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salary to ensure compliance with the statutory obligations. Since the amount set aside
is a percentage of the employee’s monthly salary, whereas the severance payment is
calculated based on the employee’s latest monthly salary, shortfalls in the employer’s
aggregated contributions or severance reserve could occur. In order to avoid this
potential liability, the law allows the employer and the employee to agree that the latter
shall only be entitled to receive, upon termination of his employment, all severance
payment amounts actually set aside during the course of his employment.
This arrangement also provides that the employeewill be entitled to severance pay upon
resignation (as opposed to dismissal) something he would not otherwise be entitled to.
Termination - Prior Notice:
Employees, who have been employed by the same
employer for more than one year, are entitled to receive, at minimum, a 30-day prior
notice. Employees who are employed on an hourly basis or have been employed for less
than a year are entitled to a shorter prior notice period.
Workweek and Overtime:
The Hours of Work and Rest Law – 1951 (“Work and Rest
Law”) sets forth a five/six day working week consisting of 43 hours. The Israeli legislator
also limits the maximum number of overtime hours an employee is entitled to perform
and regulates the payment for such working hours. Generally, payment for overtime hours
(above the8thor 9th hour ofwork per day or the44th hour ofwork per week) is calculated
as follows: (a) each of the first two hours of overtime, is paid on a 125% basis and (b)
any hour thereafter is paid on a 150% basis. The Work and Rest Law provides for several
exceptions, including for employees holding management positions that require a special
measure of “personal trust,” who are not entitled to special remuneration for overtime.
Weekly Rest Day:
Employment of Israeli employees on a Saturday is subject to receipt
of regulatory permits from the Ministry of Economy.
Vacation:
The Annual Vacation Law - 1951, sets forth the minimal number of annual
vacation days to which an employee is entitled. The laws also establish certain legal
holidays during which the employee is entitled to a day off, in addition to his annual
vacation days.
Sick Leave:
According to the Sick Leave Payment Law - 1976, an employee is entitled
to one and a half days of paid sick leave per each full month of employment, up to a
maximumof 90 days. Sick days may be accumulated and carried over but not redeemed.
An employee is entitled to a sick leave payment, as of the second day of absence, in an
amount equal to 50% of his daily salary, and as of the fourth day of absence, for full pay.
Key non-statutory elements of the Israeli labor law regime
Collective Agreements; Expansion Orders:
Collective labor agreements, arrangements,
and expansion orders serve to standardize various binding employment conditions. The
issues usually addressed by them are wages, social rights, working hours, payment for
overtime and dismissal-relatedmatters.Any employer that is amember of an employers’
organization is subject to all general collective agreements and arrangements to which
that organization is a party.
Expansion orders are administrativemandates issued by theMinister of Economy based
on general collective agreements. The expansion orders serve to expand the content of
collective labor agreements so that their provisions shall also apply to employers and
employees that were not initially a party thereto. Several expansion orders are applicable
to all Israeli employers and employees (such as recuperation pay and reimbursement of
travel expenses).