Collective Redundancy in Israel: Your Legal Rights When Facing Mass Layoffs

Israel's technology sector has seen significant waves of workforce reductions in recent years, and foreign nationals working at Israeli companies — or at Israeli subsidiaries of multinational corporations — are often caught without a clear understanding of what the law requires from their employer, and what they are entitled to receive.

This guide covers what happens when the number of dismissals triggers the collective redundancy rules, what those rules add on top of standard termination law, and the specific steps foreign workers must take to protect their rights and, where relevant, their legal stay in Israel.

1. What Counts as Collective Redundancy in Israel

Israeli law does not use a single statute to govern all aspects of mass layoffs. Two main pieces of legislation come into play:

• The Collective Dismissal Notification Law 5748-1988 (Hok Hodaat Pitourim Betzibur) governs the employer's notification obligations to the National Employment Service.
• The Employment Service Law 5719-1959 sets out the role of the Employment Service (*Sheirut HaTaasuka*) once notified.

The notification obligation under Section 5 of the Collective Dismissal Notification Law applies when an employer intends to dismiss 10 or more employees in the same calendar month, or when the employer has 10 to 20 employees and intends to dismiss at least 10% of the workforce in the same month. Both conditions look at the same month, not a rolling 30-day window.

The rules apply regardless of the reason for the dismissals — whether the employer describes it as a restructuring, a cost reduction, a market response, or a position elimination. They also apply to foreign-owned companies operating in Israel through a subsidiary or branch.

2. The 30-Day Employment Service Notice

The 30-day advance notice to the Employment Service is not optional. The employer must file a written notification that includes the number of employees to be dismissed, the planned dismissal dates, the business reasons for the redundancies, and the selection criteria being applied.

The Regional Employment Service office has the authority to intervene during the 30-day period. In practice, this most often means facilitating negotiation between the employer and the relevant trade union, or connecting affected employees with retraining programs. The Employment Service cannot veto lawful redundancies, but it can delay them while consultation takes place and can require the employer to participate in mediation.

Where the employer has an obligation under a collective agreement or extension order to consult with a union before mass layoffs, that obligation runs in parallel with the Employment Service notice — it does not replace it.

Failure to give the required notice is a criminal offence under Section 8 of the Collective Dismissal Notification Law. The employer's managing director and relevant HR officers may be personally liable. An employee who was dismissed without proper notice being given can also raise the procedural failure in a Labor Court claim as additional evidence of an unlawful dismissal process.

3. The Pre-Dismissal Hearing

Every employee in Israel — regardless of the number of people being let go — has a right to a pre-dismissal hearing (shmiath tviunot) before a final dismissal decision is made. This requirement comes from National Labor Court case law, not from a single statute, but it has been applied consistently for decades.

What the hearing must include:

• The employer must inform the employee in writing of the specific reasons for the proposed dismissal.
• The employee must be given a genuine opportunity to respond — typically in a face-to-face meeting.
• The employer must consider the employee's response before making a final decision.
• The employer should document both the hearing and the decision.

A common mistake in redundancy situations is the employer treating the hearing as a formality — calling the employee in, reading a statement, and handing over a dismissal letter in the same meeting. The National Labor Court has repeatedly held that this does not satisfy the hearing requirement. The employee must be told the reasons before the meeting, have time to prepare, and have their response actually considered before the dismissal is confirmed.

4. Notice Pay

The Notice to Employee Law 5761-2001 sets the minimum notice period for any dismissal. For monthly-salaried employees it is:

• First 6 months of employment: one day per completed month of service
• Months 7 to 12: 6 days plus one additional day for each month from the 7th month
• After 12 months: one full calendar month

Most employees in a mass layoff will be past the one-year mark, so the standard entitlement is one month's notice. The employment contract may provide for a longer period, and that longer period is enforceable.

Employers commonly elect to pay salary in lieu of notice (tashlem behiluf hadaa) rather than require the employee to work through the notice period. This is permitted under Section 6 of the Notice to Employee Law. When an employer exercises this option, the employment relationship ends on the date of dismissal and the employee receives one additional month's salary. The employee cannot be required to work through the notice period if the employer prefers pay in lieu, and equally, the employer cannot force the employee to accept pay in lieu if the contract does not permit it unilaterally.

5. Severance Pay

After 12 months of continuous employment, every dismissed employee is entitled to severance pay under the Severance Pay Law 5723-1963. The rate is one month's base salary per completed year of employment, pro-rated for partial years beyond the first. For a foreign national who has worked in Israel for, say, three years and four months, the entitlement is 3.33 months' salary.

The calculation base is the employee's last monthly salary, defined as the basic salary plus any regular payments that form part of the overall remuneration structure. Bonuses that are genuinely discretionary are typically excluded; a monthly "car allowance" that is paid every month is typically included.

The Section 14 Arrangement

Many Israeli employment contracts incorporate the Section 14 arrangement under the Severance Pay Law. Under this arrangement, the employer funds the severance obligation through ongoing contributions to the pension fund's compensation component, rather than paying a lump sum at the end. When the employee departs — for any reason, including redundancy or resignation — the accumulated compensation component is released to them in full satisfaction of the severance entitlement.

If your contract includes Section 14, verify that the employer has actually been making the contributions at the required rate throughout your employment. If they have not, the employer remains liable for the shortfall. A pension fund statement showing the compensation component balance should be obtainable directly from your pension provider.

