Shibolet’s Labor Law Department continues to provide you with ongoing updates on relevant issues for employers during these days of war regarding employee employment.
In light of the damage caused to businesses as a result of the “AM KALAVI” war, yesterday, 23.6.2025, the Minister of Finance, in coordination with the Chairman of the Finance Committee, the Chairman of the Histadrut (General Federation of Labor), and the Chairman of the Business Sector Presidency, presented the emerging compensation plan for businesses and the anticipated easing of procedures for placing employees on unpaid leave with the possibility of receiving unemployment benefits. The compensation framework is similar to the arrangement reached at the beginning of the “Iron Swords” war, and you can read its initial details here.
What is the significance of the possible easing of unpaid leave procedures?
If the conditions for receiving unemployment benefits during unpaid leave change and become more lenient (as detailed in the attached framework), employers in sectors where there is currently no work at all and no feasibility for business activity in their field in the near future due to the war, or other employers who have cash flow difficulties due to the security situation, will be able to utilize the option of placing employees on unpaid leave by mutual agreement instead of continuing to employing their employees during the war period. According to the framework, these easements will apply retroactively.
Eligibility for unemployment benefits during unpaid leave is contingent on the employee meeting the eligibility conditions according to their personal data. We further clarify that the easements were considered with the view that the war situation is expected to continue, and solutions must be found for these sectors. However, if the ceasefire becomes permanent and the war ends in the next day or two, the easement framework may be reconsidered. We remind you that the framework’s entry into force is contingent on its approval in the Knesset and appropriate legislative changes, which have not yet been completed.
What business continuity grants will be available to employers under the framework?
The emerging framework established a business continuity grant for businesses with a turnover not exceeding NIS 400 million; and which experienced a decrease in turnover of more than 25% for monthly reporting; or 12.5% for bi-monthly reporting.
The framework includes a grant formula for businesses with an annual turnover of less than NIS 300,000 and a grant formula for businesses with an annual turnover exceeding NIS 300,000. The grant formula is based on the extent of the decrease in turnover.
Is payment of wages to employees who were unable to work from home during the war on the agenda?
In previous combat situations, arrangements determining retroactive compensation obligations for employees were only reached after the completion of fighting (or parts of it) when it was possible to estimate the extent of damage caused to the economy, and accordingly, decisions were made regarding the types of employees eligible for compensation and under what conditions. In any case, this is a multi-stage process that takes time: signing a collective agreement on the matter and publishing an extension order that will give effect to the agreement and apply it to all employers.
We remind you that the Home Front Command’s instructions regarding the operation of only essential businesses have not yet changed, but they are set to expire today at 20:00, and according to reports, the Home Front Command is expected to recommend to the Chief of Staff today to remove all restrictions starting tomorrow.
We will continue to update on developments.
