Severance pay calculator

Entitlement: one year of work

An employee who is dismissed after completing at least one year of work with the same employer or at the same workplace is entitled to severance pay, even if the employer changed during that time. Seasonal workers have special rules. Someone who resigned is usually not entitled, but in certain circumstances a resignation counts as a dismissal for severance purposes.

The calculation: one month's salary per year

Severance pay is the last monthly salary times the number of years of work, including fractions of a year. An employee who worked 4 years and 3 months at a salary of ₪10,000 is entitled to 4.25 × ₪10,000, which is ₪42,500. The salary taken into account includes base pay and fixed supplements, and not pay for overtime.

Hourly employees

For an hourly employee the monthly salary for the calculation is the last hourly wage times the average regular working hours per month, without overtime. Where the number of hours changed from month to month, case law has held that the calculation follows the average job scope over the whole period of employment. That is why the calculator asks for the average rather than working it out itself. If hours are recorded in an attendance system, the average can be taken from the hours reports.

Section 14: pension instead of severance

Under section 14 of the law, the employer's monthly deposits to the severance component of a pension fund or provident fund can replace paying severance when employment ends. Under the mandatory pension arrangement, section 14 applies to the severance deposits the employer is required to make. The money accumulated belongs to the employee, even if they resigned. Where the deposits did not cover the full severance, for example because they were made on only part of the salary, a top-up may be due. Check the agreement and the fund statements. The calculator shows the full severance under the law and does not subtract the deposits.

What the calculator does not cover

Changes in job percentage during the period, variable pay (commissions), taxation of severance pay and tax exemptions. In these cases the calculation is more complex and it is worth consulting a professional. For a full final settlement, also check vacation redemption and recuperation pay.