With the start of the war on October 7, 2023, almost all areas of our lives have been affected, and in many cases, for the worse. First and foremost, the war has taken and continues to take a heavy toll on the citizens of Israel, both physically and mentally. Additionally, there's another front—the economic reality, which we all must navigate. Many businesses and employees have been directly affected by this new reality since the outbreak of the war, experiencing reduced income, worker absences due to reserve calls or Home Front Command instructions, supply chain issues, and more. This article aims to provide important and useful information for businesses during these trying times.
It's important to note that the country is in a unique situation, and many questions remain unanswered. We've previously faced instability and a similar national emergency declaration during the COVID-19 outbreak, when various benefits were offered to employers, self-employed individuals, and residents. The situation today is different; and the government has yet to finalize its economic aid program. However, past experiences can provide some clarity on several issues.
Unpaid vacation
During the COVID-19 pandemic, we learned about the term "Halat," which means unpaid vacation. In this case, the employment relationship is suspended, and no "settlement of accounts" occurs, preserving all social rights the employee has accrued until their return. An employee on "Halat" may qualify for unemployment benefits under certain conditions:
1. An Israeli resident.
2. The employee's age is between 20 and 67.
3. The "Halat" was initiated by the employer and not the employee.
4. Reporting to the employment service. For more information about the employment service's activities, click here.
5. The "Halat's" duration is at least 30 calendar days.
6. Accumulating a "qualifying period" of at least 12 months in the 18 months prior to the initial registration with the employment service.
Note that if the employee has unused vacation days, those days will be deducted from the unemployment days that the employee is entitled to.
For more information, please refer to the eligibility conditions for Halat.
Forced unpaid vacation
An employer can send an employee to "Halat" only if he/she agrees to it. If the employee disagrees but is still placed on "Halat," this could be considered as a dismissal. However, forced "Halat," especially during crises, is not considered dismissal but rather a suspension of the employment contract. But note that no binding ruling has been issued on this yet. Forced "Halat" may lead to worsening conditions that may result in the employee's resignation, and consequently, entitlement to severance pay. In such cases, the employee must notify the employer of his/her intent to resign due to worsening work conditions and allow the employer to withdraw from his/her intention.
Layoffs During Wartime
Employers should also be aware of the option to dismiss an employee who refuses "Halat." Even in a state of emergency, employee termination is possible. However, there are conditions under which employees cannot be fired:
1. An employee is unable to work due to Home Front Command instructions.
2. An employee is absent to take care of their children if the child's educational institutions are closed by the Home Front Command orders and they are under the age of 14 or 21 for a child with special needs.
3. An employee serving in reserve or called for reserve duty.
For more information on this matter, click here.
Employers Compensation
Currently, much uncertainty surrounds the governmental economic support for businesses. The Ministry of Finance presented an economic framework on October 19, 2023, which has yet to be passed into law. A new outline for economic support will be published soon, and we will keep our clients updated.
Tax Authority Reliefs
Since the war's onset, the Tax Authority has enacted a series of reliefs aimed at reducing the tax burden. For instance, the validity of withholding tax certificates has been extended, and collection and enforcement procedures have been frozen.
In these trying times, tax consulting can assist businesses in utilizing the economic opportunities available, allowing them to navigate this complex period. We invite you to contact us info@work-knot.com.