Labour Law Year in Review 2025 – Looking Ahead to 2026
In 2025, Israel’s labour law landscape continued to undergo significant changes, reflecting deep trends related to technology, the ongoing security situation and its implications, strengthened labour market regulation, and more. Alongside extensive case law and new legislative initiatives, employers are increasingly required to manage their relationships with employees in a controlled, legally compliant, and transparent manner. The past year highlighted that early preparation is a critical tool for reducing legal exposure and maintaining smooth business operations.
Looking ahead to 2026, regulatory burdens and public focus on various aspects of labour law are expected to intensify. Major changes are anticipated in workplace privacy, prevention of sexual harassment, equal opportunity and diversity, as well as continued tightening of oversight on working conditions and wages, and increased enforcement by authorities.
This update presents the key trends of the past year and the lessons employers should implement to prepare for the coming year and minimize legal and organizational risks.
Continuation of the Wartime Situation
2025 began under the shadow of the continued wartime situation in various arenas, bringing with it protections (some familiar) for reservists and family members of fallen soldiers.
Extension Order for Reservists[1]: At the start of 2025, an extension order was signed prolonging benefits and protections granted to reservists and their spouses in 2024, including additional paid absence days for spouses of reservists; entitlement to accrue annual vacation days; and protection against dismissal for 60 days after reserve service, through the end of 2025 (for now). Additional protections were set regarding prohibition of placement on unpaid leave and prohibition of worsening employment conditions for reservists.
Protection against dismissal of family members of fallen soldiers[2]: In January, the Knesset approved an amendment granting special protections to relatives of fallen IDF soldiers. Pursuant to the amendment, employers are prohibited from dismissing relatives of fallen IDF soldiers, reducing their position or salary for three months following the death, and from dismissing or placing them on unpaid leave during the first year after the death – unless authorized by the Ministry of Defense Employment Committee.
A Year of Equal Opportunity
During this past year, the Labour Court continued to play a significant role in shaping and defining the right to equality, through case law that emphasized the duty of substantive equality, the heightened burden on employers, and the need for documented, transparent, and reasoned managerial decisions.
Gender Discrimination Cases:
Clalit Health Services Case[3]: The case revolved around a groundbreaking request to certify a class action filed by a hospital support staff employee, alleging systemic gender discrimination. This was a request with significant broad implications for medical professions and beyond, as for the first time the court was required to examine alleged wage gaps between different positions, most of which are held by women on the one hand and by men on the other, and to determine whether these constitute "work of equal value” as defined by law.
However, although the regional court initially approved the request to proceed as a class action, in its final judgment after the trial, the claim was dismissed on its merits. The court conducted a substantive review of the positions’ characteristics, scope of responsibility, required skills, and tasks, and ruled that these were not jobs of equal value. Accordingly, it was determined that gender-based discrimination was not proven, and the claim was dismissed. An appeal of the judgment has been filed with the National Labour Court.
Investor Relations Case[4]: As part of the proceedings, the former employer filed a lawsuit against a former employee, alleging misappropriation of a trade secret, breach of good faith obligations, and other claims of harm. The employee filed a counterclaim concerning violation of the Equal Pay for Male and Female Employees Law.
The labour court ruled that the female employee met the initial burden of presenting prima facie evidence that she and a male employee performed substantially equal work or work of equal value. It was proven that her salary was lower than that of the male employee, who held a parallel position, even though she also served in a managerial role (Vice President).
Once the employee met the initial burden and presented a prima facie basis for the existence of prohibited wage gaps under the Equal Pay Law, the burden shifted to the employer to prove that the gaps resulted from legitimate, reasonable, and proportionate reasons. The employer failed to demonstrate any other considerations justifying the wage gaps; therefore, it was ordered to pay the employee wage differentials for the period of time that had not exceeded the statute of limitations.
Shaare Zedek Medical Center Case[5]: The judgment concerns an employer’s decision not to allow an employee to continue working after reaching retirement age and sets strict standards for applying the duty of equality in this context. The National Labour Court clarified and expanded the scope of the Weinberger precedent, ruling that when an employee requests to continue working after retirement age, the employer bears the burden of proving that a proper process was conducted to consider the request. The key innovation in the judgment is the determination that refusal to grant such a request, when other employees in similar circumstances were allowed to continue working, may create a presumption of gender discrimination and shift the burden of proof to the employer.
The National Labour Court ruled that the employer must examine a request to continue working after retirement age through a documented and substantive process, considering a broad range of personal, employment-related, and organizational factors. In this case, the employer failed to meet this burden and did not provide a legitimate reason for rejecting the employee’s request to continue working, nor for allowing other employees to extend their employment. Accordingly, the decision was found to be tainted by gender discrimination and a violation of the right to equality.
