In Israel, employment law governs contracts for both Israeli citizens and foreign workers with valid work visas. There are two main categories of employment agreements, differentiated by their duration and termination clauses.

Indeterminate Contracts (Agreements for an Unlimited Period)

Indeterminate contracts, also known as contracts for an unlimited period, are the most common type of employment agreement in Israel. These contracts don't have a pre-defined end date and continue indefinitely until terminated by either party.

• Termination: An indeterminate contract can be terminated by either the employer or the employee with proper notice. The specific notice period may be influenced by collective bargaining agreements that apply to certain sectors.

Fixed-Term Contracts (Agreements for a Specified Period)

Fixed-term contracts specify a predefined duration of employment, tied to a specific project or timeframe. These contracts automatically terminate at the end of the designated period, without requiring notice from either party.

• Renewals: Fixed-term contracts can be renewed upon mutual agreement between the employer and the employee. However, restrictions exist to prevent employers from continuously renewing fixed-term contracts to avoid obligations associated with indeterminate contracts.

Additional Considerations

• Collective Agreements: Collective agreements, negotiated by labor unions and employer organizations, can influence employment contracts within specific sectors. These agreements may establish minimum standards for wages, benefits, and termination procedures, which supersede basic statutory rights.
• Mandatory Employment Contract: Israeli law mandates the signing of a written employment contract within 30 days of an employee's start date. The contract should outline key details like job description, compensation, work hours, and vacation entitlements.

It's important to note that court rulings have recognized various types of "collective arrangements" that don't meet the strict requirements of formal collective agreements.

Israeli law emphasizes the importance of a written employment agreement to clarify the expectations and obligations of both the employer and employee. Here are the essential clauses for such agreements:

Basic Information

• Employee and Employer Identification: This section includes the names and contact information of both parties involved in the agreement.
• Job Title and Description: This section outlines the employee's role, responsibilities, and reporting structure.
• Commencement Date: This clause documents the official start date of employment.

Compensation and Benefits

• Salary: This section specifies the employee's base salary, including details on payment frequency (e.g., monthly) and method (e.g., bank transfer).
• Overtime: If applicable, the agreement outlines the terms of overtime pay, including rates and calculation methods.
• Benefits: This section includes details on additional benefits like health insurance, vacation days, sick leave, and pension contributions. These should comply with minimum standards mandated by Israeli law.

Work Schedule and Leave

• Working Hours: This section defines the standard work week, including daily working hours and any breaks included.
• Vacation and Sick Leave: The agreement specifies the entitlement to paid vacation and sick leave days according to Israeli legislation.

Termination

• Notice Period: This clause outlines the required notice period for termination by either the employer or employee.
• Grounds for Termination: The agreement can specify reasons for termination considered a breach of contract by either party.

Confidentiality

• Confidentiality Obligations: This clause protects the employer's confidential information and intellectual property. It outlines the limitations on what information the employee can disclose after employment ends.

The probationary period is a significant initial phase in an Israeli employment relationship. It provides a window for both employers and employees to evaluate suitability before the full contractual obligations become effective.

Duration of the Probationary Period

In Israel, there is no legal stipulation for a fixed probationary period. The law allows employers and employees to negotiate a suitable timeframe within their employment contract. This flexibility enables the probationary period to be tailored to the complexity of the position. However, the typical duration usually falls between one and twelve months.

Considerations for Employers

During the probationary period, employers have more flexibility in terminating the employment. If the employee's performance or fit is not satisfactory, they can be dismissed without providing notice. This provision allows employers to evaluate the employee's skills, work ethic, and cultural fit before committing to a long-term relationship.

Considerations for Employees

Probationary periods are also beneficial for employees. They offer a chance to assess the work environment, company culture, and whether the role aligns with their expectations. If the job does not meet their needs, they can leave the position with minimal repercussions during this initial period.

Important Notes

• Collective Bargaining Agreements: Certain industry-specific collective bargaining agreements may override the general legal framework and stipulate a specific probationary period for certain professions.
• Termination During Probation: Even during the probationary period, employers are required to act in good faith and avoid discriminatory reasons for dismissal.

Confidentiality clauses are a staple in Israeli employment agreements, designed to safeguard an employer's confidential information. These clauses usually outline what is considered confidential information and limit the ways employees can utilize or disclose it during and after their tenure.

Scope of Confidential Information

Agreements should explicitly define what is considered confidential information. This could encompass trade secrets, customer databases, marketing strategies, and unpublished inventions.

Employee Obligations

Employees are generally required to maintain the secrecy of confidential information and use it solely for their job responsibilities. This might include restrictions on duplicating, disseminating, or exploiting the information for personal benefit.

Non-compete clauses limit an employee's capacity to work for a competitor or in a specific sector after leaving the company. However, in Israel, their enforceability is restricted due to the principle of freedom of employment.

Legal Landscape

The "Working for Workers Act" of 2021 imposed significant restrictions on non-compete clauses. The Act generally forbids them in employment agreements, with a few exceptions:

Protection of Trade Secrets

Non-compete clauses may be enforceable if they protect the employer's trade secrets. A trade secret is confidential information that offers a competitive edge and is not easily discoverable.

Key Considerations

• Pre-October 2021 Agreements: Non-compete clauses in agreements signed before October 25, 2021, may still be valid under specific conditions.
• Reasonableness & Proportionality: Even for protectable interests like trade secrets, non-compete clauses must be reasonable in scope. Courts take into account factors such as geographical limitations and the duration of the restriction.