Severance Pay Law, 5723-1963
חוק פיצויי פיטורים, תשכ"ג-1963
Unofficial English translation — for reference only. It may contain errors or omissions and cannot be relied on as a legal text. Only the Hebrew text published in Reshumot is legally binding.More
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The Hebrew text as published in Reshumot (ספר החוקים) and on the Knesset website is the sole authoritative and legally binding version. In any discrepancy, the Hebrew text prevails.
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The Right to Severance Pay§
Continuity of Employment§
For the purposes of section 1, continuity of employment shall be recognised even if it was interrupted on account of —
When Dismissal Does Not Affect Rights§
Dismissal shortly before the end of the first year of employment shall be regarded — unless the contrary is proved — as having been effected with the intention of avoiding the obligation to pay severance pay, and such dismissal shall not affect the right to severance pay.
Deceased Employer§
An employee whose employment has ceased by reason of the death or bankruptcy of his employer, and in the case of a corporation — its winding-up or dissolution, is entitled to severance pay as if he had been dismissed.
Deceased Employee§
"Dependants", for this purpose, means the spouse of the employee at the time of death, including a person publicly known as the employee's spouse and residing with him, and a child of the employee who is a dependent of the insured for the purposes of allowances under Chapter V of the National Insurance Law [Consolidated Version], 5755-1995 (in this Law — the National Insurance Law), and, in the absence of a spouse or children as aforesaid — children and parents whose main livelihood was provided by the deceased, and also brothers and sisters who resided in the deceased's home for at least twelve months before the death and whose entire livelihood was provided by the deceased.
"the declaration of a special situation in the rear" means the declaration of a special situation in the rear as defined in the Civil Defence Law, 5711-1951, of the twenty-second day of Tishrei 5784 (7 October 2023);
"the hostilities or the war operations" means the hostilities or the war operations that occurred in the period from the twenty-second day of Tishrei 5784 (7 October 2023) until the end of the period of validity of the declaration of a special situation in the rear or until the end of the significant military operations, whichever is later;
"the significant military operations" means the significant military operations decided upon by the Ministerial Committee for National Security Affairs pursuant to section 40 of Basic Law: The Government, and notified in respect thereof to the Foreign Affairs and Defence Committee of the Knesset on the twenty-third day of Tishrei 5784 (8 October 2023);
"dependants" means the spouse of the employee at the time of death, including a person publicly known as the employee's spouse and residing with him, and a child of the employee who is a dependent of the insured for the purposes of allowances under Chapter V of the National Insurance Law;
"the determining period" means the period from the twenty-second day of Tishrei 5784 (7 October 2023) until one year after the end of the period of validity of the declaration of a special situation in the rear;
Resignation on Account of Poor Health§
If an employee resigns on account of his own state of health or that of a family member, and in light of the medical findings, the conditions of employment and the other circumstances of the matter there was sufficient reason for the resignation — the resignation shall be regarded, for the purposes of severance pay, as a dismissal.
In this section, "family member" means a family member prescribed in Regulations with the approval of the Labour Committee of the Knesset.
Resignation by a Parent§
Resignation Following Stay at a Shelter for Battered Women§
If a female employee resigns following her stay at a shelter for battered women, which has been approved by a social services department or the Ministry of Labour and Welfare, her resignation shall be regarded, for the purposes of this Law, as a dismissal, provided that immediately before her resignation she stayed at such a shelter for a period of at least sixty days; for the purposes of this section, "approval", "social services department" and "shelter for battered women" have the meanings assigned to them in section 7(c)(5) of the Women's Employment Law, 5714-1954.
Resignation on Account of Change of Residence§
For the purposes of this Law, the resignation of an employee on account of a change of place of residence shall be regarded as a dismissal —
Non-Renewal of Employment contract§
Entitlement to Severance Pay upon Change of Contractors at the Place of Employment§
"service recipient" means a person who receives a service from a service contractor;
"actual employer", "manpower contractor" and "service contractor" have the meanings assigned to them in the Employment of Employees by Manpower Contractors Law, 5756-1996;
"contractor" means a manpower contractor or a service contractor, as the case may be.
(Repealed — תשל״ז־2)
Other Resignation Treated as Dismissal§
Severance Pay for a Person Enlisting in the Police§
A person who enlists in the Israel Police or the Israel Prison Service, and who, immediately before enlisting, was an employee and resigned from his employment in order to enlist as aforesaid, shall be entitled, or his dependants shall be entitled, to severance pay if one of the following applies to him:
Rate of Severance Pay§
Calculation of Wages§
The Minister of Labour, with the approval of the Labour Committee of the Knesset, shall prescribe in Regulations, generally or by categories, the components of the total wage to be taken into account as wages for the purposes of severance pay, the method of calculating the wage that will serve as the basis for calculating severance pay and the interruptions of work that occurred in the circumstances referred to in paragraphs (1) — excluding reserve service under the Reserve Service Law — (5), (7) or (9) of section 2 that shall not be counted in determining the amount of the severance pay; in making these Regulations the Minister of Labour shall take into account the provisions relating to this matter in the collective agreement applying to the largest number of employees to whom the Regulations relate.
Calculation of Severance Pay where Wages were Temporarily Reduced§
If a collective agreement provides that the wages of employees are to be temporarily reduced, or reduced for a specific period only as prescribed therein, as compared with the wages to which they would have been entitled but for such reduction, an employee to whom the agreement applies shall be regarded, for the purposes of calculating severance pay, as if his wages had not been reduced; for this purpose, "collective agreement" includes a collective arrangement.
