Severance pay for hourly and part-time workers: how the determining wage is calculated

Service page: Employment lawyer: dismissals, wages and severance pay.

How much severance pay does an hourly employee get?

The Law distinguishes between a “monthly-salaried employee” (עובד במשכורת), whose wage is mainly paid on the basis of a month or more, and an “hourly or daily-paid employee” (עובד בשכר), which is any other employee, for example an employee paid by the hour or by the day (section 12(a) of the Severance Pay Law, 5723-1963). The Law itself sets two weeks’ wages for each year of employment for an hourly or daily-paid employee, but regulations from 1983 increased the rate: for a period of work from 1 August 1983 onward, one month’s wage for each year of employment (regulations 1 and 2 of the Severance Pay Regulations (Rates of Severance Pay for an Hourly or Daily-Paid Employee), 5743-1983 (תקנות פיצויי פיטורים (שיעורי פיצויי פיטורים לעובד בשכר), התשמ״ג-1983)).

The conditions of entitlement are the same: one continuous year of employment and a dismissal, or a resignation that the Law treats as a dismissal (sections 1(a) and 6 to 11). For an hourly employee the hard question is a different one: what is their “monthly wage”.

How is the “monthly wage” of an hourly employee determined?

Until 2017 the “Snunit rule” applied (Labor Appeal (National) 57/3-57 (דב״ע (ארצי) נז/3-57), National Labor Court, 1997): when the wage is paid by the hour and the scope of work changes, the calculation is by the average wage in the last 12 months, by analogy with regulation 9 of the regulations. On 4 June 2017 the National Labor Court changed the rule (Labor Appeal (National) 44824-03-16):

• The rule: for an hourly employee whose hours change from month to month, the last wage is calculated under regulation 7, whose principle is a calculation by the employee’s part-time fraction.
• Why: this way the severance pay matches the actual scope of employment over the whole period. According to the court, an average of the last 12 months only may be unfair to the employer when the scope went up at the end of the period, and to the employee when it went down.
• When a 12-month average still applies: regulation 9 fits when the scope of work does not change but the wage does, for example because of commissions, or in genuine piecework, where the working hours do not determine the wage.
• When data is missing: the court noted that when data on the scope of employment over the whole period is missing, and there is no evidence of a material change in the employment pattern, the average of the existing data may be used, taking into account the burdens of proof and the duty to keep records. It added that there is no need to lay down a firm rule on this, and left the question for an appropriate case (paragraph 23).

In practical terms: for each period, calculate the average monthly hours in that period, multiply by the last hourly wage and by the number of years in the period, and add the results up.

A calculation example: an hourly employee whose hours went up

A hypothetical example (section 12(a), regulation 7 and Labor Appeal (National) 44824-03-16, as of 27 October 2026): an hourly employee is dismissed after 5 years. Their last hourly wage is NIS 50. In the first three years they worked an average of 80 hours a month, and in the last two years 160 hours a month.

In the opposite example, when the scope went down at the end of the period, the method under regulation 7 increases the severance pay compared with the average of the last 12 months. So it is worth keeping the payslips from all the years of work.

I worked full-time and moved to part-time: which wage is used?

For an employee who moved from full-time to part-time work, or the other way around, the last wage is calculated for each period of work according to their wage on the eve of the dismissal, in proportion to the part-time fraction in that period (regulation 7 of the Severance Pay Regulations (Calculation of Severance Pay and Resignation Deemed Dismissal), 5724-1964 (תקנות פיצויי פיטורים (חישוב הפיצויים, והתפטרות שרואים אותה כפיטורים), התשכ״ד-1964)).

A hypothetical example (section 12(a) and regulation 7, as of 27 October 2026): a monthly-salaried employee worked 6 years full-time and then two years half-time. Her last wage, for half-time, is NIS 6,000, that is NIS 12,000 for a full-time position at that date.

A calculation by the last wage only (8 × 6,000) would give NIS 48,000.

The wage went down in recent years

When the wage was reduced, and as a result the last wage became lower, the last wage for the period before the reduction is the wage on the eve of the reduction (regulation 8). When the change in the wage was temporary, the last wage is calculated as if there had been no change (regulation 6). A reduction that results from a smaller job scope is checked under regulation 7, as in the previous example.

Commissions, output-based pay and several positions

• Commissions or output-based pay: when the wage, in whole or in part, is paid for performing specific work, as a share of the turnover or by the quantity of output, the last wage for that part is the average of the 12 months before the dismissal (regulation 9).
• Wage components: basic wage, seniority increment, cost-of-living increment and family increment; a departmental or professional increment counts as part of the basic wage (regulation 1).
• Several positions with the same employer: only the wage for one position is taken into account, as is customary in that work (regulation 1A).
• Minimum wage floor: the wage taken into account may not be lower than the minimum wage according to the job scope (section 13B of the Law). Check the current minimum wage in Minimum wage in Israel.

A seasonal employee

A seasonal employee is entitled to severance pay after two seasons in two consecutive years; a “season” is three consecutive months in a year in which they worked at least 60 days (section 1(a)). For a seasonal employee, part of a year also gives a right to proportional severance pay, even if their periods of work do not add up to a year (section 12(a)).

What to prepare for a check of the calculation

• Payslips from all the years of work, or at least from every period in which the number of hours changed.
• Attendance reports, if any, to establish the average hours in each period.
• The employment contract or the notice of employment terms, showing the hourly wage and any changes to it.
• The fund report, if deposits were made to the severance component, and whether a Section 14 arrangement applies (Section 14 of the Severance Pay Law).

The comparison between the payslips, the attendance records and the fund reports can be done as part of a payslip review. The calculation for a monthly-salaried employee: the severance pay calculator.

Frequently asked questions

How much severance pay is an hourly employee entitled to?

For a period of work from 1 August 1983, one month’s wage for each year of employment, and part of a year proportionally (section 12(a) of the Law and regulation 1 of the Severance Pay Regulations (Rates of Severance Pay for an Hourly or Daily-Paid Employee)).

How do you calculate the monthly wage of an hourly employee whose hours change?

By the job scope in each period: the average monthly hours in each period, multiplied by the last hourly wage and by the number of years in the period (Labor Appeal (National) 44824-03-16, by analogy with regulation 7).

Is it calculated on the last 12 months?

Not when the number of hours changes. The “last 12 months” rule (the Snunit rule, 1997) was changed in 2017 (Labor Appeal (National) 44824-03-16). A 12-month average remains relevant for a wage based on commissions or output (regulation 9).

I moved from a full-time job to half-time. Which wage is used for the calculation?

Each period is calculated by the wage on the eve of the dismissal, in proportion to the part-time fraction in that period (regulation 7).

I had two roles with the same employer. Are the two wages added together?

Under the regulations, only the wage the employer paid for one position is taken into account, as is customary in that work (regulation 1A).

I don’t have payslips for all the years. What do I do?

The National Labor Court noted that when data on the scope of employment is missing and there is no evidence of a material change, the average of the existing data may be used, taking into account the burdens of proof and the duty to keep records, but it left the decision on the question for an appropriate case (Labor Appeal (National) 44824-03-16, paragraph 23).