How long does an employer have to pay severance after terminating an employee in Israel?

The Severance Pay Law 5723-1963 does not specify a deadline for paying severance, but entitlement crystallizes on the date of termination — meaning the debt is immediately due. Employers typically pay severance within the final payroll cycle of the month of or following termination. Delays are treated as wage arrears and accrue statutory linkage and interest. If the employer is enrolled in a Section 14 pension arrangement, the pension fund releases the accumulated compensation component directly to the employee, eliminating the delay risk since the funds are already held independently of the employer.

Failure to pay severance entitles the employee to file at the Regional Labor Court and claim the outstanding amount plus interest at the statutory rate. If the employer is insolvent, Bituach Leumi (National Insurance Institute) operates a wage guarantee fund that covers unpaid severance up to a statutory ceiling — approximately 4 months of employment obligations. Employees should file claims promptly; the 7-year limitation period begins from the date payment was due. For more detail, see Wrongful Termination in Israel: Rights, Procedures and Remedies.