Does an employee keep their seniority and severance rights when transferred between companies in the same group in Israel?

The statute anticipated exactly this situation. Continuity attaches to the workplace as an economic unit, so where the same people continue the same work at the same premises under the same ultimate control, a change in the legal identity of the employer does not interrupt the count. The Severance Pay Regulations 5724-1964 reinforce the point by listing interruptions that do not break continuity, such as illness, leave and military reserve service. Regional Labor Courts look at substance rather than paperwork, examining who directs the work, who bears the economic risk, and whether the transfer changed anything real for the employee. Rights that accrue by seniority, including the notice period and the annual leave entitlement, are calculated from the original date.

The trap for multinationals is the tidy final settlement. A group moves an Israeli employee from the R&D entity to a new commercial entity, issues a termination letter, pays severance and asks for a release. That is permitted, but only if the severance is genuinely paid out and the employee understood what they were signing, and Israeli Labor Courts set aside releases signed without a clear explanation or without full payment. The cleaner route is a written continuity letter recording that seniority carries over, that accrued severance stays in the pension fund, and that the new entity assumes the accrued obligations. Employees should keep every payslip from both entities, since the burden of proving the start date falls on whoever claims it. Full detail is in our guide to severance pay in Israel for foreign workers.

From the full guide: Severance Pay in Israel for Foreign Workers and Expats

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