By Adv. Miriam Kanaan Masalha·Head of the Labor Law and Defamation Department·Updated 04.11.2026Summary: Dismissal is a legal process, not just an employer’s decision. Before dismissing you, the employer must hold a real hearing (shimua), and you have a real right to present your side. An employee who is dismissed is usually entitled to severance pay (pitzuei piturim) of one month’s salary for each year of work. When the dismissal was unlawful, you may also be entitled to significant additional compensation. Some employees, such as pregnant women or employees on reserve duty, are protected from dismissal altogether. In this guide we explain the full path of your rights, from the invitation to a hearing to a claim in the Labor Court.
When Is a Dismissal Lawful, and When Is It Not?
An employer has the right to dismiss an employee, but that right is not absolute. Israeli case law holds that a dismissal must be made in good faith, for a relevant reason, and after a fair process.
A dismissal will be considered unlawful when it was carried out without a hearing, or after a hearing held only for appearance’s sake, or for an improper reason such as revenge, discrimination or punishing an employee who exercised a right. Dismissing a protected employee without the required permit is also unlawful.
This distinction is critical. An employee who was dismissed lawfully receives their standard employment benefits. An employee who was dismissed unlawfully may receive additional compensation, and in some cases may even demand that the dismissal be cancelled.
Common Examples of Unlawful Dismissal
Israeli courts recognize a range of situations in which a dismissal will be considered flawed. The most common include:
- Dismissal without a hearing, or after a hearing held only for appearance’s sake.
- Dismissal during a protected period, such as pregnancy, maternity leave or reserve duty, without the required permit.
- Dismissal based on prohibited discrimination, such as age, sex, origin, religion or beliefs.
- Dismissal as revenge for exercising a right, for example complaining about harassment, demanding payment of wages or consulting a lawyer.
- Dismissal for an irrelevant consideration, or with no relevant reason at all.
- Dismissal in breach of a collective agreement or an extension order that applies to the workplace.
Any one of these circumstances does not guarantee compensation automatically, but it does give grounds for a close review of the process.
Types of Employment Termination: Not Every Parting Is a Dismissal
Before going deeper into your rights, it is important to distinguish between the different ways an employment relationship can end, because each one has different legal consequences.
Dismissal is termination initiated by the employer, and it is the situation that gives you the most protection. Resignation is leaving at the employee’s initiative, and it usually does not entitle you to severance pay, except in special cases where it is treated as a dismissal. When a fixed-term contract ends on its agreed date, that is not a dismissal, but in some cases not renewing a contract may be treated as a dismissal for all purposes. Retirement at retirement age is a separate track with its own rules. This distinction directly affects your rights, so check how the end of your employment was defined in the documents.
| Type of termination | Severance pay | Right to a hearing | Prior notice |
|---|---|---|---|
| Dismissal | Yes, after one year of work | Mandatory for the employer | Mandatory |
| Regular resignation | Usually not | Not relevant | Mandatory for the employee |
| Resignation treated as dismissal (Section 11) | Yes | Not relevant | Recommended |
| End of a fixed-term contract | Depends on the circumstances | Usually not | Under the contract and the law |
This table is a general overview. In every case, your rights are examined according to the specific circumstances.
The Right to a Hearing: The Most Important Right of a Dismissed Employee
A hearing (shimua) is a process in which the employer informs the employee that it intends to dismiss them, presents its claims, and gives the employee a real opportunity to respond before a final decision is made. The right to a hearing comes from the employer’s duty of good faith and fairness. Breaching it is the most common ground for a finding that a dismissal was unlawful.
What the Employer Must Do at the Hearing
The employer must invite the employee to the hearing in advance and in writing, set out the claims against them clearly and in detail, allow the employee time to prepare, and let them attend with a companion or a lawyer. After the hearing, the employer must consider the employee’s arguments with a genuinely open mind, not as a technical formality.
