Quick Answer: Unpaid leave in Israel (chufsha lelo tashlum, shortened by Israelis to chalat) is a pause in pay while the employment relationship continues. No Israeli statute lets an employer impose it unilaterally: it needs your consent, a contract clause, or a collective arrangement. If the leave lasts 30 consecutive days or more and you are not being paid, you can normally claim unemployment benefits from the National Insurance Institute. Your employer must pay minimum National Insurance contributions for you for the first two months, and unpaid leave counts toward seniority only up to 14 days per year of work under the Severance Pay Regulations 5724-1964.

Unpaid leave is one of the most misunderstood arrangements in Israeli employment. Employers reach for it when a project stalls, when a security situation empties the office, or when cash is tight and dismissal feels too final. Employees are handed a one-page form, told it is standard practice, and asked to sign by the end of the week. Foreign employees in particular tend to assume it works like a furlough in the United States or a layoff in the United Kingdom, and it does not.

The Israeli rule is narrower than most people assume. An employer cannot switch off your salary and keep you on the books at will. At the same time, agreeing to unpaid leave is sometimes the sensible commercial choice, particularly when unemployment benefits cover part of the gap and your seniority stays intact. This guide sets out what happens to your pay, your National Insurance cover, your pension, your severance entitlement and your visa while you are on chalat, and what the document you are asked to sign should actually say.

1. What Unpaid Leave Means Under Israeli Law

Unpaid leave suspends the two main obligations of the employment relationship: you stop working and the employer stops paying. Everything else survives. The contract remains in force, your accumulated seniority is preserved, non-compete and confidentiality clauses continue to bind you, and neither side has given notice of termination.

Because employment has not ended, the consequences look nothing like dismissal:

  • No severance is triggered at the start of unpaid leave, because employment has not ended. Severance under the Severance Pay Law 5723-1963 becomes payable only on dismissal or on a resignation that the law treats as dismissal.
  • No notice period runs. Advance notice under the Advance Notice for Dismissal and Resignation Law 5761-2001 applies to termination, not to a pause.
  • Accrual stops. Annual leave, sick days and dmei havra'a (recreation pay) accrue for periods of actual work, so a month of unpaid leave adds nothing to those balances.
  • The employer keeps the right to your services back. Unless the agreement says otherwise, you are expected to return on the agreed date and the employer is expected to have a role for you.

Israeli practice distinguishes unpaid leave from two neighbouring arrangements. Forced annual leave is different: an employer can schedule your accrued vacation days, but under Section 9 of the Annual Leave Law 5711-1951 a consolidated leave of seven days or more requires at least 14 days' advance notice, and it can only be taken out of a balance you actually have. Reduced hours are also different: cutting a full-time role to 60% is a change in terms, not a suspension, and it carries its own consequences for severance calculation.

In Practice: The Paper Trail That Protects You

Israeli employers frequently document unpaid leave with nothing more than a WhatsApp message. That is a mistake for both sides. Under the Notice to Employee (Employment Terms) Law 5762-2002, a change to your employment terms must be given to you in writing within 30 days, and a Regional Labor Court can award compensation of up to NIS 15,000 for a breach without requiring proof of any actual loss. Insist on a signed document that states four things: the exact start and end dates, that your seniority continues to run, that the employer will pay the National Insurance minimum for the first two months, and that you return to the same role and salary. Keep the last payslip before the leave begins, because that payslip is the figure any later severance calculation will be built on.

As a rule, no. Israeli labor legislation contains no general power allowing an employer to stop paying wages while retaining the employee. The authority to place someone on unpaid leave has to come from one of three sources:

  • The employee's agreement, given specifically for this leave and preferably in writing. A general clause buried in a contract signed years earlier is weak evidence of consent to a particular period of unpaid leave.
  • A collective agreement or expansion order that covers the workplace. Some sector agreements permit temporary unpaid leave in defined circumstances, and during national emergencies the government has issued temporary arrangements that changed the ordinary rules.
  • An express contractual clause that clearly anticipates unpaid leave. Labor Courts read these clauses narrowly against the employer who drafted them.

