The employer did not pay severance pay or did not release the money in the fund: what to do

Service page: A claim against an employer for wages, pension and overtime.

You were dismissed, a few weeks have passed, and the severance pay has not arrived. Or the money is in the pension fund, but the fund does not pay it. This guide explains when severance pay is considered “delayed”, what the employer must give the fund, how to check whether the amount is correct, and what to do if it is not paid. You can calculate the amount itself with the severance pay calculator.

When severance pay is “delayed”

The due date for severance pay is the latest of the dates listed in section 20(a) of the Wage Protection Law. In most cases it is the day the employment relationship ended; a collective agreement, an extension order, or a contract that grants a right beyond the one in the Law can set a different date (section 20(a)(1)–(3)).

Severance pay not paid within 15 days of the date it was due is considered delayed (section 20(b)):

• Paid between the 16th and the 30th day after the due date: linkage differentials are added from the due date until the day of payment (section 20(b)(1)).
• Paid after the 30th day: linkage differentials are added, plus 20% for each month on the severance pay and the linkage differentials; for part of a month, proportionally (section 20(b)(2)).

A hypothetical example: employment ended on 30 September 2026, and no other date was set in an agreement. Severance pay paid by 15 October 2026 was paid on time; severance pay paid between 16 October 2026 and 30 October 2026 gives a right to linkage differentials; and if it was not paid by 30 October 2026, 20% per month is also added (section 20(b) of the Wage Protection Law, as worded on 4 October 2026).

The Regional Labor Court may reduce or cancel the compensation for late payment, including where there was a genuine dispute about the right to severance pay itself or about the date on which the employment relationship ended (sections 18 and 20(d)). The employer may set off against the severance pay and the compensation for late payment a debt that the employee owes it (section 20(b2)).

Releasing the money from the fund: what the employer must provide

In most workplaces, part of the severance pay accumulates in the severance component of the pension fund or the provident fund. For the fund to pay, ask the employer in writing to give it notice that the employer agrees to the payment of the severance pay. Under section 20(e) of the Wage Protection Law, if the employer notified the fund in writing, within 15 days of the due date for the severance pay, that it agrees to the payment, no compensation for late payment is added to the amount you are owed from the fund.

Amounts paid in lieu of severance pay under section 14, or paid to a provident fund for the payment of severance pay, cannot be returned, transferred, made subject to a charge or to attachment, except for the exceptions in section 26(a)(1) of the Severance Pay Law, 5723-1963 (חוק פיצויי פיטורים, התשכ״ג-1963). They are also not part of the employer’s assets in bankruptcy or liquidation, to the extent that the employees’ claims under the Law have not been paid (section 26(a)(2)).

The employer does not give the notice? Send it a written demand that states the day your employment ended and the name of the fund, and asks the employer to give the fund written notice that it agrees to the payment of the severance pay, by a date you set.

How to check that the amount in the fund matches the determining wage

1. Calculate the severance pay under section 12 of the Severance Pay Law: one month’s wage for each year of employment, and a proportional part for part of a year. You can use the severance pay calculator.
2. Ask the fund for a report that lists the deposits to the severance component, month by month, and the wage on which they were deposited.
3. Compare the wage in the report with the wage on the payslips. A Section 14 arrangement applies only to the wage from which deposits were made and to the period for which they were made (section 7 of the Extension Order for Comprehensive Pension Insurance in the Economy (צו ההרחבה לביטוח פנסיוני מקיף במשק) and paragraph (3) of the general approval under section 14).
4. Check the extent to which the arrangement replaces severance pay: under the Extension Order for Comprehensive Pension Insurance in the Economy, a deposit of 6% to the severance component replaces only 72% of the severance pay, and the employer must top up the rest.
5. When there is no Section 14 arrangement, the money accumulated is credited toward the severance pay, and the employer pays the difference up to the full amount.

The difference you get is the amount worth including in the demand to the employer. The comparison between the payslips and the fund reports is done in a payslip review by a lawyer and CPA.

Demand letter and a claim in the Labor Court

The demand letter records what you demanded and when. It should include the first and last day of work, the last wage, the amount you calculated under section 12, what is in the fund, and what you are asking for: payment of the difference, a notice to the fund that the employer agrees to the payment, or both, by a certain date. A template to copy, and what not to write: a warning letter before legal action.

A person entitled to severance pay other than under section 1(a) or section 5 of the Severance Pay Law, for example under a contract only, must give the employer a written demand that states the ground for the entitlement; the due date applies only after the demand was given (section 20(c) of the Wage Protection Law).

If the payment does not arrive, sue in the Regional Labor Court, which has exclusive jurisdiction over actions between an employee and an employer that arise from the employment relationship (section 24(a)(1) of the Labor Court Law). In the same claim you can also claim the compensation for late payment.

Before you sign an end-of-employment document: a settlement or a discharge receipt (הודאת סילוק) regarding severance pay is valid only if it was made in writing and states expressly that it concerns severance pay (section 29 of the Severance Pay Law).

Deadlines and the limitation period

• The employer’s notice to the fund: within 15 days of the due date for the severance pay (section 20(e) of the Wage Protection Law).
• Compensation for late payment of severance pay: it is time-barred if no claim was filed within one year of the day the severance pay is considered delayed, or within 60 days of the day you received the severance pay, whichever is earlier; the court may extend the 60 days to 90 (section 17A(a), which applies under section 20(d) of the Wage Protection Law).
• The severance pay itself: as a rule, a claim is time-barred seven years from the day the cause of action arose (sections 5(1) and 6 of the Prescription Law, 5718-1958 (חוק ההתיישנות, התשי״ח-1958)).

Frequently asked questions

The severance pay was paid late. What is added to it?

Severance pay paid between the 16th and the 30th day after its due date: linkage differentials are added to it. Paid after the 30th day: linkage differentials are added, plus 20% for each month on the severance pay and the linkage differentials (section 20(b) of the Wage Protection Law). The Regional Labor Court may reduce or cancel the compensation for late payment, including where there was a genuine dispute about the right to severance pay itself (sections 18 and 20(d)).

The employer deposited 6% to the severance component. Does that cover all the severance pay?

No. Under the Extension Order for Comprehensive Pension Insurance in the Economy, a deposit of 6% to the severance component replaces only 72% of the severance pay, and the employer must top up the rest. When there is no arrangement under section 14 of the Severance Pay Law, the money accumulated is credited toward the severance pay, and the employer pays the difference up to the full amount.

The company went into liquidation. What happens to the severance money in the fund?

It is protected. Amounts paid in lieu of severance pay under section 14, or paid to a provident fund for the payment of severance pay, are not part of the employer’s assets in bankruptcy or liquidation, to the extent that the employees’ claims under the Law have not been paid (section 26(a)(2) of the Severance Pay Law), and they cannot be returned, transferred, made subject to a charge or to attachment, except for the exceptions in section 26(a)(1).

I signed a waiver when my job ended. Did I give up my severance pay?

Only if the document meets the conditions of the Law: a settlement or a discharge receipt regarding severance pay is valid only if it was made in writing and states expressly that it concerns severance pay (section 29 of the Severance Pay Law).

How long do you have to sue for compensation for late payment?

Compensation for late payment of severance pay is time-barred if no claim was filed within one year of the day the severance pay is considered delayed, or within 60 days of the day you received the severance pay, whichever is earlier; the court may extend the 60 days to 90 (section 17A(a), which applies under section 20(d) of the Wage Protection Law). A claim for the severance pay itself is, as a rule, time-barred within seven years (sections 5(1) and 6 of the Prescription Law).