A Sham Hearing: When the Decision Was Already Made
A hearing where the decision to dismiss was made in advance is a hearing in appearance only, and the labor courts treat it as a breach. The same applies to a vague invitation that does not specify the claims, or a hearing scheduled for the same day the dismissal letter is handed over. In these cases, the employee may be entitled to compensation even if the reason for the dismissal itself was legitimate.
What to Do When You Receive an Invitation to a Hearing
Do not resign and do not sign documents on the spot. These are the recommended steps from the moment you receive the invitation:
- Do not sign documents and do not resign on the spot, even if you are being pressured.
- Ask for the claims against you in writing.
- Ask for reasonable time to prepare for the hearing.
- Collect documents, correspondence and witness statements that support your position.
- Prepare a relevant response to each claim, and submit it in writing as well.
- In a complex case, consult a lawyer before the hearing date.
Remember that the hearing is not only a technical duty of the employer. It is also a real opportunity for you. A relevant, well-reasoned response that addresses each claim may prevent the dismissal in the first place, or at least lay the groundwork for a claim if the employer decides to dismiss you anyway. Submit your response in writing as well, so there is an orderly record.
Evidence and Documentation: What to Collect
The success of a dismissal claim depends heavily on evidence. Keep documents that can support your position early on, including the hearing invitation, the dismissal letter, correspondence with the employer, messages, pay slips, the employment agreement and performance reviews. Colleagues who are willing to testify can strengthen the picture. Orderly, chronological documentation is a significant asset in the proceedings.
Employees Protected from Dismissal
Some employees enjoy special protection: either they may not be dismissed at all, or their dismissal requires a permit.
Pregnant Employees and Fertility Treatment
Under the Employment of Women Law, 5714-1954, an employer may not dismiss a pregnant employee who has worked for it for at least six months without a permit from the Commissioner at the Ministry of Labor. Similar protection applies to employees undergoing fertility treatment, and to employees on maternity leave and during the period after it.
Reserve Duty
The Discharged Soldiers (Reinstatement in Employment) Law sets an absolute ban on dismissing an employee during reserve duty and for thirty days afterwards, regardless of the reason for the dismissal, unless a permit was obtained in advance from the Employment Committee. This is especially broad protection, designed to ensure that an employee is not harmed for fulfilling their duty.
Following the security situation of recent years, there are also certain protections for the spouses of reservists, under the Employment of Women Law and collective agreements. These include limits on reducing the scope of a position or working hours in certain circumstances. If you are not sure whether you are protected, check before taking any step.
Discrimination and Workers’ Organizing
The Equal Employment Opportunities Law, 5748-1988, prohibits dismissal on grounds of sex, age, religion, nationality, pregnancy, sexual orientation or beliefs. It is also prohibited to dismiss an employee for taking part in workers’ organizing or for seeking to enforce their rights.
Dismissal During Sick Leave
Under the Sick Pay Law, an employer may not dismiss an employee during a period of illness for which the employee is entitled to accumulated sick pay, subject to the conditions in the law. The purpose is to prevent a situation where an employee is dismissed precisely when they are ill and vulnerable. Here too, a dismissal in breach of this rule may entitle you to compensation. We cover all your rights during illness in our guide to sick pay.
Severance Pay: Who Is Entitled and How Much
Under the Severance Pay Law, 5723-1963, an employee who is dismissed after at least one year of continuous work with the same employer or at the same workplace is entitled to severance pay. A dismissal close to the end of the first year, intended to avoid payment, also entitles the employee to severance.
How Severance Pay Is Calculated
The basic rate is one month’s salary for each year of work. The calculation is based on the last salary, including fixed components. For example, an employee who earned NIS 10,000 a month and worked for five years is entitled to about NIS 50,000 in severance pay. Partial years are calculated proportionally.
