Labor Minister Delays New Vacation Pay Increase Until August Approval

Contrary to recent reports, Israeli workers will not see the anticipated increase in vacation pay (dmei havraah) in their upcoming paychecks. Although the Histadrut labor union and the Employers' Federation reached an agreement to raise the daily vacation pay rate significantly, the new rates have not yet been officially approved. Labor Minister Yariv Levin has not signed the required extension order, which must be published for public comment until August 7, 2026, before final approval can be granted. As a result, the current paychecks will reflect the old daily rate of 418 shekels in the private sector, rather than the proposed 451.5 shekels. Once approved, the increase will be applied retroactively, with workers receiving the difference in their September salaries.

In the public sector, the updated daily vacation pay rate has already risen to 511.6 shekels, up from 471.4 shekels previously. Another positive development is the full restoration of vacation days to employees after two years of reductions and freezes due to the "Sword of Iron" military operation. Vacation days are now granted according to seniority, ranging from five days in the first year to ten days after 20 years of employment. Part-time employees receive proportional payments.

Eligibility for vacation pay requires completing one full year of employment with the current employer, with retroactive payments for the initial months worked. Employers typically pay the amount in a lump sum during the summer months but may opt to 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 it can be sued for up to seven years retroactively. The payments are subject to income tax, national insurance, and health insurance deductions but are excluded from pension contributions and severance pay calculations.