An employer who ignores all three and simply stops paying is in breach of the Wage Protection Law 5718-1958, which treats late or withheld wages as attracting delayed-wage compensation (pitzuei halanat sachar). The statutory formula is punitive by design and can quickly exceed the withheld salary itself, though Labor Courts retain discretion to reduce it where the delay was genuinely disputed rather than deliberate.

The second remedy is more powerful. Being sent home without pay is a material worsening of employment terms, and Section 11(a) of the Severance Pay Law 5723-1963 allows an employee who resigns because of such a worsening to claim severance as though dismissed. That means one month's salary for each year of service, plus advance notice, plus any accrued balances. Before relying on it, an employee must normally warn the employer in writing and give a genuine opportunity to correct the situation, which is exactly the step people skip when they are angry. Our guide to constructive dismissal in Israel explains how the courts assess these claims and what the warning letter needs to contain.

3. National Insurance and Health Tax During Unpaid Leave

Israeli residents must remain covered by National Insurance and the national health system even when they earn nothing. During unpaid leave the responsibility shifts in stages.

For the first two calendar months of unpaid leave, the employer must continue paying a minimum contribution to the National Insurance Institute (Bituach Leumi) on the employee's behalf. The amount is modest, in the region of NIS 200 per month at current rates, and the NII publishes the updated figure each year. The law permits the employer to recover that payment by deducting it from wages once the employee returns, and most employers do exactly that, usually without mentioning it in advance.

From the third month, the employee is classified as a non-working insured person and becomes responsible for paying directly. The NII does not send a reminder to everyone, and the gap is the most common source of trouble: unpaid health tax accumulates as a debt, and the NII can suspend entitlement to health services until the arrears are settled. A short call or online declaration to the NII branch handling your file at the start of the third month is enough to open a direct payment arrangement.

Some people fall outside this pattern. An employee insured through a spouse as a non-earning partner may owe nothing directly, and a new immigrant within the first year of aliyah may still be inside the oleh exemption period. Neither position should be assumed. Ask the NII to confirm it against your file.

In Practice: The Three Calls to Make in Week One

Treat the first week of unpaid leave as an administrative sprint. Call one goes to the Employment Service (Sherut HaTa'asuka) to register as a job seeker, because unemployment benefits run from the date of registration and not from the date the leave began. Call two goes to your National Insurance Institute branch to confirm who is paying your contributions in months one and two, and to open a direct payment file for month three onward. Call three goes to your pension fund to ask, in writing, how long your disability and survivor cover stays active without deposits and what the monthly risk premium would be if you paid it yourself. Each call takes ten minutes. Skipping the third one is the mistake that costs the most: employees who become ill or injured during unpaid leave and discover their cover has lapsed have no realistic remedy afterward.

4. Claiming Unemployment Benefits While on Unpaid Leave

The National Insurance Institute treats a sufficiently long unpaid leave as unemployment, which is what makes the arrangement workable for many employees. The main conditions:

  • The unpaid leave must run for at least 30 consecutive days. Shorter periods do not qualify under the standard rules.
  • You must receive no salary from the employer for that period, and you must not be using accrued vacation days. An employer who insists you burn your vacation balance first is delaying your eligibility, which is often the real point of the request.
  • You must register with the Employment Service and attend when called. Refusing suitable work offered by the bureau costs you benefit days.
  • You must satisfy the qualifying period: 12 months of National Insurance contributions as an employee within the 18 months preceding the claim.

Benefit duration depends on age and dependents. Most claimants are entitled to up to 138 days. Claimants aged 45 and over, or those with three or more dependents, can reach 175 days. Younger claimants without dependents receive substantially less. The daily benefit is calculated from your average wage over the months preceding the claim, on a sliding scale that replaces a high proportion of a low salary and a much smaller proportion of a high one, and the first five days of each unemployment period are generally unpaid.

Watch the benefit ceiling. Days paid during unpaid leave come out of the same annual allowance as days paid after an actual dismissal, so an employee who uses 60 benefit days during a chalat and is dismissed four months later starts the second claim with far less left. And in emergency periods the Knesset and the NII have repeatedly issued temporary relaxations, including shortening the 30-day threshold and waiving the requirement to exhaust vacation days. Check the current position on the NII website before assuming the standard rules apply. Our guide to unemployment benefits in Israel covers the calculation and the claim procedure in detail.