The salary base for the calculation usually includes the base salary and related fixed components, but not variable components such as expense reimbursements or overtime. For employees paid by the hour, or whose salary changed over the years, the calculation follows special rules set in regulations. Check the calculation carefully: a common mistake is to use the net salary instead of the determining salary.
Section 14 of the Severance Pay Law
When a Section 14 arrangement applies, the employer’s contributions to the severance component of your pension plan replace severance pay. In that case the accumulated funds belong to you even if you resigned, but it is important to confirm that the arrangement applies in full and not only partially. Check your pay slips and pension documents to know where you stand.
For the employer, the main advantage of Section 14 is that it avoids the need to top up severance retroactively for salary raises given over the years, for the contribution percentages that were made. This is one of the reasons the arrangement is so common.
When the arrangement applies only partially, or when the determining salary is higher than the contributions that were made, you may be entitled to a severance top-up beyond the amount accumulated in the fund. An accurate comparison of what was accumulated against what you are owed is an important part of claiming your full rights.
Tax on Severance Pay and Form 161
Severance pay is tax-exempt up to the ceiling set by law, and above that ceiling it is taxable. When your employment ends, the employer will give you the updated Form 161, the official termination form reported to the Israel Tax Authority. It now combines the employer’s reporting and the employee’s choices in one comprehensive document, after the Tax Authority merged the previous forms. The form is used to calculate the tax and to determine how the severance funds will be handled. You have planning options, such as continuity of severance or continuity of pension rights, which may defer or reduce the tax. Review the implications before withdrawing the money, because an uninformed decision can lead to unnecessary tax liability.
Compensation for Unlawful Dismissal: Beyond Severance Pay
When a dismissal was unlawful, the Labor Court may award additional compensation, which does not depend on entitlement to regular severance pay. This compensation is meant to make up for the flaw in the process itself and for the harm caused to the employee.
How Much Can You Receive?
Compensation for unlawful dismissal is usually awarded as a lump sum, or as a multiple of monthly salaries, and ranges from one month’s salary to several months. In severe cases of bad faith, it can reach twelve months’ salary or even more. In recent years the labor courts tend to award a lump sum based on the severity of the flaw, so as not to discriminate between high earners and low earners. In every case, the court weighs the severity of the flaw, the employee’s seniority, their age and their chances of finding new work.
Emotional Distress and Loss of Earnings
In addition to compensation for the dismissal itself, you can claim compensation for emotional distress and for loss of earnings in the period after the dismissal. These heads of damage are examined separately and added to the total amount of the claim.
The courts calculate loss of earnings according to the reasonable time the employee needed to find alternative work, and sometimes cap it. Compensation for emotional distress is awarded at the court’s discretion, taking into account the circumstances of the dismissal, the way it was delivered and the emotional harm caused. In a well-prepared claim, each head of damage should be set out separately and supported by documents, because an unexplained overall amount tends to be rejected.
What Affects the Amount of Compensation
The main factors the court considers are: the severity of the flaw in the process, the employee’s seniority at the workplace, their age and chances of returning to the job market, the employer’s level of good faith, and whether this is a repeated or a one-time breach. The more serious the harm and the more blatant the conduct, the higher the compensation.
Special Cases: Probation Periods and Layoffs
Dismissal During a Probation Period
Contrary to a common belief, a probation period is not a free-for-all. During this period too, the employer has a duty of good faith and a duty to hold a hearing, even if in a more limited form. A dismissal during probation for an improper reason, such as discrimination or revenge, is unlawful exactly like the dismissal of a long-serving employee. The practical difference is usually in the scope of the financial rights that depend on seniority.
Layoffs and Downsizing
Dismissals for efficiency or downsizing reasons are legitimate, but they are also subject to rules. The employer must choose which employees to dismiss according to relevant and equal criteria, and may not use downsizing as cover for a dismissal made for an improper reason. In group dismissals, additional consultation duties may apply. An employee dismissed in a layoff is still entitled to a hearing, severance pay and all other rights.