6. Unemployment Benefits (Dmei Avtalah)

Employees dismissed through collective redundancy are entitled to dmei avtalah (unemployment benefit) from the National Insurance Institute (Bituach Leumi), provided the qualifying conditions are met.

The key conditions under the National Insurance Law 5755-1995:

• Contribution period: The employee must have accumulated at least 12 months of NII contributions during the 18 months before becoming unemployed. Foreign nationals who have worked in Israel under a B/1 work visa and paid NII contributions meet this condition in the same way as Israeli employees.
• Registration: The employee must register as unemployed at a National Employment Service office within 90 days of the last day of employment. Late registration forfeits the corresponding benefit days.
• Availability for work: The claimant must be available for and seeking employment.

The waiting period that normally applies to employees who resign voluntarily (which can be 30 to 90 days depending on length of service) is reduced to 30 days for employees dismissed in a collective redundancy under Section 5 of the Collective Dismissal Notification Law.

7. B/1 Visa Holders: The Immigration Clock

For foreign nationals working in Israel on a B/1 work visa tied to a specific employer, collective redundancy creates an immigration problem that does not apply to Israeli citizens or permanent residents. The B/1 work visa is issued per employer. When that employment relationship ends, the legal basis for the visa ends with it.

Under the Population and Immigration Authority (PIBA) administrative practice, a B/1 holder whose employment has ended has approximately 30 days to either transfer their work permit to a new employer or arrange departure from Israel. There is no automatic extension of stay beyond this period.

What this means in practice:

• Do not wait until your last day of employment to begin looking for a new employer or consulting an immigration attorney. Start the moment you receive a redundancy notice.
• A new employer can apply to transfer the work permit through the Employment Service and PIBA. The transfer application must include a new employment contract, the new employer's registered business details, and the original work permit particulars. Processing typically takes 2 to 4 weeks.
• If you cannot transfer to a new employer within the grace period, you need to apply to PIBA for a short extension of stay on humanitarian or administrative grounds, or depart and apply for a new entry visa from your home country.
• Overstaying after the grace period expires is a violation of the Entry into Israel Law 5712-1952 and can result in fines, a PIBA deportation order, and an entry ban of one to ten years.

The immigration dimension is entirely separate from your labor rights. You can simultaneously be entitled to severance, pursue a Labor Court claim, and be running out of time on your visa status. These tracks do not pause each other. If you are on a B/1 visa, treat the visa deadline as urgent from day one.

8. Who Gets Selected: Non-Discrimination Rules

An employer in a redundancy situation has business discretion over which positions to eliminate. That discretion has limits.

The Equal Employment Opportunities Law 5748-1988 prohibits using a redundancy process as a cover for discrimination. An employer cannot select employees for dismissal based on nationality, religion, gender, pregnancy status, age, or any of the other protected characteristics listed in the law. The reversed burden of proof applies: if an employee can show that they belong to a protected group and that the selection process has statistical indications of discrimination, the burden shifts to the employer to show a non-discriminatory reason for the selection.

Israeli courts have also found unlawful selection in cases where the employer dismissed employees who had recently filed complaints, raised health and safety concerns, or were about to become entitled to severance or long-service benefits. Timing matters. A dismissal that arrives shortly before the employee's one-year anniversary (avoiding severance liability) or shortly after they return from parental leave raises questions that an employer needs to answer.

Certain categories of employees require additional protection or prior regulatory approval before dismissal even in a genuine redundancy:

• Pregnant employees and those on parental leave cannot be dismissed without prior written approval from the Ministry of Economy and Labor under the Employment of Women Law 5714-1954, Section 9.
• Employees on reserve military service (miluim) cannot be dismissed without Ministry approval under the Military Service Law 5746-1986.
• Employees undergoing IVF treatment are protected under the Employment of Women Law for a defined period.
• Union representatives may have additional procedural protections under applicable collective agreements.

9. Challenging an Unlawful Redundancy

An employee who believes their redundancy was unlawful has several options. These are not mutually exclusive — a single claim often raises multiple grounds simultaneously.

Regional Labor Court

The Regional Labor Court (Beit HaDin HaAzori LeTaasuka) has exclusive jurisdiction over employment disputes in Israel. Claims can be filed in the court covering the employee's place of work. Foreign nationals can file claims — there is no residency or citizenship requirement to access Israeli labor courts.

Common grounds for a redundancy challenge include: failure to conduct a proper pre-dismissal hearing, discriminatory selection, constructive dismissal where the employer forced a resignation to avoid paying entitlements, and failure to pay severance or notice pay as required.

Ministry of Economy and Labor

The Ministry's labor inspectorate (Pekidat Avoda) can investigate and sanction employers who violate statutory employment rights. For foreign nationals whose employer has also violated work permit conditions, a separate complaint can be made to the Foreign Workers Unit.

Realistic outcomes

Israeli labor courts cannot normally order reinstatement in a genuine business-driven redundancy. The more typical remedy is compensation. Where a proper hearing was not held, courts typically award between one and four months' salary as procedural compensation on top of any outstanding substantive entitlements. Where discrimination is proven, the Equal Employment Opportunities Law allows for compensation of up to NIS 50,000 without proof of actual financial loss, and additional amounts with proof.