Israel Raises Holiday Pay for Private Sector Workers

Israel's Minister of Labor has signed an expansion order that increases the daily "holiday pay" (dmei havra'ah) rate for private sector employees from NIS 418 to NIS 451.50. This adjustment, effective immediately, means thousands of workers will see a raise in their upcoming paychecks, ranging from tens to hundreds of shekels depending on seniority and employment status. Employees who have already received their holiday pay based on the old rate will receive the difference retroactively.

The expansion order extends the agreement reached in June between the Histadrut labor federation and the business sector presidency to all private sector employees. The increase amounts to an additional NIS 33.50 per day of holiday pay. For instance, an employee entitled to 10 days of holiday pay annually will receive an extra NIS 335 gross.

This update follows a two-year period where the holiday pay rate remained stagnant. During that time, employees had to forgo one holiday pay day as part of legislation to fund war expenses and reserve soldier bonuses. While the new agreement adjusts the rate to account for inflation, it does not compensate for the days previously lost.

Holiday pay is an additional payment given to employees, typically annually, separate from their base salary and not factored into pension or severance calculations. Originally intended to fund rest and recuperation stays, it has evolved into a direct monetary payment. Eligibility requires completing a full year of employment, with the number of entitled days increasing with seniority, up to a maximum of 10 days for those with 20 or more years of service. Part-time employees receive a prorated amount.