5. Pension, Severance Component and Keren Hishtalmut

Pension contributions are calculated as a percentage of salary, so when salary stops, deposits stop. What continues, and for how long, is decided by your fund's rules rather than by statute.

Most comprehensive pension funds keep your risk cover alive during an arrangement period, commonly up to five months, by drawing the disability and survivor premiums from your accumulated balance. The cover survives only while the balance can carry it, which is why employees early in their careers, with small balances, lose protection faster than they expect. After the arrangement period lapses, rejoining is not automatic. Funds may require fresh medical underwriting, and a condition that developed during the gap can be excluded permanently.

The severance component sitting in your pension fund is unaffected. If your employment is covered by a Section 14 arrangement, the amounts already deposited remain yours, and no further deposits accrue for the unpaid months. Your keren hishtalmut (study fund) behaves the same way: deposits pause, the accumulated balance continues to earn returns, and the six-year liquidity clock is not reset by the pause.

In Practice: Keeping Pension Cover Alive for Roughly NIS 150 a Month

Ask your fund for a hesder risk quotation before the leave starts. For a typical employee in their thirties or forties, maintaining disability (ovdan kosher avoda) and survivor cover through direct payment usually costs somewhere between NIS 100 and NIS 250 a month, depending on age, insured salary and health history. Compare that against the alternative: a disability claim rejected because cover lapsed can cost a family a monthly benefit worth roughly 75% of the insured salary for decades. Funds process a direct debit authorisation within about 10 to 14 business days, so arrange it before your last salary is paid rather than after. If your employer initiated the leave, ask them to cover the risk premium as part of the deal. Employers frequently agree, because the sum is trivial next to the salary they are saving.

6. Seniority, Severance and the 14-Day Rule

Unpaid leave does not break the continuity of your employment. Regulation 10 of the Severance Pay Regulations 5724-1964 lists interruptions that leave the employment relationship intact, and leave granted with the employer's agreement is one of them. Years of service before and after the pause are added together as a single continuous period.

Counting toward seniority is a separate question, and here the regulations set a firm limit: unpaid leave counts as seniority only up to 14 days per year of work. Days beyond that are excluded from the calculation.

An example makes the arithmetic concrete. An employee with a monthly salary of NIS 20,000 has worked six years and takes four months of unpaid leave in year five. Continuity is preserved, so the employee is still credited with six years of employment for eligibility purposes. Of the roughly 120 days of leave, 14 days count and about 106 days do not, reducing the credited seniority by around 0.29 of a year. At NIS 20,000 per year of service, that is approximately NIS 5,800 less in severance. The number is not catastrophic, but it is real, and it belongs in the conversation before you sign.

The base figure for the calculation is your last regular monthly salary before the leave, not an average dragged down by months of zero income, so a long chalat does not deflate the multiplier. If the employer decides during the leave that the role no longer exists, that is a dismissal like any other: it requires a pre-dismissal hearing (shimua), advance notice under the Advance Notice Law 5761-2001, and payment of severance and accrued balances within the statutory deadlines.

7. Employees Who Cannot Be Placed on Unpaid Leave Without a Permit

Several categories of employee are protected not only against dismissal but against any reduction in the scope of their position or their income. Placing such an employee on unpaid leave falls squarely within that prohibition, so the employer needs a permit before doing it, even with the employee's apparent agreement.

  • Pregnant employees with at least six months of service, under Section 9a of the Women's Employment Law 5714-1954. The employer must apply to the Employment of Women Commissioner at the Ministry of Labor's Regulation and Enforcement Administration and prove the step is unconnected to the pregnancy.
  • Employees on or returning from maternity or parental leave, including the protected period of 60 days after the return.
  • Employees undergoing fertility treatments, within the periods defined by the same law.
  • Reservists, protected during miluim service and for a period afterward under the Discharged Soldiers (Reinstatement in Employment) Law 5709-1949, with a permit required from the statutory committee.

Permit applications to the Ministry of Labor typically take around 30 to 45 days to decide, and the Commissioner refuses a significant share of them. Acting without a permit is not merely voidable: the Women's Employment Law carries criminal liability alongside civil exposure, and Labor Courts award compensation for the breach itself in addition to lost wages. Our guides on dismissal during pregnancy and employment rights during reserve duty cover the permit process in detail.

