Convalescence pay is an annual entitlement of every salaried employee, a payment that grows with seniority at the workplace. Many people do not know exactly how much they are owed, whether it is taxed, or what happens to it if they leave a job, so here is the clear version.
Disclosure: Educational information only. Amounts and conditions, including extension orders, are updated, verify with the Ministry of Labour or Kol Zchut. Any action you take is your own responsibility.
What convalescence pay is
Convalescence pay is an annual payment an employer must make to an employee, originally intended for recuperation and holiday expenses. Today it is a monetary entitlement in every respect, and is not conditional on actually taking a holiday. Entitlement begins after the first year of employment, and is then paid retroactively from day one.
How much you are owed: the full table
The amount grows with seniority at the workplace (private sector, full-time):
| Seniority | Days | Annual amount (full-time) |
|---|---|---|
| First year | 5 | 2,257.5 ₪ |
| Years 2-3 | 6 | 2,709 ₪ |
| Years 4-10 | 7 | 3,160.5 ₪ |
| Years 11-15 | 8 | 3,612 ₪ |
| Years 16-19 | 9 | 4,063.5 ₪ |
| 20 years and above | 10 | 4,515 ₪ |
The public sector daily rate is higher, at 511.6 ₪ per day. Part-time employees receive a proportional amount, and anyone who worked only part of the year receives a proportional amount for that period too. The full formula: number of convalescence days × daily rate × employment fraction.
When it is paid
Under the extension order, payment is made in one of the summer months, June to September, and many employers pay it as a single annual sum in the summer.
Some employers spread it as a fixed monthly line across the year, which is legitimate provided the full annual amount is in fact paid.
Is convalescence pay taxable?
Yes. Convalescence pay counts as employment income in full, and income tax, National Insurance and health insurance contributions are deducted from it exactly as from regular salary. The common misconception is that it is tax-free "vacation money," it is not.
There is a quiet upside, though: convalescence pay is not included in the salary base used to calculate pension contributions, and not included in the salary base used to calculate severance pay. It is a real addition to your payslip, but it does not inflate your pension or severance base.
Left the job or got fired? What happens to unpaid convalescence pay
If your employment ended before the usual summer payment date, you are owed the accrued amount in your final paycheck, even if the employer normally pays only once a year.
If your employer never paid you the full amount you were owed, you are entitled to claim retroactive convalescence pay redemption for up to 7 years back, whether you are still employed there or have already left.
Fired right before completing your first year? Case law has held that an employee dismissed without prior notice, or in bad faith, shortly before completing a first year of employment may be entitled to compensation equal to the convalescence pay they would have received had they completed the year.
Common mistakes
1. Not checking that payment was made. Look for the convalescence pay line on your payslip.
2. Assuming convalescence pay is tax-free. It is subject to income tax, National Insurance and health insurance, exactly like regular salary.
3. Confusing seniority with age. The days are set by seniority at the workplace, not by how old you are.
4. Forgetting to claim retroactively. If an employer underpaid in the past, you can claim redemption for up to 7 years back.
Summary
Convalescence pay is an annual entitlement worth hundreds to thousands of shekels, it grows with seniority, and it is taxed like regular salary. It cannot be waived, and if it was never paid you can claim it retroactively for up to 7 years. Confirm it appears on your payslip, and calculate your exact amount using the table above. See more entitlements in employee rights.
The information on this page is for educational purposes. Please consult a professional before making financial decisions.
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