New extension order signed in Israel improves wage terms and benefits in the construction sector

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 order extends the provisions of the general collective bargaining agreements signed in 2015 and 2022 to the construction sector, and constitutes an addition to the 2015 extension order applying to the construction sector. The new extension order significantly improves the employment terms of construction workers, which is direly needed considering the severe manpower shortages in the sector since the war began.

To whom does the extension order apply?

The extension order applies to all employers in Israel engaging in construction, infrastructure, heavy equipment, public works, civil engineering, and renovations.

The extension order applies to employees and foremen employed at construction or renovation sites, but does not apply to employees in administrative and office positions.

The extension order’s key improvements

Streamlined pay grades and higher wage levels for employees and foremen

The number of pay grades for employees (including in the renovations segment and foremen) will be reduced, thereby enabling faster promotions. Additionally, the minimum monthly wage will be increased, at least on a par with the latest minimum wage update, and will be updated again gradually 24 and 60 months after the extension order’s effective date (April 1, 2025).

Promotions in pay grade will be made contingent upon seniority and the completion of full courses in practical safety training. The extension order also authorizes employers to shorten the promotion period by one year, provided that employees complete significant professional training in their field, and stipulates that employees who refuse to participate in practical safety training will not be eligible for a promotion in pay grade.

In relation to employees working in the renovations segment, the extension order does not obligate employees to complete practical safety training to qualify for promotions, but employees who complete safety training will be required to accumulate less seniority in order to qualify for promotions between particular pay grades.

Promotions in pay grade for foremen will be contingent upon seniority.

Wage update for crane operators

The extension order updates crane operators’ wages to a mandatory minimum wage of ILS 54 per hour, 36 months after the extension order’s effective date.

Improved employee benefits

The extension order also updates employees’ entitlement to workwear allowances, regulates the per diem subsidies to which employees in the sector are entitled, and also updates the sums of holiday gifts.

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Adv. Nofar Perel is an associate in our firm’s Employment department.

The Employment Department advises local and international companies on all aspects of Israeli labor law. Our expertise includes employee-related matters in mergers and acquisitions, company structuring, terminations, site closures, and cross-border relocations. We provide practical, business-focused solutions tailored to each client’s needs.