Calculation of Severance Pay on the Basis of Minimum Wage§
Notwithstanding the provisions of section 13, the wages to be taken into account for the purposes of calculating severance pay shall not be less than the rate of minimum wage as defined in section 1 of the Minimum Wage Law, 5747-1987, according to the scope of the position.
Severance Pay and Provident Payments§
A payment to a provident fund, a pension fund or a similar fund shall not come in lieu of severance pay unless so prescribed in the collective agreement applicable to the employer and the employee and to the extent so prescribed, or unless such payment was approved by Order by the Minister of Labour and to the extent so approved.
Severance Pay and a Retirement Pension§
If an employee or the employee's dependants are entitled under a legislative provision to a pension from the employer on account of the employee's retirement from employment or for another reason, the pension shall come in lieu of the entitlement to severance pay under this Law.
Dismissal without Severance Pay by virtue of a Collective Agreement§
An employee shall not be entitled to severance pay, or shall be entitled to partial severance pay only, as the case may be, if dismissed in circumstances which, under the collective agreement applicable to the employer and the employee — and in the absence of such an agreement, under the collective agreement applicable to the largest number of employees in that branch — justify dismissal without severance pay or with partial severance pay only.
Dismissal without Severance Pay by virtue of Judgment§
In a branch of employment in which there is no collective agreement, the Regional Labour Court may determine that an employee's dismissal occurred in circumstances justifying dismissal without severance pay or with partial severance pay as it shall determine; in deliberating on this matter, the Regional Labour Court shall be guided by the rules of the collective agreement applicable to the greatest number of employees.
Certification§
A certification by the Minister of Labour, or by a person authorised by him to do so, that a particular collective agreement applies to an employer and an employee, or to the greatest number of employees in a branch, or to the greatest number of employees, as the case may be, shall be conclusive evidence for the purposes of sections 16 and 17.
Priority Right to Return to Work and Severance Pay§
Where an employee was dismissed due to a reduction in the scope of work at an enterprise and was guaranteed a priority right to return to work at the enterprise within a fixed period, the provisions of the collective agreement applicable to the employee and the employer shall apply with respect to severance pay — and in the absence of a collective agreement on that matter, the provisions of a special agreement between those entitled to be parties to a collective agreement — provided that such agreements shall not contain a permanent waiver of severance pay.
Securing Accumulation of Severance Pay in a Collective Agreement§
A collective agreement may prescribe the methods and means for the payment of severance pay, including its deposit to the credit of the employee, in order to secure its accumulation to his credit, and once so prescribed, the severance pay shall be paid in accordance with the agreement.
Deposit Order§
The Minister of Labour, after consulting the Minister of Finance and with the approval of the Labour Committee of the Knesset, may direct, by Order, employers to deposit in a provident fund as defined in the Financial Services Supervision Law (Provident Funds), 5765-2005 (hereinafter — provident fund), amounts at a rate to be prescribed in the Order, in order to secure the accumulation of the severance pay that the employers may be required to pay to their employees under this Law (hereinafter — deposit Order).
Categories of Employers§
A deposit Order published in Reshumot (Official Gazette) shall define the categories of employers to which it applies, according to branches of the economy, size of enterprises or regions, and the date of its commencement, provided that its commencement shall not precede the date of its publication.
Regulations regarding Deposited Funds§
The Minister of Labour may, with the approval of the Labour Committee of the Knesset, prescribe by Regulations provisions on the following matters, to the extent not otherwise prescribed by rules made under section 47 of the Income Tax Ordinance [New Version]:
Collection§
Date of Deposit§
Amounts to be deposited in accordance with a deposit Order shall be deposited within 42 days after the payment of wages in respect of that period of employment; the Minister of Labour or a person authorised by him to do so may extend the said period for a period not exceeding three months.
Ring-Fenced Amounts§
Priority Right§
For the purposes of the collection of debts whose settlement, under the Bankruptcy Ordinance, 1936, or under the Companies Ordinance, takes precedence over all other debts — severance pay shall be regarded as wages to be settled in priority over all other debts, except that the total of severance pay and wages settled as aforesaid shall not exceed 150% of the maximum amount of wages that may be settled in priority over all other debts under the said Ordinances; severance pay as aforesaid shall also be a debt whose settlement takes precedence over other debts in the winding-up of a cooperative society, or of an association under Ottoman law.
Wages Including Severance Pay§
An agreement between an employer and an employee in which it is stipulated that severance pay is included in the wages, and which has been approved by the Minister of Labour or by a person authorised by him to do so, shall, for the purposes of severance pay, replace the provisions of this Law, provided that there is no collective agreement applicable to the employer and the employee that obliges the payment of severance pay.
Compromise and Receipt of Settlement§
A compromise regarding severance pay and a receipt of settlement shall have no effect unless made in writing and expressly stated therein to relate to severance pay.
The State as Employer§
Preservation of Rights§
Duty of Consultation§
The Minister of Labour shall not make Regulations except after consulting with the workers' organisation representing the greatest number of employees in the State and with representative national employers' organisations which in the opinion of the Minister are concerned in the matter.
Implementation and Regulations§
The Minister of Labour is charged with the implementation of this Law, and may make Regulations on any matter relating to its implementation.
Commencement§
This Law shall commence on the 16th of Tevet 5724 (1 January 1964).
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חוק פיצויי פיטורים, תשכ"ג-1963
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5723-1963