How do you terminate an employee in Israel in 2026?
Most Israeli employers fund severance before anyone is dismissed. Under a Section 14 arrangement they pay 1 month's salary per year of service into the worker's pension fund every month, so the 1 month per year owed after 1 continuous year is already sitting in the fund. Statutory notice and severance accrue from day one, because Israeli law sets no probation period.
· Israel guide
Illustration · Tel Aviv, Israel
Israel gives a dismissed monthly-paid employee notice that grows with service. It reaches a full 1 month once they pass their first year. You can pay the notice out instead of working it.
Severance is 1 month's salary per year of service. It is owed once the employee completes 1 continuous year and is then dismissed. (Severance Pay Law, 5723-1963)
Most employers run a Section 14 arrangement. They pay that 1 month per year into the worker's pension fund every month. The money is funded as you go, so the severance is ready before any dismissal.
There is no statutory probation period in Israel. Notice and severance build from the first month of work, whatever the contract calls the early stage.
How much notice must you give an Israel employee?
Notice grows with how long the person has worked. A monthly-paid employee past their first year gets a full 1 month. You can pay it out rather than have it worked.
In the first six months notice is 1 day for each month worked. From month seven it steps up again. (Advance Notice Law, 5761-2001)
| Stage of service (monthly-paid employee) | Minimum employer notice |
|---|---|
| First 6 months | 1 day per month worked |
| Months 7 to 12 of the first year | 6 days + 2.5 days per month |
| After the first year | 30 days, a full 1 month |
These figures come from the Advance Notice for Dismissal and Resignation Law, 5761-2001. They are the legal floor. A contract can set longer notice, never shorter. The same scale runs in reverse when an employee resigns, so resignation notice mirrors dismissal notice at each stage of service.
Paying notice out
You can end the employment at once and pay the notice instead of working it. An employer who dismisses without the required notice must pay the employee's regular wage for the un-given notice days. The payment is taxable as ordinary income and runs through payroll in the normal way.
What is fair procedure for terminating in Israel?
You must hold a hearing before you dismiss. The employee hears the reason in advance, then gets a real chance to respond. Skip the hearing and a court can void the dismissal or award damages.
Some dismissals are simply banned. You cannot dismiss a pregnant employee or one on maternity leave without permission from the Ministry of Labor. (Women's Employment Law, 5714-1954)
Israeli case law requires a genuine hearing (a shimua) before any dismissal. The employer must set out the grounds in writing, give the employee time to prepare, hold the meeting with an open mind, and only then decide. Labour courts treat a missing or sham hearing as a serious defect and can order compensation on top of everything else the employee is owed.
Protected employees you cannot freely dismiss
Several groups have extra protection that sits on top of the hearing duty. Dismissing any of them needs a permit from the Ministry of Labor or is barred outright:
- Pregnant employees and new parents, who cannot be dismissed during pregnancy or during the 26 weeks of birth and parenthood leave, nor for a protected window afterwards, without a permit under the Women's Employment Law, 5714-1954
- Employees on reserve military duty, protected around their service
- Union members and organisers, where dismissal targets union activity
- Whistleblowers, protected when they report wrongdoing in good faith
A dismissal that ignores these protections is not just unfair. It can be reversed by a labour court, with reinstatement or heavy damages, regardless of how much notice you gave.
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Set out the grounds in writing
Tell the employee the reason for the proposed dismissal before any meeting. Give them enough time to prepare a response. A vague or last-minute invitation undermines the whole process.
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Hold a genuine hearing
Meet the employee, hear them out, and keep an open mind on the outcome. This shimua is a legal requirement built by the labour courts, not a formality you can rubber-stamp.
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Check for protected status
Confirm the employee is not pregnant, on parental leave, on reserve duty, or otherwise protected. Dismissing a protected employee needs a Ministry of Labor permit first.
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Serve notice or pay it out
Give the notice the employee's length of service earns, or pay their regular wage for the un-given days. A post-first-year employee is owed a full month.
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Release severance and final pay
Release the severance held in the pension fund, pay out unused leave, and run the final payroll on time. Late wages carry statutory penalties under the Wage Protection Law.
How is Israel severance pay calculated?
