Client updates / Employment

Can a company dismiss its CEO after the controlling shareholder changes? This was the central question in a recent proceeding in which we represented an employer and its new controlling shareholder. Indeed, Israel’s national labor court accepted our claim, and ruled, for the first time, that a company may dismiss its CEO after the controlling shareholder changes and wants to appoint a new CEO.

The court’s determinations in the Kovach ruling underscore how important it is for employers to carefully and wisely manage their undertakings to grant Stock Options to employees, especially in startup companies that use options as a key remuneration tool.

On June 21, 2025, the National Emergency Authority defined the term “essential sector” to ensure clarity for the public and employers and to support the continued operation of the essential economy during the emergency.

This morning, June 22, 2025, the Home Front Command’s updated defense policy came into effect. The updated policy has implications for the operation of workplaces throughout Israel.

In light of recent complexities affecting labor relations in Israel, our Employment Department answer key questions such as who may work, from where, who must be paid and when, and who may exceed statutory overtime limits.

In Israel, many employers customarily employ teenagers during the summer vacation. Since the school year is coming to a close, we are recapping highlights of the Youth Employment Law to remind employers about what is permitted and prohibited when employing teenagers.

Employers employing more than 518 employees obligate to prepare two annual reports specifying the gender wage disparities in the workplace, publish publicly and internal.

On April 25, 2025, the public transportation fares were updated in the second phase of the “transportation justice” reform. The new fares may affect the rate of reimbursement of employees’ travel expenses.

The Freeze and Reduction of Convalescence Pay Law was approved in 2025.  As in 2024, employers will be obligated to reduce the convalescence pay payable to their employees and to transfer the reduced sums to the tax assessor, accordingly. The purpose of this law is to redirect these sums for the provision of benefits to reservists.

A recent ruling by the National Labor Court establishes that placing cameras near an employee’s workstation does not necessarily constitute a substantial deterioration in working conditions.

The account-settling must include wage components based on seniority, actual work (like overtime or rest-day work), and qualifying events.

A new extension order signed in March 2025 applies to employees in the construction, infrastructure, heavy equipment, public works, civil engineering and renovation sectors and came into effect on April 1.

The minimum wage in Israel is rising by 6.25% to ILS 6,247.67 per month as of April 1, 2025 (compared to ILS 5,880 last year). The update comes into effect on April 1, 2025.

Employers may require a medical exam only in cases of suspected sick leave misuse, such as working elsewhere or following a hearing summons.

A new extension order for the institutional catering sector took effect on April 1, 2025, applying the 2022 collective agreement to all employers and employees in the industry. The order improves conditions for one of the most underpaid and overworked groups in the labor market.

The Families of Fallen Soldiers Law was amended recently, which prohibits employers in Israel from dismissing any employee who is a member of a fallen soldier’s family (“bereaved employee”), from docking his/her wages, from reducing his/her appointment percentage and from sending him/her home on unpaid leave during the year of mourning.

Israel began 2025 with a series of labor law amendments and updates. Following are highlights of relevant amendments and innovations.

A new amendment to the Israeli Wage Protection Law allows employees to request that their employers transfer their salary to a wider range of entities.

In a precedent-setting ruling handed down recently, the National Labor Court ruled that sales commissions must be included in wages for the purpose of calculating sick pay, vacation pay, pension contributions and overtime pay.

An important amendment to the Israeli Severance Pay Law was enacted recently to facilitate the process of redeeming the severance pay of employees who died during the period prescribed in the amendment.