Is It Time To Review Your Vacation Policy?

• Law Firm: lus Laboris
• Subject Matter: Employment and HR, Employee Benefits & Compensation
• Author: Ms Liat Shaked-Katz (Herzog Fox & Neeman) and Abigail Borowitz (Herzog Fox & Neeman)
• Published date: 12 January 2023

The new year should prompt employers to review (and re-think) their annual leave policies for employees in Israel.

As 2022 has just ended and a new (vacation) year begins, it is good timing for reviewing your vacation policy and whether it is enforced in practice. If changes to the policy are planned, make sure to determine and adopt the lawful process for making those changes.

Social Benefit

Entitlement to annual leave is treated in Israel as a social benefit, not as a monetary compensation. Therefore, the default according to law is that an employee is not entitled to redeem unused vacation days during the employment period. Redemption of unused vacation is, generally, only possible upon termination of employment.

Minimum Statutory Quotas

Israeli law sets minimum quotas for vacation days to which employees are entitled, and these quotas increase based on seniority in the same workplace or with the same employer.

Higher quotas may be required by other binding sources, such as extension orders. Each employer should ensure that the quotas provided are not lower than the legal requirement.

Accrual

There is no automatic legal right to accrual of unused vacation days. However, an employer may agree on accumulation of unused vacation from one year to the next, provided that the employee has used at...