Mass layoffs: employer duties and the process

Service page: Unlawful dismissal: when, what you are entitled to and how to sue.

What are mass layoffs under the law?

You received notice that the company is “carrying out a merger” or “reducing staff”. 20 employees, and you. What now?

Israel has no general law that defines “mass layoffs”, and no “redundant employees law”. The main statutory provision is section 37 of the Employment Service Law, 5719-1959: an employer who gives dismissal notices to ten or more employees, at once or within one month, or gives such notices to the employee representatives, must report the dismissals to the competent Employment Service bureau. In unionized workplaces, collective agreements and case law add a duty to consult the employee representatives.

The notice to the bureau does not replace the advance notice to each employee or the individual hearing.

What must the employer do, and doesn’t always do?

Notice to the Employment Service bureau: an employer who gives dismissal notices to ten or more employees, at once or within one month, must give notice of the dismissals to the competent Employment Service bureau when the notices are given to the employees or to their representatives, and when the notices are given over one month and not at once, when the notice is given to the tenth employee (section 37(c) of the Employment Service Law). The duty also applies when the employer gave the employee representatives advance notice of its intention to dismiss ten or more employees (section 37(b)).

Consultation with the workers’ committee: before the dismissals, the employer must hold a discussion with the employee representatives and allow them to propose alternatives: shorter hours, unpaid leave, transfers. This is not a ceremony: it is a duty whose breach can be enforced.

Full severance pay: every employee who is dismissed and worked for at least a year is entitled to severance pay: one month’s salary for each year of employment (sections 1 and 12 of the Severance Pay Law, 5723-1963). If the severance pay is accumulated in a pension fund, make sure that it covers the full amount and that it has been released.

Advance notice: in addition to severance pay, advance notice whose length depends on seniority: for a monthly-salaried employee, one day for each month in the first six months, 6 days plus two and a half days for each month after the sixth, until the end of the year, and after that a month (section 3 of the Advance Notice of Dismissal and Resignation Law, 5761-2001); for an hourly or daily-paid employee, according to the scale in section 4. The employer may waive actual work during the notice period and pay the regular wage for it (section 6).

What a dismissed employee is owed, and does not always know to ask for

Unemployment benefit: a dismissed employee is entitled to unemployment benefit from the National Insurance Institute (Bituach Leumi) if they have built up a qualifying period of 12 months for which unemployment insurance contributions were paid, within the 18 months before the unemployment (section 161 of the National Insurance Law [Consolidated Version], 5755-1995). The claim is filed within 12 months (section 296). The rate of unemployment benefit is set as a percentage of the wage according to the insured person’s age and subject to a ceiling (section 167), and the maximum payment period depends on age and the number of dependents (section 171).

Payment for unused leave (vacation redemption): a dismissed employee is entitled to payment for vacation days that were not used (section 13 of the Annual Leave Law, 5711-1951); a claim under the Law becomes time-barred after three years (section 31). Do not give this up.

A special retirement agreement: in mass layoffs, some employers offer a “retirement package” beyond the law: a seniority grant, extended health insurance, help with retraining. This can usually be negotiated, and you do not need to sign immediately.

An individual hearing: even in mass layoffs, every employee being dismissed is owed an individual pre-dismissal hearing. This is not a formality: you can bring a lawyer to the hearing and try to obtain better terms.

What happens if the employer did not meet its duties?

If the dismissals were carried out without notice to the Employment Service bureau, without a hearing, or without fulfilling the duty to consult, they may be unlawful. The employee can sue in the Labor Court for: compensation for unlawful dismissal, compensation for not giving advance notice (section 7 of the Advance Notice of Dismissal and Resignation Law), and sometimes even reinstatement. See also: unlawful dismissal.

The Regional Labor Court has exclusive jurisdiction over these claims (section 24 of the Labor Court Law, 5729-1969). The limitation periods vary by type of claim, and some are very short, as with compensation for late payment of wages, so the earlier you file, the better the evidence is preserved.

What should you do the moment you receive a dismissal notice?

Do not sign anything on the day you receive the notice. Not a retirement agreement, not a waiver, not a “confirmation form”. Ask for time to check: a week is entirely reasonable.

Write down the details of the notice: the date, who gave it, what was said. Ask in writing for all the details: the date of dismissal, the retirement terms, the amount of severance pay. Keep every email.

Get legal advice, preferably before you sign any document. A lawyer who knows employment law can check whether the offer you received complies with the law.