Free Consultation
Labor Law

Does an employee in Israel get severance pay when a fixed-term contract expires and is not renewed?

Usually yes. Section 9 of the Severance Pay Law 5723-1963 treats an employee whose fixed-term contract reaches its end as having been dismissed by the employer, and dismissal is what triggers severance. The entitlement still depends on the ordinary qualifying period of one year of continuous employment, so a six-month contract that simply runs out produces nothing. The important exception is that if the employer offers to renew on the same or better terms and the employee declines, the employee is treated as having resigned and loses the entitlement. Consecutive fixed-term contracts with the same employer generally count together toward the one-year threshold.

The provision exists to stop employers using a fixed end date to sidestep severance. Without Section 9, an employer could hire on rolling twelve-month contracts and argue at each expiry that nobody was dismissed and nothing was owed. The statute closes that by deeming expiry to be dismissal, and it puts the burden on the employer to have made a genuine renewal offer if it wants to rely on the exception. A renewal offer on worse terms does not count, so an employer that offers to continue at a lower salary and is refused still faces a severance claim. The Regional Labor Court decides these fixed-term disputes.

Foreign employees on project-based or visa-linked contracts are the most affected, because a fixed term is the norm for them rather than the exception. Two practical points matter. First, most Israeli employment now runs under a Section 14 pension arrangement, which means the severance component has been accumulating in a pension or insurance fund monthly and is released to the employee on separation regardless of why the employment ended, so the real argument is often about the gap between what accumulated and the full statutory calculation. Second, keep the renewal correspondence, because whether an offer was made, and on what terms, usually decides the case.

⚖ In Practice
  • Governing law: Section 9, Severance Pay Law 5723-1963 (expiry treated as dismissal); Section 1 (qualifying period); Section 12 (calculation)
  • Competent authority: Regional Labor Court (Beit Din Ezori LaAvoda)
  • Amount: one month’s final salary for each year of employment, with partial years pro-rated
  • Qualifying period: 12 months of continuous employment; consecutive fixed-term contracts with the same employer generally aggregate
  • Exception: a genuine offer to renew on the same or better terms, if declined, converts the ending into a resignation and removes the entitlement
  • Time limit: severance claims are subject to a seven-year limitation period

From the full guide: Fixed-Term Employment Contracts in Israel: Rights, Dismissal and Severance

Related Questions

Related Guides

Need legal help with this topic?
Get a Free Consultation with Adv. Eli ShimonyPrepared under the direction of Adv. Eli Shimony, Eli Shimony Law Office · Editorial policy

← Browse all Q&A