Severance is 1 month's salary for every year of service. It is owed once the employee completes 1 continuous year and is then dismissed.
There is no general cap. The base is the last monthly salary, multiplied by full and part years of service. (Severance Pay Law, 5723-1963)
The Severance Pay Law, 5723-1963 sets the headline rate. A monthly-salaried employee who completes 1 continuous year and is then dismissed earns 1 month's salary per year of service. The calculation uses the final monthly salary as the base, so a pay rise just before dismissal raises the whole liability, not just the last year.
The Section 14 arrangement that changes everything
Most Israeli employers do not wait until dismissal to find the money. Under a Section 14 arrangement they pay the severance component into the employee's pension fund every month, alongside the mandatory pension contributions. When the employee leaves, the severance already sitting in the fund settles the obligation, whether they were dismissed or resigned. This is why severance in Israel feels less like a termination cost and more like a running payroll line.
Worked example
| Completed years of service | Statutory severance |
|---|---|
| 1 year | 1 month's salary |
| 3 years | 1 month's salary times 3 |
| 7 years | 1 month's salary times 7 |
Part years count too. A worker dismissed after three years and four months is owed the three full years plus a proportionate slice for the extra four months. The Section 14 arrangement absorbs all of this as it accrues.
Accrued annual leave on termination
Unused annual leave is paid out on the last day. The statutory floor is 16 days of gross leave a year for each of the first five years, rising to 18 days in year six, 21 days in year seven, and up to 28 days from year eight, under the Annual Leave Law, 5711-1951. Any balance left on the last working day is a cash payment.
Are there extra rules for group dismissals in Israel?
There is no fixed headcount that triggers a separate collective process in Israeli law. The hearing duty still applies to each individual employee.
Where a workplace has a union, a collective agreement usually sets a consultation step before group layoffs. That comes from the agreement, not from a single national threshold.
Every dismissal in Israel needs a genuine hearing first, and severance of 1 month's salary per year of service is owed after 1 continuous year. Group layoffs do not change those individual rights.
Source: Labor Laws Regulation and Enforcement Administration, gov.il
Israel has no statute that sets a number of employees at which a formal collective-redundancy procedure with fixed consultation days kicks in, unlike the United Kingdom or France. Each dismissal is handled as an individual case, so the hearing duty and the severance entitlement apply person by person across the whole group.
Where the workplace is unionised, the picture shifts. Collective agreements and the practice of the Histadrut, Israel's main labour federation, commonly require the employer to notify and consult the workers' committee and the union before a wave of dismissals. The exact steps and timing come from the agreement that covers that workplace.
What a careful group process covers
- An individual hearing for every affected employee, not a single group meeting
- Notification to the workers' committee and union where one is recognised
- The selection method used to decide who goes
- Severance and accrued leave figures for each person, settled on the last day
- Any permits needed for protected employees before their names go on the list
Can you agree a mutual exit in Israel?
Yes. An employer and employee can agree to end the relationship by mutual consent. A signed agreement records the exit date and the final money.
Mutual departures still trigger severance under a Section 14 arrangement, because the funded amount releases on resignation as well as dismissal.
Mutual termination is common in Israel, especially for senior roles. The parties sign an agreement that sets the leaving date, confirms the final payments, and resolves the status of the severance held in the pension fund. A clean agreement avoids a later claim that the hearing was skipped or the exit was a disguised dismissal.
A typical Israeli mutual exit covers:
- Notice or pay in place of it, covering the 1 month owed to a post-first-year employee or the contractual figure, whichever is longer
- Release of severance, confirming the 1 month per year held in the pension fund passes to the employee
- Accrued annual leave, all unused days at the daily rate
- Any agreed top-up, where the employer offers more than the legal floor
- Confidentiality and reference wording, agreed in advance
Note on timing. Severance held under a Section 14 arrangement is released from the fund on the agreed date. Other final sums, such as unused leave, run through the last payroll. Wages unpaid more than 9 days after they are due become delayed wages under the Wage Protection Law, 5718-1958, which carries its own penalties, so get the final payroll out on time.
How Teamed runs Israel terminations
Teamed is your legal employer of record in Israel. The price is from $599 per employee per month, with zero FX mark-up in any currency. Every Israel termination runs through Teamed's operations team.
