Israel Approves Increased Holiday Pay for Millions of Workers

Israel's Minister of Labor, Yariv Levin, has signed a directive to increase "holiday pay" (dmei havra'ah), a benefit paid to employees, which will be reflected in the July and August salary slips for millions of workers. This increase, stemming from an agreement between the Histadrut labor union and the business sector's presidency signed in June, raises the rate per holiday pay day from NIS 418 to NIS 451.50 for private sector employees. Consequently, an employee entitled to 10 days of holiday pay annually will receive an additional gross amount of approximately NIS 335. Public sector employees already receive a higher rate of NIS 511.60 per day.

The directive comes after a two-year period where the holiday pay rate remained stagnant, and employees were even required to forgo one day of holiday pay in 2024 and 2025 to fund war efforts and reserve soldier bonuses. While the new agreement accounts for accumulated price increases over three years, it does not compensate workers for the holiday pay days lost during those two years.

Holiday pay is an annual payment separate from regular salary, not factored into pension or severance calculations. It originated as funding for employee retreats but is now paid directly. All employees who complete 12 months of work are eligible, with the number of entitled days increasing with seniority, ranging from 5 days for the first year to 10 days for 20 or more years of service. The amount is prorated for part-time employees. Employers can offer alternative arrangements like funding a private vacation or monthly installments, provided it's agreed upon in writing. Periods of unpaid leave do not count towards holiday pay eligibility, while paid leave and reserve duty do. Maternity leave counts towards seniority for holiday pay, but only for the period covered by National Insurance payments.