Can an Israeli employer pay wages in lieu of the notice period instead of having the employee work it?

The Advance Notice Law sets a mutual duty. An employer dismissing an employee, and an employee resigning, must give notice in advance, with the length rising as seniority grows. For a monthly-paid employee the entitlement accrues through the first year and reaches one month after a year of service, while shorter periods apply during that first year. The law lets the employer choose not to have the employee actually work the notice period. Instead the employer pays a sum equal to the ordinary wage for that period and the employment ends at once. This payment is what Israeli practice calls compensation in lieu of advance notice.

For the employee, the effect is an immediate, clean end to the working relationship, with the notice period paid as a lump sum rather than worked out. The notice pay is calculated on the regular wage for the relevant period and stands apart from severance pay, redemption of unused vacation, and other end-of-employment amounts. Employers often use payment in lieu when they want an immediate separation, for example on restructuring. The duty runs both ways: an employee who resigns and walks out without giving the required notice can be charged the equivalent amount. Foreign employees hold the same statutory rights as Israelis, a point set out in the guide to employment law in Israel for expats.

From the full guide: Employment Law in Israel for Foreign Companies and Expats

← Browse all Q&A