Must an Israeli employer pay out unused vacation days when employment ends?

The Annual Leave Law 5711-1951 (Hok Chufsha Shnatit) entitles every employee to paid annual leave, with the number of days rising with seniority. The law treats leave as something to be taken during employment, but it recognizes that a balance often remains when the job ends. Under the redemption provision, an employer must pay out the unused balance on termination as leave redemption (pidyon chufsha), valued at the employee's ordinary daily wage. The right to redemption is capped by a limitation rule: an employee can generally claim the balance accrued during the current year of work plus the three preceding years, not an unlimited historical total. Employers cannot lawfully pay employees to skip leave during employment as a substitute for actual rest.

Foreign nationals working in Israel hold the same redemption right as local employees, and it cannot be waived by contract. The practical disputes usually concern how many days were really left and the wage rate at which they are valued, which is why an accurate, itemized payslip throughout employment matters so much. Keep your own record of leave taken so you can check the final settlement. If an employer refuses to pay redemption or miscounts the balance, the claim is pursued in the Labor Court (Beit Din LaAvoda), often together with other end-of-employment amounts such as severance. Act within the limitation period, and review the broader employment law guide for foreigners for the full list of termination entitlements.

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

← Browse all Q&A