8. Foreign Nationals: Work Permits, Visas and Returning to Work

For foreign employees, unpaid leave raises a question Israelis never have to consider: what happens to the permit that lets you stay in the country?

A B/1 work visa is tied to a specific employer and a specific permit issued by the Population and Immigration Authority (PIBA). The visa's validity depends on an ongoing employment relationship with that employer, and an extended period without wages can raise questions when the permit comes up for renewal, particularly where the employer's quota or licence is under review. The employment relationship technically continues during unpaid leave, which is the right answer legally, but permit officials look at payslips and monthly reporting rather than at contract theory. An employee whose payslips show zero for four consecutive months should expect to be asked about it.

Practical steps for foreign nationals:

  • Ask the employer to confirm in writing, in a form suitable for PIBA, that the employment relationship continues and the return date is fixed.
  • Check the visa expiry date against the end of the leave. Renewal applications are usually submitted by the employer, and an employer who has stopped paying you may also be slow to file.
  • Confirm your health insurance position. Employers of foreign workers must provide private medical insurance, and that obligation continues while the employment relationship does. Losing cover mid-leave is a common and avoidable problem.
  • Remember that unemployment benefits require Israeli residency for National Insurance purposes, so a foreign worker on a B/1 permit will usually not qualify even when the 30-day condition is met.

Employees who are Israeli residents but working for a foreign employer without an Israeli entity face the mirror-image problem: there may be no Israeli payroll and no employer contributions to suspend, which changes both the NII analysis and the unemployment claim. That situation deserves individual advice before agreeing to anything.

In Practice: What a Fair Unpaid Leave Agreement Contains

A well-drafted chalat agreement runs to one page and covers seven points: the start date and a fixed end date; confirmation that seniority continues to accrue for all purposes; who bears the National Insurance minimum in months one and two and whether the employer waives recovery of it; who pays the pension risk premium; a guaranteed return to the same role, scope and salary; a statement that the employee retains the right to accept alternative work during the leave; and an undertaking that if the employer terminates instead of reinstating, severance will be calculated on the pre-leave salary with the leave period treated as continuous service. Where the employer refuses the return-to-role commitment, treat the arrangement as a dismissal in slow motion and negotiate accordingly. A Regional Labor Court claim for wrongfully imposed unpaid leave is usually filed together with a claim for delayed-wage compensation under the Wage Protection Law 5718-1958, and the combination gives an employee real bargaining weight before litigation ever starts.

Frequently Asked Questions

No. No Israeli statute gives an employer a general right to stop paying while keeping you employed. Unpaid leave requires your consent, a clear contract clause, or an applicable collective arrangement. An employer who simply stops paying breaches the Wage Protection Law 5718-1958 and risks delayed-wage compensation. You may also treat it as a material worsening of terms and resign with full severance under Section 11(a) of the Severance Pay Law 5723-1963, after giving written warning.

Yes, if the leave runs at least 30 consecutive days, you get no pay and you are not using vacation days. Register with the Employment Service and file with the National Insurance Institute. You need 12 months of contributions as an employee within the previous 18 months. Duration runs up to 138 days for most claimants and up to 175 days at age 45 or with three or more dependents.

Your employer pays the minimum contribution for the first two calendar months, roughly NIS 200 a month at current rates, and may deduct it from your salary when you return. From the third month you are treated as a non-working insured person and must arrange direct payment with the NII yourself. Unpaid health tax accumulates as a debt and can suspend access to health services until cleared.

It does not break continuity, so your service before and after counts as one period. But under Regulation 10 of the Severance Pay Regulations 5724-1964, unpaid leave counts toward seniority only up to 14 days per year of work. Four months of leave therefore costs roughly 0.29 of a year of credited seniority. Severance is still calculated on your last regular salary before the leave, not on zero income.

Deposits stop. Most funds keep disability and survivor cover alive for an arrangement period of up to about five months, funded from your accumulated balance. After that the cover lapses and reinstating it may require new medical underwriting. Ask the fund in writing what the risk premium would cost you directly, usually NIS 100 to NIS 250 a month, and arrange payment before your last salary is issued.

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