Israeli Workers Face Delay in Receiving Increased Vacation Pay Despite Agreement

Despite recent reports of a significant increase in vacation pay rates, Israeli workers will not see the higher amounts reflected in their upcoming paychecks. Labor Minister Yariv Levin has yet to sign the official extension order required to implement the new daily vacation pay rate, meaning payments will continue at the old rate for now. The public comment period on the order remains open until August 7, 2026, after which, barring legal objections, the minister is expected to sign it. Once signed, the increased rates will be applied retroactively, with workers receiving the difference in their September paychecks.

The current daily vacation pay rate in the private sector stands at 418 shekels, set to rise to 451.5 shekels upon approval. In the public sector, the updated rate is already in effect at 511.6 shekels, up from 471.4 shekels in previous years. Additionally, a two-year freeze on vacation days and pay reductions imposed during the "Sword of Iron" conflict has ended, restoring workers’ full vacation day entitlements based on seniority.

Vacation days are allocated according to years of service, ranging from five days in the first year to ten days after twenty years. Part-time employees receive proportional payments. Eligibility requires completing one full year with the current employer, with retroactive payments for the initial months. Employers typically pay the vacation pay in a lump sum during summer months or may distribute it monthly or provide equivalent vacation benefits with employee consent.

Vacation pay is a legal entitlement that cannot be waived, and employers who fail to pay can be sued for up to seven years retroactively. The pay is subject to regular income tax and social security deductions but is excluded from pension contributions and severance pay calculations.