Resigning as Dismissed: How to Claim Severance and Unemployment Rights in Israel
Resigning from a job in Israel under specific legal conditions can grant employees full severance and immediate unemployment benefits, bridging thousands of shekels in potential gaps.
When a new mother leaves her job seven months after giving birth to stay home with her baby, she receives full severance pay because the law treats her as someone who was dismissed. Yet when she registers at the employment bureau that same week, the National Insurance Institute (Bituach Leumi) treats her like anyone else who resigned, leaving her to wait 90 days for unemployment benefits. Each institution maintains its own list of justified reasons for departure, and anyone familiar with only one risks forfeiting money to which they are legally entitled.
Calculating Severance and Unemployment Pay
Consider a 34-year-old employee earning 12,000 NIS gross per month, who worked for four years with their employer contributing 6% toward severance. Upon resigning because their spouse fell ill, their full severance entitlement amounts to 48,000 NIS, whereas the provident fund accumulated approximately 34,600 NIS. The employer must cover the 13,426 NIS difference directly. Unemployment benefits are estimated at roughly 284 NIS per day, meaning if the resignation is recognized, about 21,300 NIS for the first three months is disbursed immediately, totaling around 34,700 NIS combined.
This gap exists because most employers contribute 6% of the salary to the severance component, covering about 72% of full severance. Employees leaving for another job simply take what is in the fund, including returns, with no additional employer contribution. Conversely, those resigning under circumstances defined by law as dismissal receive the completion amount—approximately 2.33% of their final salary for each month worked.
Legal Criteria and Bureaucratic Discrepancies
The Severance Pay Law and its regulations outline over ten such circumstances, including material breach of conditions (such as wage cuts or demotion), health conditions of the employee or a close family member, resignation to care for a child within nine months of birth (12 months for civil servants), relocation of at least 40 kilometers following marriage or a spouse's employment, and conscription into regular military service. All require at least one year of seniority and a direct link between the reason and the departure.
"Each institution has its own list of justified reasons for departure, and anyone who knows only one of them risks losing money that belongs to them."
At the National Insurance Institute, the list is narrower. Waiving the 90-day waiting period applies to material changes in conditions, health issues of the employee or family member, sexual harassment, and relocation resulting in a commute exceeding 60 kilometers, or 40 kilometers for mothers of children under seven. Childbirth alone does not suffice without additional factors such as inflexible shifts, extended unalterable hours, or an employer failing to reinstate the employee to her previous role.
Best Practices for Resigning Employees
Employers cannot demand that a resigning employee justify their decision, but those seeking severance must explicitly state the reason in writing. The letter must specify that departure stems from deteriorating conditions, illness, or relocation, that the employee treats it as dismissal under the Severance Pay Law, and the effective date.
Employees enduring a 15% wage cut who remain silent for half a year risk facing a labor court ruling that they accepted the change. Prior to leaving, employees must warn the employer and grant reasonable time to rectify the issue. While the law does not mandate writing, a dated email serves as the simplest proof. Severance exemption applies up to 13,750 NIS per year of service, meaning the example worker's 48,000 NIS total is fully tax-exempt.
