Israeli Workers to See Significant Pay Bump from Increased Leave Allowance
Employees in Israel's private sector receiving their August payslips may find a substantial financial addition. Deputy Prime Minister and Labor Minister Yariv Levin signed an order on Sunday that increases the daily convalescence (leave) allowance in the private sector by 8%, from NIS 418 to NIS 451.5 per day. This order formalizes an agreement reached in June between the Histadrut labor union and the business sector's presidency, affecting over two million workers.
In addition to the rate increase, the number of convalescence days has been fully restored. For 2024 and 2025, workers had been required to forgo one leave day to contribute to funding the Iron Swords War, with a half-day reduction for vulnerable workers. Since the allowance rate itself had not been updated since 2023, this year marks a double benefit: both the rate has risen and the previously deducted days have been returned.
The combined effect of returning leave days and the increased rate results in a notable gross addition to salaries. For instance, a first-year employee, who received payment for only four days at the old rate last year (totaling NIS 1,672), is now entitled to five days at the new rate, amounting to NIS 2,257.5, an increase of approximately NIS 585. A long-term employee entitled to 10 leave days will see an increase of about NIS 335 from the rate hike alone, plus the return of their tenth deducted day.
Employers who have already paid leave allowances for the summer months at the old rate are now required to review payments and retroactively transfer the difference to employees. However, the agreement does not compensate for leave days that were deducted in the previous two years. The number of leave days an employee is entitled to is determined by their tenure with their current employer, ranging from 5 days for the first year to 10 days for employees with 20 or more years of service.
Eligibility requires completing a full year of employment, with entitlement calculated retroactively for the initial months of work. Part-time employees receive a proportional payment based on their work hours, and military reserve service counts towards tenure. This benefit is considered a protected right that cannot be waived, even in a personal contract. Convalescence pay is subject to income tax, national insurance, and health insurance, but is not included in the salary used for pension or severance pay calculations. The base index for updating convalescence pay in 2027 will be determined by the consumer price index of May 2026.