Disability Discrimination:
Rav Bariach Case[6]: In this judgment, the National Labour Court outlined guiding principles regarding an employer’s duty to provide accommodations for employees with disabilities. In this case, the employee was dismissed after a medical determination that he was fit to work only part-time, while the employer argued that such an arrangement would impose an "excessive burden.”
The court rejected this argument and ruled that the burden of proving that the dismissal was unrelated to the disability rests on the employer, and that the test is the actual outcome of the decision – not the intent to discriminate. Since no genuine effort was made to implement accommodations, the employee was awarded the maximum compensation claimed.
The judgment clarifies the scope of the employer’s obligation, including a sincere examination of possible accommodations, adjustments to scope and hours of work, consideration of alternative positions, consultation with professionals, and involving the employee in the accommodation process.
Age Discrimination:
Kalner Case[7]: This judgment addressed the decision to terminate the employment of an Air Force pilot who had worked as a civilian flight instructor for 34 years, following a safety incident. The dismissal occurred when the plaintiff was 63 years old. The Regional Court ruled that the decision was made through a flawed process, without proving grounds for dismissal, and in violation of proper administrative procedures. The court found that the employee’s age was a significant factor in the decision, even though the role is sensitive and in a professional field where fitness and safety considerations are important.
The court further held that while the professional view that flight capabilities may change with age is not subject to judicial intervention, age alone is insufficient to justify ending flights, especially when the Ministry of Defense had set the retirement age at 67 and had recently extended the plaintiff’s employment. It was determined that the hearing conducted was merely a formality, as the decision had been made in advance, and that the opinions and documents shared in real time contradicted claims of professional decline. Under these circumstances, the court ruled that the termination of flights and employment was tainted by improper age-based considerations and serious procedural defects.
A Year of Privacy
In the past year, there have been significant changes in employers’ obligations to protect employee privacy, both following Amendment 13 to the Privacy Protection Law, which substantially deepened organizational duties in this area, and as a result of Labour Court rulings. The case law emphasized the duty of proportionality and transparency, as well as the need for clear regulation of monitoring, surveillance, and the use of technologies in the workplace.
Elkaner Case[8]: In March 2025, the National Labour Court issued a ruling addressing the limits of using cameras in the workplace. The court held that the mere installation of cameras does not, in itself, constitute a material deterioration of working conditions that would entitle an employee to resign and be considered dismissed.
However, it emphasized that any use of cameras requires a multi-step assessment: the existence of a legitimate and proper purpose; examination of the scope and intensity of the privacy infringement; and the degree of employee consent and notification. The judgment underscores the need to establish a clear and transparent policy on this matter and the employer’s obligation to fully inform employees about the installation of cameras and the level of consent required to ensure compliance with the law.
Amendment 13 to the Privacy Protection Law: In August 2024, the Knesset approved Amendment No. 13 to the Privacy Protection Law, 1981. The amendment, which came into effect in August 2025, significantly impacts the employment sphere and requires employers, among other things, to change the way they manage and store employees’ personal data. Among the key changes, the employer’s duty of disclosure and notification has been expanded. Previously, a privacy notice was required to state whether providing the information was mandatory, the purpose of its use, and the recipients of the data. Now, the amendment also requires specifying the consequences of refusing to provide information, details of the database controller and contact methods, as well as the data subject’s rights to access and correct the information.
Sexual Harassment Prevention
Amendment No. 16 to the Prevention of Sexual Harassment Law, regarding the expansion of applicability to service contractors, came into effect in January 2025 – Following the amendment, the law now also applies to service recipients who receive services through a contractor. The definition of "service” in this context is broad and includes any service provided by a contractor through its employees. As part of the amendment, the prohibition against harm related to sexual harassment was also extended to employees of service contractors, in accordance with the provisions of the Equal Employment Opportunities Law, 1988.
Shoham Local Council Case[9]: In the judgment delivered in June 2025, the court applied a key principle established in previous rulings regarding the existence of influence relationships between the alleged harasser and the complainant. Additionally, the judgment held that an employer’s obligations to prevent sexual harassment and address complaints may extend beyond those explicitly set out in the law, particularly where the nature of the workplace environment inherently creates a risk of sexual harassment.
