick Pay Law entitles employees to 18 sick days per year, up to a maximum of 90. The pay for sick leave is as follows:

  • for the first day, employees are not entitled to remuneration;
  • for the second and third days, employees are entitled 50% of their salary; and
  • from the fourth day onwards, employees are entitled to 100% of their salary.

Sick leave pay is subject to a medical certificate and, unlike vacation days, accrued and unused sick days are not redeemable.

Employees are entitled to use a proportion of their accrued sick days for the illness of a child, parent or a spouse, all subject to certain requirements specified under law.

Male employees are entitled to use up to seven sick days for a spouse’s pregnancy check-ups or the birth of a child.

Maternity and paternity leave are provided for by law, payable through National Security (not the employer); however, the right to be absent from work is statutory.

Harassment
What is the position in relation to harassment?

The Prevention of Sexual Harassment Law requires employers to:

  • publish a set of rules for the prevention of sexual harassment in the workplace;
  • appoint a sexual harassment prevention officer;
  • implement a sexual harassment prevention policy; and
  • conduct an inquiry in case of a complaint.

Whistleblowing
What is the position in relation to whistleblowing?

The Equal Opportunities Law prohibits employers from acting in a prejudicial manner towards an employee due to a complaint or claim made by the employee in relation to this law, or due to the employee’s assistance of another employee in connection with a similar complaint or claim.

The law extends the same protection to employees (and applicants for employment) complaining of sexual harassment committed by the employer, agents of the employer or other employees.

The Disability Law also contains prohibitions against retaliation against an employee due to a complaint or claim made by the employee in relation to this law.

The Protection of Employees (Exposure of Offences of Unethical Conduct and Improper Administration) Law prohibits employers from dismissing an employee, or revising his or her terms of employment, where that employee has submitted a complaint against the employer (or another employee) or assisted another employee in submitting such complaint (whistleblowing).

Privacy in the workplace

Privacy and monitoring
What are employees’ rights with regard to privacy and monitoring?

Employees have a legitimate expectation of privacy in the workplace, including the right not to be monitored. However, employers may monitor employees during working hours, provided that they obtain employees’ consent and establish an explicit policy detailing the monitoring tools, methods, purpose and use of data.

Employees’ right to privacy has been an evolving issue in case law in recent years.

To what extent can employers regulate off-duty conduct?

Employers are forbidden from regulating off-duty conduct.

Are there rules protecting social media passwords in the employment context and/or on employer monitoring of employee social media accounts?

This is an evolving matter. Given that social media is quite new, very little case law is available. Some cases brought before the courts have allowed employers to use information from social media accounts. In another cases, an employer’s motion to access information from Facebook concerning an employee’s account was rejected on grounds of irrelevance and privacy infringement.

Trade secrets and restrictive covenants

Intellectual Property
Who owns IP rights created by employees during the course of their employment?

Under the Patents Law, IP rights generally belong to the employer unless specifically agreed otherwise between the parties. However, the assignment of ownership does not automatically serve as a waiver to compensation for employee-created intellectual property. A general waiver and an explicit waiver in connection with ‘service inventions’ under the Patents Law should be included in an employment contract in order to avoid future claims for compensation or royalties. Such waiver can also be included in termination agreements or documents.

Restrictive covenants
What types of restrictive covenants are recognised and enforceable?

The Basic Law: Freedom of Occupation provides for an almost unconditional right to freedom of occupation. Accordingly, restrictive covenants (ie, non-compete clauses) are enforceable only when the employer can prove a breach of its constitutionally protected rights (eg, property rights). For example, a non-compete clause may be enforced where an employee has used the employer’s trade secrets or receives special compensation for not competing – provided that the clause applies within a reasonable scope and period of time.

A confidentiality clause may be more broadly drafted, applicable for an unlimited period until the information concerned becomes public knowledge; it may also be enforced more easily as it does not infringe on freedom of occupation.

Non-compete
Are there any special rules on non-competes for particular classes of employee?

There are no special rules on non-compete clauses for any particular class of employee.