Documents You Must Receive When Your Employment Ends
When the employment relationship ends, you are entitled to receive a series of documents from the employer, and failure to provide them may in itself give grounds for a claim. The main documents include: a dismissal letter stating the end date of your employment, the updated Form 161 for the taxation of severance pay, a letter releasing the severance and pension funds to the insurance company or fund, and confirmation of your period of employment. Ask for the documents in writing and keep a copy. You will also need these documents to claim your rights from the National Insurance Institute (Bituach Leumi), for example for unemployment benefits.
Employers: How to Run a Proper Dismissal Process
Rights in a dismissal process are not only the employee’s concern. An employer that handles the process carelessly is exposed to a costly claim, even when the decision to dismiss was justified on its merits. An employer that follows a proper process protects itself.
A proper process includes a written invitation with reasonable notice, a clear statement of the claims, a real hearing in which the employee’s responses are considered, orderly documentation of the decision and its reasons, and an advance check of whether the employee belongs to a protected group that requires a permit. Legal advice before issuing a dismissal letter can sometimes prevent future claims. At Vaknin Yariv Law Office we advise employers on building a sound process, and we also represent employees who want to claim their full rights.
Resignation Treated as Dismissal
Sometimes an employee is forced to leave because of a significant deterioration in working conditions, or because of circumstances in which they cannot be expected to keep working, such as unpaid wages or ongoing mistreatment. Under Section 11 of the Severance Pay Law, such a resignation is treated as a dismissal for the purpose of severance pay. Document the deterioration, give the employer written notice of it, and give the employer a real opportunity to fix the situation before you make a final decision to leave. An employee who resigns because of a deterioration without letting the employer correct it may lose the right to severance pay.
Prior Notice and Final Settlement
Under the Prior Notice of Dismissal and Resignation Law, 5761-2001, the employer must give notice of the dismissal in advance, or pay in lieu of prior notice. In the first year, prior notice accumulates proportionally, and for a long-serving monthly employee it is a full month. When your employment ends, you are also entitled to a full final settlement of accounts, including payment for unused vacation, recuperation pay and other balances. A full breakdown of each component, and of what to choose on Form 161, is in our guide to final settlement at the end of employment.
| Employee seniority | Prior notice for an employee on a monthly salary |
|---|---|
| Up to 6 months | One day for each month of work |
| Months 7 to 12 | 6 days, plus two and a half days for each month from the seventh month |
| More than a year | A full month |
For employees paid by the hour or by the day, different rates apply, which increase with seniority. Check the exact calculation for your type of employment.
The Legal Process: A Claim in the Labor Court
Dismissal claims are heard in the Regional Labor Court, the first-instance court for employment disputes in Israel. Employees from the north, including Afula and the valleys, bring their case before the Nazareth Regional Labor Court. For information on representation from our branch: labor law lawyer in Afula. Employees from central Israel and the Gush Dan area litigate before the Tel Aviv-Jaffa Regional Labor Court. See also: labor law lawyer in central Israel.
Vaknin Yariv Law Office has offices in northern and central Israel, which allow close representation in proceedings in both the north and the center of the country. The head of the firm’s Labor Law Department, Adv. Miriam Kanaan Masalha, represents both employees who were dismissed and employers facing claims. This experience on both sides makes it possible to see a case from every angle.
Frequently Asked Questions
Can an employer dismiss an employee without a hearing?
No. A dismissal without a real hearing is usually considered unlawful, and may entitle the employee to compensation even if the reason for the dismissal was legitimate.
How far in advance must an employee be invited to a hearing?
The law does not set a fixed number of days, but the employee must be given reasonable time to prepare, understand the claims and get advice. An invitation to a hearing on the same day is usually considered flawed.
When is an employee entitled to severance pay?
As a rule, an employee who is dismissed after at least one year of continuous work with the same employer is entitled to severance pay, subject to any Section 14 arrangements.
