If a foreign caregiver in Israel is enrolled in a Section 14 pension arrangement, does the employer still owe separate severance pay when employment ends?

No, provided the arrangement was structured correctly from the start. Under Section 14 of the Severance Pay Law 5723-1963, if the employer makes pension contributions at the rate specified in the employment contract as a full 'Section 14 release,' those contributions discharge the employer's severance liability entirely. The pension fund accumulates the employer's contributions, and on termination the caregiver keeps the full balance in lieu of a lump-sum severance payment. This protects the employer from large end-of-service payments and protects the caregiver by building a portable fund rather than depending on the employer's liquidity years later.

The Section 14 arrangement must appear in the written employment contract from the first day — it cannot be applied retroactively to prior service. Without that clause, the traditional rule applies: one month's salary per full year worked under the Severance Pay Law 5723-1963, payable as a lump sum on termination. For a caregiver earning the NIS 5,571.75 minimum monthly wage who worked four years, that amounts to approximately NIS 22,287. Diaspora families should include the Section 14 clause in the initial contract and verify their chosen fund is a recognized keren pensia licensed by the Ministry of Labor before the caregiver's first day. For more detail, see Foreign Caregiver Visa Israel: How to Hire a Home Care Worker Legally.