ISRAEL Law and Practice Contributed by: Tal Keret, Shira Lahat, Neta Goshen Brami, Shira Cohen-Mazor and Shirly Mahlab Hefetz, Arnon, Tadmor-Levy
required by law to pay at least the minimum wage, and failure to do so may lead to criminal and administrative proceedings. There is no legal requirement for a 13th- month salary (annual bonus) in Israel, although such payments may be acceptable in certain industries or given at the discretion of the employer. Bonuses, com - missions, and other incentive payments are generally subject to the terms of the employment contract or collective bargaining agreements (CBAs), and are not required by law unless expressly agreed. The govern - ment plays an active role in regulating wages, mainly through periodic adjustment of the minimum wage and through sectoral collective agreements that may set a higher minimum or additional benefits for certain industries. Salary increases may also be determined by CBAs or individual negotiations, but must always meet the legal minimum wage and other legal require - ments. 1.5 Other Employment Terms Employees in Israel are entitled to paid annual leave in accordance with the Annual Leave Law. The mini - mum entitlement is usually 12-14 days per year for full-time employees, and it increases with seniority and varies depending on the structure of the work - week. The vacation payment is calculated based on the employee’s regular salary. Unused vacation days can be accrued within certain limits, but employers are encouraged to ensure that employees use their time off. Israeli law requires different types of paid and unpaid leave, including the following. • Maternity leave: female employees are entitled to 26 weeks of maternity leave, part of which is paid by the National Insurance Institute, subject to eligibility. • Paternity leave: fathers may be entitled to a por - tion of maternity leave or separate paternity leave, subject to eligibility. • Sick leave: employees accrue 1.5 sick days per month, up to a maximum of 90 days. Sick pay is subject to waiting periods and statutory rates. • Childcare leave: parents may be entitled to unpaid leave after maternity leave, and there are additional rights for parents of children with disabilities. • Other types of leave: these include leave for mili - tary reserve duty, bereavement, adoption.
Employment contracts usually include confidentiality clauses and a prohibition of defamation. Confidential obligations are enforceable, provided they are reason - able in scope and duration. Defamation clauses are also enforceable in general, but they must not infringe upon statutory rights, such as the right to unionise or report corruption. The employee’s liability for dam - ages caused during the course of work is limited. Under Israeli law, employees are generally not liable for ordinary negligence but may be liable for malicious conduct or gross negligence. Employers are encour - aged to maintain insurance to cover potential liabilities arising from employee actions. Under Israeli law, non-compete clauses in employment agreements are generally viewed with caution and are rarely enforceable. The Israeli courts have established that the fundamental principle is the employee’s right to work and earn a livelihood. As such, non-compete clauses will only be upheld in limited circumstances. Requirements for Validity • Legitimate interest: the employer must demon - strate a legitimate interest that requires protection, such as trade secrets, confidential information, or unique business methods. General business knowledge or skills acquired during employment are not sufficient. This is s fundamental require - ment. • Independent consideration: while not an absolute requirement, the provision of independent con - sideration (such as a special payment or benefit specifically for agreeing to the non-compete) can strengthen the enforceability of the clause. How - ever, even with consideration, the clause must still meet the other requirements. Specific training might also be considered as consideration for the non-compete undertaking. 2. Restrictive Covenants 2.1 Non-Competes • Reasonableness: the scope of the non-compete must be reasonable in terms of duration, geo - graphic area, and the type of restricted activity. Overly broad or vague restrictions are likely to be struck down.
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