Client updates /  Employment

2025 was replete with dynamic changes with far-reaching implications for employers and employees in Israel. We are pleased to present a selection of client updates we published over the past year, along with several new and important updates already relevant at the outset of 2026.

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.

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

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.

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 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.