Severance Pay (‘Pitsuim’) upon Voluntary Resignation: What You Need to Know

Leaving a job is always a significant step, especially in Israel, where labor laws have their own unique features. One of the key questions that concerns many employees is the possibility of receiving severance pay (‘Pitsuim’) when resigning voluntarily. In this article, we will examine in detail the cases in which you are entitled to this payment, how to properly file documents, and how to avoid common mistakes. Understanding your rights will help protect your financial interests and avoid disputes with your employer. And if you are looking for a new job or want to post a job listing, use the job board. Our website automatically translates every listing into the four most popular languages in Israel: Russian, Hebrew, English, and Arabic, making your information accessible to thousands of job seekers and employers across the country.

When You Are Entitled to ‘Pitsuim’ upon Voluntary Resignation

Contrary to popular belief, ‘Pitsuim’ (severance pay) is not only paid upon dismissal initiated by the employer. The Severance Pay Law of 1963 establishes several exceptional circumstances under which an employee who resigns voluntarily is fully entitled to this payment. These include:

• Deterioration of working conditions: If the employer significantly reduces salary, worsens working conditions, or transfers you to a less qualified position without your consent.
• Relocation of employer or employee: If the workplace is moved to another locality and you cannot commute to the new location.
• Health condition: If due to deteriorating health (confirmed by medical documents) you can no longer perform your duties.
• Retirement or reaching retirement age: In this case, the benefit is paid provided you have worked at the same place for at least one year.
• Death of the employer or their bankruptcy: If the company closes and you cannot continue working.

It is important to understand: if you resign ‘voluntarily’ without a valid reason, the employer is not obligated to pay ‘Pitsuim’. However, in the cases listed above, the law is on your side. To confirm your rights, you must gather evidence: written statements, medical certificates, documents on changes in working conditions. A well-written listing on the ‘Hand to Hand’ platform will help you quickly sell unwanted items and compensate for financial losses while searching for a new job.

How to Calculate the Severance Amount

The amount of ‘Pitsuim’ is calculated based on your salary for the last three months of work. The basic formula is simple: for each full year of work, you are entitled to one month’s salary. If you have worked less than a full year, the amount is calculated proportionally. For example, with 2.5 years of service and a salary of 10,000 shekels per month, the severance will be 25,000 shekels (2 full years + 0.5 years).

However, there are important nuances:

• For the calculation, not only the base salary is taken but also all additional payments: bonuses, overtime allowances, petrol costs (if part of compensation), vacation pay, and sick pay (in certain proportions).
• If you have a pension insurance (‘Pension’ or ‘Kupat Gemel’), part of the funds for ‘Pitsuim’ may have been contributed by the employer to your insurance policy. In this case, you need to request a certificate of the accumulated amount from the insurance company. If the insurance covers 100% of the due benefit, the employer may not pay it directly—you will receive the money from the insurer.
• Upon termination due to health reasons or retirement, the amount may be increased under special conditions (e.g., an additional 2–3 months of salary).

It is recommended to contact an accountant or the HR department for an accurate calculation before submitting the application. If you are looking for a specialist, use the ‘Services’ category on our website—there you will find accountants, lawyers, and labor law consultants who can help you properly file the documents.

Step-by-Step Guide: How to Get ‘Pitsuim’ upon Resignation

The process of obtaining severance pay requires attention and proper documentation. Follow this algorithm:

1. Check your tenure. Ensure you have worked for this employer for at least one year. If less, the benefit is not due, except in cases of termination for medical reasons or the employer’s death.
2. Determine the reason for resignation. If you are resigning voluntarily but have a valid reason (deterioration of conditions, relocation, health), be sure to state this in your written application. For example: ‘I request to be dismissed voluntarily due to deterioration of working conditions (salary reduction of 20%).’
3. Gather documents: Employment contract, pay slips for the last six months, salary certificate, medical certificates (if the reason is health), written notifications to the employer.
4. Submit the application to the employer. Deliver it in person and obtain a signature on a copy, or send it by registered mail. Keep proof of delivery.
5. Wait for a response. The employer must pay ‘Pitsuim’ within 15 days from the date of termination. If they refuse, contact the Labor Inspection (Ministry of Economy) or the Labor Court.
6. Check your insurance. Request from the insurance company (e.g., ‘Migdal’, ‘Harel’, ‘Clalit’) a certificate of accumulated funds for ‘Pitsuim’. These funds may be transferred directly to your account by the insurer.

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Common Mistakes and How to Avoid Them

Many employees lose their right to ‘Pitsuim’ due to ignorance of the law or improper documentation. Here are the most common mistakes:

• Resignation without stating a reason. If you simply write ‘I request to resign voluntarily’ without explaining a valid reason, the employer may refuse to pay the benefit. Always specify a concrete reason from the law (deterioration of conditions, relocation, health).
• Missing deadlines. You should only apply for payment after termination, but no later than 7 years. However, it is better not to delay—the sooner you submit the application, the easier it is.
• Ignoring insurance accumulations. Often employees do not know that part of the ‘Pitsuim’ has already been accumulated in the insurance company. Check your policy—you may already be entitled to a payment, and the employer does not have to pay twice.
• Verbal agreements. Do not trust the employer’s promises ‘on word of mouth’. Always document in writing and keep copies.
• Incorrect calculation. If you believe the amount is being underestimated, consult a lawyer or a union. In Israel, free consultations are available for workers.

Remember: ‘Pitsuim’ is your legal right, not a gift from the employer. Do not be afraid to assert your interests. If you need legal assistance, search for a lawyer in the Services category—our users leave reviews and ratings, which will help you choose a reliable professional.

Practical Benefits and Key Takeaway

So, the payment of ‘Pitsuim’ upon voluntary resignation is a real opportunity to receive a substantial sum, but only under certain conditions. The main thing is not to confuse ‘voluntary resignation’ with ‘resignation without a valid reason.’ If you leave due to deterioration of conditions, relocation, or health issues, the law is entirely on your side. Do not forget to check your insurance accumulations, properly file your application, and contact the labor inspection in a timely manner.

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