Discipline and grievance procedures

Procedures
Are there specific laws on the procedures employers must follow with regard to discipline and grievance procedures?

The employee must be given a chance to state his or her case and a hearing must be conducted. Other grievance procedures may be stipulated in collective bargaining agreements.

Industrial relations

Unions and layoffs
Is your country (or a particular area) known to be heavily unionised?

Historically, unions have had a lot of power in Israel, although union power decreased dramatically from the 1970s onwards. However, in recent years unions have regained some of their power.

What are the rules on trade union recognition?

The Collective Agreements Law provides that the union must represent the majority of unionised employees to whom the collective bargaining agreement applies, and no fewer than one-third of the total employees to whom the agreement applies. The union must notify the employer of its claim to be recognised as a representing body and the employer may examine the signatures of employees joining the union.

What are the rules on collective bargaining?
 

The parties are legally obliged to negotiate in good faith, with the aim of reaching an agreement. However, there is no obligation to reach an agreement within a specific time.

Termination

Notice
Are employers required to give notice of termination?

The Advance Notice for Dismissal and Resignation Law requires both employers and employees to give notice. The length of the notice period is set according to the duration of employment, with a maximum of 30 calendar days. An employer can forgo the attendance of the employee during the notice period, provided that it pays the employee in lieu of notice.

Redundancies
What are the rules that govern redundancy procedures?

In general, an employer is allowed to dismiss any of its employees, subject to limitations in the law, the employment agreement and/or any applicable collective bargaining agreement. There are some legal limitations on the dismissal of:

  • pregnant women;
  • women on maternity leave or for 60 days thereafter;
  • women staying in shelters for abused women;
  • men who have been called up for military and/or reserve service;
  • employees on sick leave;
  • employees undergoing infertility treatment;
  • bereaved families; and
  • disabled people.

A hearing process must be conducted before making the final decision about termination and redundancies.

In essence, the same rules apply to redundancy. However, as an employer might face claims that the layoff selection process was affected by some form of unlawful bias or discrimination, it is always advisable to have a fully thought-out and articulated business basis for each decision.

The Employment Service Law obliges employers to notify the Employment Service Bureau in case of the termination of more than 10 employees in the same month. However, this provision is rarely implemented or followed.

A consultation obligation may apply under certain collective bargaining agreements.

Are there particular rules for collective redundancies/mass layoffs?

In essence, the same rules as for termination apply to redundancy. However, as an employer might face claims that the layoff selection process was affected by some form of unlawful bias or discrimination, it is always advisable to have a fully thought-out and articulated business basis for each layoff decision.

The Employment Service Law obliges employers to notify the Employment Service Bureau in case of the termination of more than 10 employees at once or in the same month. However, this provision is rarely implemented or followed.

A consultation obligation may apply under certain collective bargaining agreements.

Protections
What protections do employees have on dismissal?
 

There are some legal limits on the dismissal of:

  • pregnant women;
  • women on maternity leave or for 60 days thereafter;
  • women staying in shelters for abused women;
  • men who have been called up for military and/or reserve service;
  • employees on sick leave;
  • employees undergoing infertility treatment;
  • bereaved families; and
  • disabled people.

In certain cases termination is forbidden and in certain other cases the employer must seek a permit for termination from the relevant government body.

Further, employees have a right to a hearing before termination. In short, before making the final decision, the employer must hold a hearing with the employee in question in order to allow him or her to state his or her case against dismissal. The rules of the hearing process are set by case law.

Courts/tribunals

Jurisdiction and procedure
Which tribunals or courts have jurisdiction to hear complaints?

Labour courts have two instances: regional labour courts and the National Labour Court.

Some procedures are held before the Labour Ministry – for example, the issue of termination permits for pregnant women. 

What is the procedure and typical timescale?

The basic procedure for a civil non-collective labour claim is as follows:

  • statement of claim;
  • statement of defence;
  • preliminary hearing;
  • discovery;
  • submission of depositions and evidence;
  • evidence hearing; and
  • summary arguments.

The proceedings at first instance may take three or four years.

Appeals
What is the route for appeals?

The National Labour Court hears appeals from judgments of regional labour courts.