Many workers leave a job in Israel without ever asking about severance pay. Either they assume it will be handled automatically, or they were told they are not entitled, and they accepted that without checking. Sometimes money was sitting in a fund with their name on it — and nobody told them.
Severance pay is not charity. It is a legal right in many situations. And understanding the basics before your job ends is much easier than trying to recover money after you have already left.
When are you entitled to severance pay?
According to the Ministry of Labor, the basic right to severance pay generally requires: at least one year of continuous work and termination of employment.
The standard amount is one monthly salary for each full year of work. For partial years, a proportional amount may apply.
The phrase “termination of employment” matters. Dismissal generally triggers the right to severance pay. Resignation, in most standard cases, does not — unless the resignation was forced by a serious deterioration of working conditions. That specific situation is legally complex and worth checking with a professional if it applies to you.
The deposit system: what it is and why it matters
Many foreign workers in Israel have money held in a pension fund or a special deposit fund during their employment. Contributions are made by the employer throughout the period of work, and the amount accumulates over time.
Under Israeli law, the standard employer contribution to the pension or severance fund is 8.33% of the monthly salary (equivalent to one month’s salary per year of work). Some employment arrangements also include an additional employer contribution toward the pension component. Your own contribution from salary is typically around 6%. These percentages allow you to calculate what should be in the fund at any point during employment — and to notice if the contributions stopped or were never made.
This fund is sometimes described loosely as “severance.” But it is important to understand the difference: what is in the fund may cover part of your severance obligation, but it does not automatically cover everything. The final calculation at the end of employment should account for the fund balance and any remaining amounts owed separately.
Ask your employer or placement bureau: Is there a fund or deposit account in my name? What is the current balance? What is the process for receiving it at the end of employment?
Do not confuse receiving the fund balance with receiving everything you are owed. They are not always the same thing.
It happens more than it should: workers reach the end of employment and discover the fund account is empty — or was never opened at all. If that is your situation, the Ombudsman can investigate whether the employer violated their legal obligation to contribute — and what remedies are available.
💬 Not sure what you are owed at the end of your job in Israel? Use Ask an Expert on LankaConnect. Explain your situation — the length of work, how employment ended, and what you have received so far.
If the workplace changed hands during your employment
Some workers spend years in a situation where the employer’s name changed, the management changed, or the placement bureau changed — but the physical workplace and the daily work remained the same.
In those situations, the question of whether your employment is considered continuous is legally important for severance calculations. Do not assume that a change in the employer’s name breaks your history. This is worth checking carefully.
What to do before you leave
Before your last working day, or as close to it as possible, collect these documents: your contract, all payslips from the full period of employment, notice letters, final wage statements, and any fund or deposit information.
Ask for a written severance calculation showing the basis for the amount: the start date, the end date, the monthly salary used for calculation, and the amounts held in any fund.
If someone says “you are not entitled” or “it will be sorted later,” ask for the legal reason in writing. Vague verbal answers at the end of employment are a risk.
Simple checklist
- Confirm whether you worked at least one continuous year
- Write down how and why employment ended
- Ask whether there is a pension or deposit fund in your name and what the balance is
- Request a written severance calculation before signing any final document
- Check whether a change in employer name affected your employment continuity
- Keep all end-of-employment documents in a safe place
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