As Knesset moves to pay workers furloughed by war, some who returned under fire are passed over

Four weeks into the war with Iran, private sector workers who were put on furlough due to security restrictions are hoping to finally get some clarity regarding whether and how they may be paid.

However, critics say the plan set to pass the Knesset on Monday does not go far enough and punishes employees who returned to work under missile fire a week into the war, when restrictions were eased in a bid to jumpstart the economy.

As in previous rounds of war, the government has formulated a plan to compensate some employees put on unpaid leave, and a compensation framework to provide partial financial relief to businesses whose revenues have been hurt by the ongoing war with Iran.

The measure for employees is expected to pass its final readings on Monday, with initial benefits expected to be paid out to employees in mid-April at the earliest, depending on the submission of claims, according to Finance Ministry estimates.

With the Knesset going on recess starting Wednesday, the plan for businesses may only get voted on following Passover, which ends April 8, according to a Finance Ministry spokesperson.

In the meantime, the delayed legislative process has left both employees and businesses in a state of uncertainty.

“This is a substantive delay and not merely a technical one, as it creates great uncertainty in the labor market, as employees and employers find themselves operating in a fog,” said Manpower Group Israel country manager Lior Latvik. “Particularly affected are employees who do not know if and when they will be able to claim their wages, and are left without a clear safety net at the most critical moments.”

“A clear, rapid, and fair framework is required that will provide certainty to employees, allow employers to manage their workforce responsibly, and help the economy cope with current challenges and return to growth,” said Latvik.

In the first week after Israel and the US jointly launched an offensive against Iran on February 28, most of the economy, except for essential businesses, was shut down. While Home Front Command restrictions for workplaces were eased on March 5 to allow the economy to get back on its feet, some businesses remain shut, particularly in the retail sector, and many workers have been unable to fully return to the workforce because schools in most places have stayed closed under continuing missile fire.

“The business sector is the one producing the medicines, food, and military equipment that allow us to live in Israel,” said Israel Manufacturers’ Association head Avraham (Novo) Novogrotzky. “Despite many challenges, private sector employees returned and continued to come to work with dedication.”

“There was enough time to make a decision on the unpaid leave framework, and there was no need to wait until a second before the Passover holiday, since we are dealing here with people’s salaries,” said Novogrotzky.

Beyond the delay in passing and implementing it, the compensation framework being advanced has come under criticism for failing to include employees who returned to work after being put on leave for the first week of the war.

According to the framework proposed by Finance Minister Bezalel Smotrich, an employee placed on unpaid leave for a certain period will receive unemployment benefits — likely a percentage of their salary — from the government, subject to certain conditions. In the original proposal, the minimum qualifying leave period was set at 14 consecutive business days.

Under pressure from Knesset members, this was reduced to 10 consecutive days, though that still leaves out anyone who returned to work directly after the military eased restrictions.

This includes service-sector employees already living paycheck to paycheck, who “will get zero, not one shekel,”  according to Federation of Israeli Chambers of Commerce President Shachar Turjeman.

“Many of these employees are hourly employees, among them a significant portion are women working in logistics warehouses, or as store salespeople, waiters, cooks, and cleaners,” he said.

“They are the weakest in the working population who returned to work and they will… have about a quarter of their salary deducted just ahead of the Passover holiday as employers are unable to pay them because they were shut and do not have cash flow,” said Turjeman.

The Histadrut Labor Federation also criticized the outline, saying that “instead of incentivizing a return to routine, the state punishes those who return to work.”

Both manufacturers and the Histadrut labor union have been demanding that the minimum days for entitlement to the payments be reduced to five days.

The consecutive days requirement may also turn out to be an issue, especially for working parents with young children at home, who may have worked but did so in a more limited capacity.

“The problem is much more acute,” said Tzomet Sfarim bookstore chain CEO Avi Shomer. “About 30 percent of my employees have been absent for almost 14 days, but not for consecutive days in a month, when they were all supposed to receive full salaries and bonuses ahead of the Passover holiday sales.”

Shomer, who manages 700 employees in 95 stores across Israel, said that a large part of the workers will not “receive even half of their salary, and that’s at best.”

“We have employees who didn’t come to work as they were afraid because of multiple missile attacks from Iran, but then they turned up for one or two days, and now they don’t meet the conditions of the government framework,” said Shomer.

Even those who are eligible for compensation will only get 70% of their regular wages at most.

In contrast, more than 800,000 public sector employees who went on unpaid leave will be entitled to up to 100% of their salaries from the first day of the Iran war through March 14, and 80% after that, according to an agreement reached last week between the Finance Ministry and the Histradrut Labor Federation. They are also not subject to the requirement to have missed a certain number of days.

“In simple terms, the agreement means that public sector workers who are absent from work will receive 100% of their salary in the first two weeks of the campaign and 80% of their salary in the following two weeks, and even those who are stuck abroad will receive 80% of their salary,” said Turjeman. “We demand a copy-paste of the outline granted to public sector workers for private sector workers.”

In response to the criticisms, a Finance Ministry official contended that the compensation plan for public sector employees is intended to maintain the functional continuity of essential government services. The Finance Ministry official argued that public sector employees generally earn less, and wages in the sector were cut in 2025 and 2026.

“We are the state’s cash cow generated from our taxes, which pays the public sector,” said Eliran Nomdar, the owner of the Kids and Dragons toy store chain. “This is crossing every line — we are not different from others.”

Alongside the compensation outline for unpaid leave, the government is also advancing a framework to compensate businesses with an annual turnover of up to NIS 400 million ($127 million), which suffered a decline of at least 25%, similar to the model applied during previous wars.

Those businesses can apply for reimbursement of up to 22% of fixed expenses, depending on their revenue decline, and up to 75% of salary costs for employees.

Businesses, including self-employed people with an annual turnover of less than NIS 300,000 ($95,000), will be eligible for a fixed one-time continuity grant of up to NIS 15,000 ($4,750).

A Finance Ministry official admitted that the outline was flawed, but would at least provide some help to keep the economy humming.

“The outline is not perfect — it is clear to us that citizens will be harmed and businesses will suffer,” the official said. “The purpose of the compensation framework is first and foremost to create business continuity for the economy so that every business that was harmed during the wartime shutdown period will be able to stay above water and emerge later strengthened.”