Amal U’Maavar Case[10]: In a recent judgment by the Haifa Regional Labour Court, it was ruled that an employer is liable to compensate an employee for emotional distress caused by the way her complaint was handled, even though the incidents she complained about were not directed at her personally and did not constitute a cause of action under the Prevention of Sexual Harassment Law. The court emphasized that during a company retreat attended by employees and managers, a "problematic atmosphere” developed, and determined that the company should have clarified its policy in advance regarding conduct, including issues such as shared lodging between managers and female employees.
The company was ordered to pay compensation of 15,000 NIS for emotional distress due to failures in its handling of the matter – primarily denial of the complaint and lack of a clear response after the investigation – despite the fact that the investigation was conducted immediately and by senior officials, and despite the reassignment of the alleged harasser. The judgment underscores that even when the law does not directly apply, employers are expected to manage complaints in a transparent, consistent, and documented manner and to establish clear rules of conduct for social events in advance, as failure to do so may result in independent legal liability.
Commissions and Overtime
Castro Case[11]: As part of a class action that began more than a decade ago and went through several rounds in different courts, the Labour Court ruled that commissions paid to sales staff in Castro chain stores must be included as part of the base wage for calculating the hourly rate under the Hours of Work and Rest Law. The judgment emphasized that this is not a blanket rule and that each case must be examined according to its circumstances – particularly in relation to whether the commission component constitutes an integral part of the salary that gives rise to entitlement to overtime pay and how commissions should be factored into the calculation of overtime compensation.
Engagement with Service Providers
This year also saw legal developments regarding employers’ obligations when engaging with various service providers, including an expansion of the duties imposed on service recipients.
First Extension Order in the Catering Sector – This order includes a significant update to the wages and employment conditions of workers in the catering industry.
Regulations to Strengthen Enforcement of Labour Laws (Salary Components Constituting the Hourly Rate and Hourly Rate for Contractor Employees), 2023 – These regulations require updating agreements with guarding and security, catering, and cleaning contractors in accordance with the calculation and monitoring mechanisms set out therein – effective from January 1, 2025 – including in relation to existing agreements.
Koach LaOvdim Case[12]: In this landmark ruling by the National Labour Court at the end of the year, it was determined that in certain cases, a service recipient, although not considered the employer of the workers providing the service in every respect, may be deemed an employer for specific purposes, including the obligation to engage in discussions at the collective level. In this case, the court ruled that the State, as the service recipient for operating day-care centers for at-risk youth, is required to engage in discussions with the workers’ union in which the workers are unionized, before publishing a tender for selecting the organizations that will operate the centers.
Looking Ahead to 2026 – Key Focus Areas
Equal Employment Opportunity (including for reservists and their families):
- Organizational awareness – Pay attention to protected groups and show sensitivity.
- Monitor changes and developments in extension orders and legislation, as these may occur quickly.
- Advance planning for employees approaching mandatory retirement age – Draft a procedure for considering requests to continue employment beyond retirement age.
- Review accommodations for employees with disabilities – Ensure genuine efforts are made, given stricter requirements in case law.
- For employers with more than 518 employees – Prepare for the annual gender pay gap report, which must be published by June 1, 2026.
Employee Privacy Protection:
- Following Amendment 13 to the Privacy Protection Law, employers must update and validate existing procedures to ensure compliance with the amendment’s principles, including proportionality, transparency, and a clear purpose for monitoring.
- Expanded disclosure obligations – Amendment 13 broadens employers’ duty to inform regarding the collection and processing of employees’ personal data. Accordingly, employers must provide detailed privacy notices that meet legal requirements and obtain employees’ consent for data collection and processing, as stipulated in the amendment.
- Appointment of a Data Protection Officer (DPO) – Required where applicable under the amendment.
Prevention of Sexual Harassment, Workplace Bullying, and Complaint Handling:
- Conduct training for managers and employees.
- Ensure the designated officer’s details are visible and accessible to all employees.
- Verify that the designated officer has received appropriate training.
- Before company events – Provide training and conduct relevant briefings.
Enhanced Enforcement:
- Review agreements with security, cleaning, and catering contractors.
- Train managers on managing interfaces with contractors and their employees (including requirements when publishing a new tender, in light of the recent National Labour Court ruling).
- If contractor employees are unionized, assess how this may affect the choice of contractor or tender process.
Additional Issues:
- If commissions or bonuses are paid – Reassess whether these components are considered part of the base salary and how to minimize exposure in this regard.
- Recuperation pay – Verify payments and any required reductions.
Employers seeking assistance in implementing these recommendations are welcome to contact us for tailored advice.
We have an exciting year ahead with diverse and engaging webinars, conferences, and training sessions on labour law and employment relations -stay tuned for updates. We look forward to seeing you!
Wishing everyone a peaceful and successful 2026,
Labour Law Department