You decide who leaves and why. We handle the hearing record, the notice maths, the Section 14 severance release, the leave payout, and the final payroll, all on one platform.
Real HR and legal experts handle your Israel hires, from the first contract through every monthly payroll run, pension contribution, and statutory deduction. An actual person runs a contested termination, not a chatbot or a pooled queue. There is no setup fee and no exit fee, and employer cost passes through at cost, itemised on every invoice.
The split of responsibilities under EOR for Israel terminations:
| What Teamed handles | What you decide |
|---|---|
| Notice calculation up to the 1 month statutory maximum | Whether to dismiss, why, and on what timeline |
| Running the hearing and keeping the written record | Performance standards and what counts as misconduct |
| Severance at 1 month per year, released from the Section 14 fund | Whether to offer terms above the legal floor |
| Permit checks for pregnant, reservist, or otherwise protected staff | Communication with the wider team |
| Accrued annual leave payout, up to 28 days a year for long service | Reference wording and confidentiality terms |
| Final payroll inside the 9 days wage-payment window | Commercial terms of any mutual exit |
Israel has no statutory probation period, so notice and severance accrue from the first month. Teamed sets up the Section 14 arrangement on day one, so the severance is funded as it builds rather than landing as a shock at dismissal.
EOR, contractors, and entity employees all live on one platform. An employee hired through Teamed's Israel network can graduate to your own Israeli entity when headcount makes that the right call, until it isn't. Run the Crossover Calculator to see when the model flips. Start from the Israel hiring overview.
Key sources: Severance Pay Law, 5723-1963, Advance Notice for Dismissal and Resignation Law, 5761-2001, and the Israel Ministry of Labor.
Frequently asked questions
How much notice must you give an Israel employee in 2026?
Notice scales with length of service. In the first six months a monthly-paid employee earns 1 day of notice per month worked. From month seven to the end of the first year it is 6 days + 2.5 days per month of work in that period. After the first year notice is a full 1 month, which is 30 days. You can pay the notice out instead of having it worked, under the Advance Notice for Dismissal and Resignation Law, 5761-2001.
Is severance pay mandatory in Israel?
Yes. The Severance Pay Law, 5723-1963 gives a dismissed monthly-salaried employee 1 month's salary per year of service, once they have completed 1 continuous year. Most employers prepay this through a Section 14 arrangement, paying the severance component into the employee's pension fund every month, so the money is funded as it accrues rather than found at dismissal.
What is a Section 14 arrangement in Israel?
Section 14 of the Severance Pay Law lets an employer satisfy the severance obligation by paying it monthly into the employee's pension fund instead of holding it back until dismissal. Where it applies, the funded amount settles the 1 month per year owed, and the employee keeps it whether they are dismissed or resign. It turns severance from a termination cost into a running payroll line.
Is there a probation period in Israel?
No. Israeli law sets no statutory probation period. Any trial period comes from the individual contract or a collective agreement, but it does not delay statutory rights. Notice and severance accrue from the first month of employment, so an early dismissal still carries the notice the employee's service has earned.
Can you dismiss a pregnant employee in Israel?
Not freely. Under the Women's Employment Law, 5714-1954 you cannot dismiss a pregnant employee, or one on the 26 weeks of birth and parenthood leave, without a permit from the Ministry of Labor, and protection extends for a window after the leave ends. The protection sits on top of the general duty to hold a hearing before any dismissal.
When must final pay be made after termination in Israel?
Final wages run through the normal payroll cycle, paid at the end of the month they are due under the Wage Protection Law, 5718-1958. Wages still unpaid more than 9 days after the due date become delayed wages and carry statutory penalties. Severance held under a Section 14 arrangement is released from the pension fund on the leaving date.
The Israel termination mistake we see most is treating severance as a future cost. It is not. Under a Section 14 arrangement you fund one month per year into the pension fund every month, so by the time anyone leaves the money is already there. Employers who skip that setup get a nasty surprise on the last day.
In Israel the severance is usually funded before anyone hands in a resignation. One month per year of service goes into the pension fund every month under a Section 14 arrangement.
Most countries treat severance as a bill at the end. Israel treats it as a running payroll line.
Get the day-one setup right and the last day looks after itself.
