New extension order signed in Israel improves wage terms in the catering sector

The extension order signed by the Minister of Labor extending the application of the 2022 collective bargaining agreement to the entire institutional catering sector came into effect on April 1, 2025. The extension order now applies to all employees and employers in the catering sector and improves the employment terms of catering employers – a population that is considered one of the most underpaid and overworked in the labor market.

To which employers does the extension order apply?

The extension order applies to anyone engaging in the catering business, through its employees, at or for its customers, which are private or public companies, businesses, institutions and entities providing internal catering intended for their employees and/or tenants and/or students and/or for security and rescue forces and/or for events, cafeterias or kitchenettes, through ongoing and/or specific catering engagements, and excludes restaurants and event and banquet halls.

Is the extension order relevant to companies not engaging in the catering business?

Yes. Absolutely. Companies that order catering services also must familiarize themselves with the provisions of the extension order.

Pursuant to the Law for Increased Enforcement of Labor Laws, companies ordering catering services for their employees, tenants, students, etc. must ensure that their catering suppliers are abiding by the law. Therefore, such companies must review and amend their engagement agreements with their catering suppliers so that they comply with the provisions of the extension order.

To which employees does the extension order apply?

The extension order applies to employees who are directly employed in the provision of catering services, whether they are stationed at the customer ordering the service or are employed in central kitchens, as well as to shift managers, chefs, cooks, kitchen assistants, servers, dishwashers and administrative staff working in central kitchens. The extension order does not apply to management employees or to managers who are not stationed at the customer ordering the service.

The extension order’s improvements to catering employees’ employment terms

Updating the sectoral minimum wage – the minimum wage for employees in the catering sector will be increased in five stages according to the minimum wage in the economy. As of April 1, 2025, the minimum wage in the catering sector will be 110% of the minimum wage in the economy (i.e.  a minimum hourly rate of ILS 37.75 and a minimum monthly wage for a full-time position of ILS 6,872.44. In stage 2, which is expected to come into effect in April 2026, the minimum wage will increase to 113% of the minimum wage in the economy and, as of stage 3 prospectively, the minimum wage in the catering sector will increase to 116% of the minimum wage in the economy.

Contributions to a continuing education fund – as of stage four of the extension order (April 1, 2028), any employee who has completed 12 months of employment either at a customer ordering catering service and/or by an employer, will be entitled to contributions to a continuing education fund. Initially, both the employee’s contribution rate and the employer’s contribution rate will be 2.5% of the base wage. As of stage 5 (April 1, 2029), the employer’s contribution rate will increase to 5%, while the employee’s contribution rate will remain at 2.5%. The contributions will be out of the base wage (i.e. the wage payable for regular work hours and up to 130% of the sectoral minimum wage as updated from time to time, according to that stated above).

Increasing the sum of holiday gifts – as of April 1, 2025, the holiday gift for Rosh Hashanah and Passover will be ILS 212; in stage 2, the sum will increase to ILS 220 and, in stage 3, the sum will increase to at least ILS 230. After stage 3, the sum of the holiday gift will be updated in January of each year according to the rate of change in the Consumer Price Index. Any employee who is employed at less than a half-time job, or who works fewer than 91 hours on average during the full three calendar months preceding the holiday, will be entitled to a holiday gift proportionately to his/her position.

Workwear and gear – the extension order obligates employers to provide suitable workwear and gear to their employees at the employers’ expense.

Annual retention bonus – employees will be entitled to a retention increment per hour worked, which will also be increased in stages. As of April 1, 2025, the increment is 2 agorot for each regular work hour; in stage 2, the increment will increase to 5 agorot and, in stage 3, the increment will increase to 8 agorot per regular work hour. The retention bonus will be calculated as follows: the increment multiplied by the number of regular work hours that the employee actually performed during the applicable period.

The rates for the value of a work hour as published in the Ministry of Labor’s online calculator will be updated in conformity with the Increased Enforcement of Labor Laws Regulations.

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Adv. Noemie Amar is an associate in our firm’s labor law 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.