Wait a minute before you empty out your desk
Israel's economic recovery, which according to all the indicators is continuing despite the recent war in the north, has not yet had much of an effect on the job market. This market is still relatively unstable and troubled by high personnel turnover. On the one hand there is increased demand for new workers, for example, in the financial sector (and moderate demand among high-tech companies), while the tourism sector is plagued by waves of layoffs.
Have you been fired due to liquidity problems or new management at your workplace? Has the startup or furniture store where you worked suddenly locked its doors? Have you decided to leave your job for a more attractive offer elsewhere? Now is the time to clarify your rights. It is reasonable to assume that your personal work contract or the collective agreement signed between your employer and the Histadrut labor federation covers your rights when you leave.
David Shay of Hilan Tech, an expert in work and wage conditions, says that employees need to be aware of all their rights if they are fired.
1. Advance notice
If you have received a dismissal notice, you have the right to continue working at full pay until the dismissal takes effect. The advance notice required by law is as follows: up to six months on the job - one day for every month worked; from the seventh through 12th months, workers are entitled to advance notice equal to six days plus 2.5 days for each month worked. After working for a year, advance notice of one month is required.
If a dismissal is effective immediately - if a company representative is waiting for you when you arrive at work, asks for your keys to the company car and gives you an hour to empty your desk, you are entitled to full wages for a period equivalent to the advance notice you are due.
2. Severance pay
If you have accumulated time-on-the-job of at least one year, you are entitled to one month's compensation for every year worked, pro-rated for partial years, and there is no ceiling on this sum. If, for example, you enjoyed a salary of NIS 30,000 a month, this is the figure on which severance pay must be based. Not all components of a salary are included in the calculation, however - just the base salary. Such things as overtime hours and car maintenance reimbursements are usually not included. An employer must pay a worker his severance pay within 15 days of his last day on the job. Incidentally, severance pay is income tax exempt up to a ceiling of NIS 10,250 (as of 2006) for each year worked.
3. Breach of contract compensation
Most salaried employees in Israel work under open-ended contracts, according to which the employer reserves the right to fire an employee. Sometimes an employer signs a fixed-period contract with an employee, obligating both parties to maintain their working relationship throughout the term of the contract. If a worker is fired before the contract expires, the employer may be obligated to pay the worker not only severance pay, but also special compensation for breach of contract. The level of this compensation is usually stated in the contract itself, and in any event must fairly recompense the worker for lost wages.
4. Readjustment grant
Have you ever heard of the readjustment grant that retiring workers receive to help them adjust to life without a salary? You may not be eligible for such a grant, which is generally awarded to senior managers and is known as a "golden parachute." Still, public sector employers, such as government ministries, often pay readjustment grants to junior employees who are fired due to cutbacks.
5. Vacation pay redemption
If you have unused vacation days when you leave your job, your employer must pay you for them as if you had used them while you were still working, and the sums involved are usually quite substantial. In the past, employers could send an employee on vacation during his advance notice period, and thus minimize the vacation pay redemption sum for which he was eligible. In 1999, however, the National Labor Court ruled that an employer cannot offset vacation days with the advance notice period, even if he tells the employee not to come to work during this period.
6. Unused sabbatical or sick leave
Civil servants who retire are allowed to redeem their unused sick leave days. High-tech workers who can work via their home computers even when they are too ill to come to the office, are not eligible for compensation for unused sick days unless this is stipulated in their contracts.
7. Pension insurance
When a dismissed employee's severance pay is deposited in his retirement or disability fund, the employee must have the right to withdraw the severance pay monies from the fund. Even so, Shay advises clients not to touch this money, but rather to leave it to accrue interest. Withdrawing the cash will reduce the accumulated pension rights.
8. Continuing education fund
Many employers and employees deposit monthly sums in a CEF. These funds continue to be registered in the employee's name and departing employees should be sure to obtain a letter permitting the withdrawal of funds from the CEF. The CEF must be six years old before money can be withdrawn, at which time it will be tax-exempt. Withdrawing money earlier incurs income tax of 50 percent. If you really need the money, it is better to take a bridging loan from the bank rather than withdraw funds early from a CEF.
9. Unemployment benefits
It is important to obtain a letter from your employer stating that you were fired or that you are no longer employed, including the dates of your employment, so that you can apply for unemployment benefits. These benefits are calculated by averaging the last three months wages and have a ceiling of the average wage in Israel.
A few more tips
Attorney Dafna Shmuelevich, who specializes in labor law, says that even when a person quits his job and is not considered as having been fired, he is sometimes eligible for severance pay, particularly if he has worked for several years. Such eligibility is recognized mainly under senior position contracts and in high-tech companies. Shmuelevich advises quitting/fired workers to check what payments other workers received when they left the company. The severance grant is known as a "compensation supplement." High-tech workers are also advised to obtain a letter from their employer confirming that they have returned all equipment and documents belonging to the company, similar to that the letter provided to discharged soldiers. If you have had a company car during your employment, it is important to show the car to the company's car fleet manager, so that it cannot be later claimed that you returned the car damaged. As for a cellular telephone - if the number you used for work purposes is important to you, as for it to be transferred to your name. When returning a personal computer it is essential to delete all personal documents.
Shmuelevich also recommends an overlap period between a departing employee and the new person taking over his position.
"Document the overlap period in writing. Many work contracts state that an employer will release a worker's disability/pension fund only if he performs satisfactorily during the overlap period. If your advance notice period is over and no replacement is found, write to your supervisor, noting the period of time available to the company to call you back to help train your replacement.
When a person has been fired, Shmuelevich advises him to ask his employer to allow him to work right up until his last day on the job, rather than opting to receive wages without coming in to the office. The reason for this is that working during the advance notice period entitles the employee to all the social benefits that come with the base salary, such as the pension plan contribution paid by the employer.
"In general, if an employee is not fired under duress, it is worth his while to choose when he leaves his job," explains Shmuelevich, adding that if a worker leaves a company while it is experiencing liquidity problems, chances are slim that he will receive generous severance pay, due to the reduced balance in the company's coffers.
"The best time to leave is actually when the company is thriving, when your value as an employee is high, because then it is easier to go on your way with a generous severance package.
Ziva Baum, CEO of Eshed Organizational Consulting, advises workers quitting of their own accord not to make do with their work contract's clauses concerning departure terms, but rather to check the practices common in their workplace, which could include benefits beyond what is written in the contract. One such practice could be advance notice of two or three months, rather than just one, or the granting of severance pay to workers who quit, rather than only to those who are fired.
If an employee is quitting of his own accord, who is the first person he should notify of his intentions? The human resources managis direct supervisor, or perhaps his colleagues? Baum says that the direct supervisor is the wisest choice, as he is in an intermediate position between the worker and the senior management.
"The direct supervisor can serve as a kind of advocate for the worker," says Baum, "to attest to his worth and assist in his dealings with the human resources department. Only after one's direct supervisor has been brought in on the secret of a planned departure should colleagues be notified, and then finally the human resources manager."
Finally, Baum advises employees who are leaving their workplace - whether they are quitting or have been dismissed - to leave with a minimum of friction and on friendly terms.
"The world goes around in circles and Israel is a small country," says Baum. "In certain industries everyone knows everyone else. When you leave on a sour note, everyone will hear about it, and it will not be to your advantage."
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