Employers – Israel freezes and reduces convalescence pay in 2025
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.
What is the value of a day of convalescence?
The value of one day of convalescence in Israel will be a minimum of ILS 418 and a maximum of ILS 471.40.
How do I reduce the value of a day of convalescence for part-time employees?
For part-time employees, multiply the above sum by the employee’s employment percentage, which is calculated as follows:
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The number of work hours for which convalescence pay is calculated for the employee during the relevant period |
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The number of months of work during the period for which convalescence pay is calculated for the employee |
X |
The number of monthly full-time hours of work as is customary at his workplace |
In relation to employees who worked part-time during a portion of the year, the said sum must be multiplied by the employees’ employment percentages during that period.
How should I calculate the value of a day of convalescence for an employee who is entitled to convalescence pay every month?
In this instance, the value of one day of convalescence used to calculate the convalescence pay payable in 2025 will be a minimum of ILS 418 (and a maximum of ILS 471.40), with the total sum divided by 12. If an employee works part-time, the quotient obtained will be multiplied by his employment percentage.
What does an employer do if it funds a vacation for an employee or gives him another benefit in lieu of paying convalescence pay?
In this instance, the sum equivalent to the quotient will be obtained by dividing the total value of the said benefit that would have been credited to the employee for income tax purposes were it not for the provisions of this law, by the number of days of convalescence to which the employee would have been entitled in 2025, according to that customary in the workplace, had he been paid convalescence pay and were it not for the provisions of this law. In this instance, too, the sum pursuant to this paragraph will be a minimum of ILS 418 and a maximum of ILS 471.40 for a full-time employee who was employed throughout the period for which convalescence pay is payable to him in 2025 and, if the employee was employed part-time or during part of the period for which the benefit is given, the pro rata sum will be calculated.
Will there be a partial reduction this year for employees earning low wages?
Yes. The partial reduction will apply to employees whose average monthly salary during the period October through December 2024 did not exceed ILS 6,150 and, if they were employed part-time, in the instance where their wages did not exceed the aforementioned sum when multiplied by their employment percentages. If an employee was not entitled to a salary in respect of one of the aforesaid months, the last three months preceding January 2025 in which he was entitled to a salary, will be taken into account instead. In the instance of part-time employees earning low wages, the following formula applies:
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The number of hours that the employee worked during the relevant period |
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The number of months of work he worked during the said period |
X |
The number of monthly full-time hours of work as is customary at his workplace |
What is the freeze on the value of a day of convalescence?
The value of a day of convalescence used to calculate convalescence pay in 2025 will be the same as in 2024, and will be a minimum of ILS 418 per day. With regard to employers that are obligated to update the value of a day of convalescence, the sum of convalescence pay that would have been payable to the employee in 2025 were it not for the provisions of the law, will be used to calculate convalescence pay in 2026.
Is it permitted to reduce the convalescence pay now and pay the employee later?
No. The portion of the convalescence pay or the portion of the salary, as the case may be, which was not paid to employees pursuant this law, will not be payable to them even after the end of 2025.
In relation to which components does the reduction in convalescence pay not affect?
The reduction of convalescence pay does not affect various components, including deposits to a pension provident fund, the income for calculating payments to a pension provident fund or the tax liability or exemption as a result of such payments pursuant to the provisions of the Income Tax Ordinance mentioned in the legislative amendment, any one-time payment payable to employees or their heirs by law or agreement as a result of termination of employment, or various other payments as specified in the law.
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Adv. Netta Bromberg is a partner and heads the firm’s labor law department.
Our firm’s labor law department is always at your service to provide advice on these and other labor law issues.