Israeli Workers to Receive Significant Boost in Vacation Pay
Hundreds of thousands of Israeli employees are set to receive a pleasant surprise in their upcoming paychecks due to a new expansion order signed by the Histadrut labor federation and the business sector presidency. The order mandates an 8% increase in vacation day pay, raising the rate to NIS 451.5 per day, which translates to thousands of shekels for many workers.
This increase means a new employee in the private sector, who received 4 vacation days at NIS 418 each last year (totaling NIS 1,672), will now receive 5 vacation days at NIS 451.5 each this year (totaling NIS 2,257), an increase of approximately NIS 600. The enhanced vacation pay also applies to the public sector, where the daily rate will rise by 8.5% to NIS 511.6. The agreement also stipulates that the base index for updating vacation pay for 2027 will be tied to the May 2026 price index.
During the 2025 "Swords of Iron" war, one vacation day was deducted from all employees, except for vulnerable workers who had half the amount deducted, to help fund the war effort. This deducted amount was paid to the employers and not directly to the employees. Vacation pay rates had not been updated since 2023, making this new agreement a significant improvement for many.
The expansion order, which requires the signature of Minister Yariv Levin to apply to all employees, was signed last week. It is expected to benefit between 2 to 3 million salaried employees annually. Employers are generally required to pay vacation days during the summer months, between June and September, depending on employer choice or collective agreements.
Employees who have already received their vacation pay for 2026 at the lower rate are still entitled to the difference. "The operational meaning for employers is that if vacation pay for 2026 was paid at a rate lower than the updated rate of NIS 451.50 per day, they will likely have to make retroactive adjustments," explained Adv. Irit Ullmann. Employers are advised to review their specific situations to ensure compliance with the new order.
