Are employees in Israel entitled to a cost-of-living increase (tosefet yoker)?

Israel has no wage indexation statute. Sections 25 to 33 of the Collective Agreements Law 5717-1957 allow the Minister of Labor to extend a general collective agreement to employers who never signed it, which is the mechanism that carries a Histadrut deal into a small business with no union presence. A cost-of-living extension order specifies three things: the trigger, normally a cumulative rise in the consumer price index published by the Central Bureau of Statistics, the percentage payable, and the ceiling of salary to which the percentage applies. While an order is in force, the payment carries statutory force, appears as its own payslip line, and forms part of the base for calculating severance and pension contributions. When no order is in force, nothing accrues.

A foreign employee reading an Israeli contract should not assume any inflation protection is built in. Ask whether an extension order or a sectoral collective agreement covers the workplace, because construction, cleaning, security, catering and caregiving all sit under sector-specific orders that set pay above the statutory floor and often include their own linkage terms. The real backstop is the Minimum Wage Law 5747-1987, which is updated by legislation and negotiated agreement rather than by index. If your own contract promises linkage to the consumer price index, that promise is a contractual term and the Labor Court will enforce it. The guide to trade unions and collective agreements in Israel explains how to check which agreements bind your employer.

From the full guide: Trade Unions and Collective Agreements in Israel: What Foreign Workers Need to Know

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