Labor Law Lawyers
Employer's Guide to Terminating an Employment Relationship in Israel
Considering terminating an employee? As an employer, you have every right to do so—but it is essential to follow the proper legal procedures. Israeli labor law imposes specific obligations on employers during the termination process. Complying with these requirements ensures that the dismissal is conducted correctly and significantly reduces the risk of future legal claims by the former employee.
By Igal Mor, Adv. & Notary
Accuracy in Legal Advice. Excellence in legal support.
The Pre-Dismissal Hearing
Before terminating any employee, an employer must conduct a pre-dismissal hearing. The purpose of this procedure is to give the employee an opportunity to present arguments against the proposed dismissal. For the hearing to be legally valid, the employer must adhere to several requirements: Written notice: The employer must provide the employee with adequate advance notice of the hearing, including the reasons under consideration for dismissal. Full disclosure: The employer must clearly explain the grounds for the proposed termination and allow the employee to respond. Good faith conduct: The hearing must be conducted in a manner that genuinely allows the employee to voice concerns, with the employer remaining open to reconsidering the decision. Documentation: A written record of the hearing must be prepared, reviewed by the employee, and signed. Decision timeline: The final decision should be issued in writing several days after the hearing, reflecting genuine consideration of the employee’s arguments.
Issuing a Termination Letter
Upon dismissal, the employer is legally required to provide the employee with a written termination letter specifying the date of issuance and the effective date of termination. It is generally advisable not to state the reason for dismissal in order to avoid harming the employee’s future prospects—unless the reason is unrelated to the employee’s skills or professional performance, such as budget constraints or workplace reorganization. The termination letter is critically important to the employee because it is required to claim unemployment benefits from the National Insurance Institute. Failing to issue a termination letter exposes the employer to a potential claim for compensation equal to the unemployment benefits the employee would have received. The employee must, however, demonstrate that benefits were withheld specifically due to the absence of the letter and not because of an insufficient qualifying period.
Prior Notice Requirements
Israeli law requires the employer to provide the employee with prior notice of termination. The notice period depends on the employee’s seniority and whether the employee is classified as a monthly-salaried worker or a daily-wage worker, though the maximum notice period in both cases is one month. The employer may choose whether the employee will continue working during the notice period. If the employer opts to release the employee immediately, the employer must pay the employee’s full salary for the notice period. Importantly, the prior notice obligation is reciprocal: an employee who resigns must likewise provide the employer with advance notice.
Final Account and Severance Payment
Upon termination of employment—whether by dismissal or resignation—the employer must prepare a final account as part of the employee’s last pay slip. In addition to the final salary, the employer must pay out any accrued vacation days and convalescence pay. If severance pay was not fully deposited into the employee’s pension fund during the course of employment (for example, if contributions were set at 6% rather than the full 8.33%), the employer must pay the difference directly. The employer is also required to provide the employee with Form 161 and a letter of release of funds, which transfer ownership of the pension fund to the employee and allow withdrawal of severance funds, in whole or in part.
Strict compliance with the legal requirements for terminating an employment relationship can prevent unnecessary claims and lawsuits, while preserving the employer’s professional reputation in the business community.
Are you a business owner or manager? Proper termination of the employer-employee relationship can protect you from costly litigation.
The Labor Law Division of Mor & Co. Law Firm specializes in legal representation of employers throughout Israel, ensuring full compliance with all statutory requirements. We understand the critical importance of protecting employers’ legal standing. Israeli labor law presents unique challenges—if you need expert legal advice and representation, we are here to help. Contact us via WhatsApp at 050-441-1343 or call 02-595-3322.