Israeli Employment Contracts
Companies hiring staff for expanding operations into Israel must ensure contracts and agreements with their employees fit into a framework of employment rules. Laws and regulations provide employees with minimum entitlements, which can be extended by Collective Bargaining Agreements (CBAs) authorized by the Ministry of Economy, in addition to their individual contracts. Where different levels of entitlement apply to employees, the most beneficial always takes precedence. The Enforcement Unit of the Ministry of Economy or federal or state authorities oversee employment laws that safeguard rights and entitlements of employees.
There is no legal requirement for employment agreements to be in a formal written contract.
However, within 30 days of starting work, the employee is given either a written contract or a ‘notice’ highlighting such as responsibilities, scope of work, entitlements and working conditions, disciplinary procedures, termination, and severance payments. In addition to the notification, employees on an oral agreement must still be given written confirmation of any changes to their work schedule or other aspects of their role.
Main contract types are:
- Indefinite, Open-ended Employment Contracts: The most common type of contract runs without a specified end date. The Notice of Discharge and Resignation Law requires both parties must give notice of dismissal or resignation. All employers and employees are subject to the laws on termination, which is permitted on reasonable grounds, excluding discrimination, if correct procedures are followed.
- Fixed-term Employment Contracts: These are for a specified period or are attached to a specific project. Termination of the contract by the employer before the agreed period entitles the employee to the balance of the salary that would have been paid for the full term.
- Probationary Periods: Trial periods are allowed, during which the probationer must be treated the same as a full-time employee. The probation can be between one and 12 months according to the contract or relevant collective agreement. The required notice period is one day for each month worked up to six months, then two-and-a-half days for each additional month up to 12 months.
- Collective Bargaining Agreements (CBAs): The Collective Agreements Law is the main legislation governing CBAs. They set out minimum terms and entitlements for workers, such as wages, sick leave, maternity benefits, paid vacations, and notice periods. Collective agreements can apply to specific sectors or companies, or generally with a wider scope. General collective agreements can be extended by the Ministry of Economy to wider groups of employers and employees. Where workers are covered by contracts, collective agreements, and statutory minimums the most beneficial for the employee always applies.
Employees are permitted to establish a union in their workplace if none exists, with the general rule there should be one ‘bargaining unit’ of at least one third of the workforce.