How much is severance pay?
The basic amount is one month’s salary for each year of work, calculated according to the last salary. Partial years are paid proportionally.
What is the difference between severance pay and compensation for unlawful dismissal?
Severance pay is a statutory right that arises from the end of employment itself. Compensation for unlawful dismissal is additional compensation awarded by the court because of a flaw in the dismissal process or because of bad faith.
I was dismissed while pregnant. What are my rights?
Dismissing a pregnant employee who has worked for at least six months is prohibited without a permit from the Commissioner at the Ministry of Labor. A dismissal in breach of this rule may entitle you to significant compensation, and sometimes to cancellation of the dismissal.
Can a resignation be treated as a dismissal?
Yes. A resignation because of a significant deterioration in conditions, or because of circumstances in which the employee cannot be expected to keep working, may be treated as a dismissal and entitle the employee to severance pay, under Section 11 of the law.
What is prior notice and how long is it?
Prior notice is the period of time in which the employer must notify the employee of the dismissal in advance, or pay in lieu of it. For a long-serving monthly employee it is a full month, and in the first year it accumulates proportionally.
How long do I have to file a claim for unlawful dismissal?
Limitation periods vary according to the type of claim, and some are short. That is why it is important to get legal advice as early as possible and not wait.
I live in the Afula area. Where will my claim be heard?
Claims by employees from the north, including Afula and the valleys, are heard at the Nazareth Regional Labor Court. Residents of central Israel litigate before the Tel Aviv-Jaffa Regional Labor Court.
Should I sign the dismissal letter or a waiver?
You are not required to sign a waiver or a document confirming that you have no claims. Signing such a document may harm your rights. Read every document carefully, and if in doubt, get advice before signing.
I was dismissed verbally. Is that valid?
The Prior Notice Law explicitly requires notice of dismissal to be given in writing, so a verbal dismissal is a breach of the law, in addition to a possible flaw in the hearing. Even if the dismissal is valid in practice, the lack of a written document works against the employer. Ask for the dismissal in writing and document the circumstances in which it was delivered.
Can an employee be dismissed during a probation period without a reason?
Even during a probation period, the duty of good faith and the duty to hold a hearing apply, if only in a limited form. An employee cannot be dismissed for an improper reason such as discrimination or revenge. The main difference is in the scope of the financial rights that depend on seniority.
What do I receive at the end of employment besides severance pay?
Beyond severance pay, the employee is entitled to a final settlement that includes payment for unused vacation days, recuperation pay and other balances, as well as documents such as a dismissal letter, Form 161 and a letter releasing the funds.
I was dismissed during sick leave. Is that legal?
As a rule, an employer may not dismiss an employee during a period of illness for which the employee is entitled to accumulated sick pay, subject to the conditions of the law. A dismissal in breach of this rule may entitle you to compensation. Check the exact circumstances with a lawyer.
The Next Step
Dismissal is a difficult moment, but it is also a point in time when many rights are at stake. An early legal review, even before the hearing, can change the whole picture. Vaknin Yariv Law Office, with offices in northern and central Israel, represents employees and employers in dismissal processes, hearings and claims in the Labor Court. To schedule a consultation, contact us.
September 2026 update: The recuperation pay rate in the private sector rose to NIS 451.50 per day under a new extension order, and it must also be used when calculating the final settlement. A full breakdown, including a table of differences by seniority and holiday pay for the Tishrei holidays, is in our guide to employer preparations for the Tishrei holidays and the end of 2026.
This article is general information, accurate as of its writing, and does not constitute legal advice. Every case is examined on its own facts; obtain individual advice from a lawyer before taking any action.
About the author
Adv. Miriam Kanaan Masalha
Head of the Labor Law and Defamation Department
Represents employees and employers at every stage of the employment relationship, from hearings and dismissals to representation before the labor courts in northern and central Israel. Holds a law degree from the University of Haifa.
