Labour law6 min read10/12/2026

Employer “Wiped Out” Vacation Leave: When Days Can Be Restored or Paid Out in Israel

The disappearance of a vacation balance from a payslip does not yet mean that the days were lawfully forfeited. It is important to determine whether the employer gave the employee a genuine opportunity to take leave, warned of the forfeiture, and what balance the employer itself stated in the documents.

Numbers and facts

•7 days — minimum leave when carrying over the balance under Section 7
•2 next working years — period for adding the balance
•3 years after termination — period for filing a claim
•30 days — notice for one day of leave selected by the employee
•58 days × 470 shekels = 27,260 shekels in Case 17760-07-17

Year-End Is Not an Automatic Forfeiture Button

The Annual Leave Law, 1951 does not encourage unlimited accumulation: under Section 7, with the employer’s consent, an employee may use at least seven days and carry over the balance for leave during the next two working years. But the mere end of the calendar year does not make forfeiture lawful. The employer must show that the employee knew the rules, genuinely could take leave, and consciously did not use the proposed dates without a valid reason. If requests were repeatedly denied, the employee was required to work during leave, or the employer proposed using a large number of days only a few days before year-end, the court may not regard this as a genuine opportunity to rest.

What the Labor Court Will Examine

The court examines not only the arithmetic but also the conduct of both parties: who determined the dates, whether the employee submitted requests, why they were denied, and whether advance warning was given about the loss of days. The company’s written policy, correspondence with the manager, vacation schedules, and attendance reports are relevant. Payslips are especially important: if they correctly state the accumulated balance, upon termination the employee may claim payment for that balance, even when some days relate to an earlier period. An incorrect or suddenly changed figure in the final payslip does not necessarily negate the previous records.

Which Documents Prove the Balance

Collect payslips for the entire available period and compare the opening balance, accrual, use, and closing balance for each month. Add working-time records, leave requests, the manager’s responses, internal notices about carrying over or forfeiting days, and the final settlement upon termination. Correspondence showing that leave was denied because of workload or that the employee was asked to continue working is also useful. A discrepancy between the employer’s records, payslips, and actual dates of absence is precisely the issue that will have to be explained with documents.

Money Is Usually Paid Only Upon Termination

While the employment relationship continues, the general principle is that leave must be used for rest rather than replaced with money. This follows from the case law of the National Labor Court in Case 324/05; Section 5 of the Wage Protection Law also prohibits including vacation pay in advance as part of the regular salary. Upon dismissal, resignation, or retirement, the permissible unused balance is subject to monetary compensation. Days from the year in which employment ended and the three preceding years are usually counted, less leave used, but a correct balance on the payslip may establish entitlement to older days as well.

How the Calculation Looks in a Real Case

In National Labor Court Case 17760-07-17, the dispute concerned, among other things, compensation for vacation leave owed to an employee who worked from December 1995 until January 2014. The Regional Labor Court calculated 58 days at 470 shekels, totaling 27,260 shekels; after offsetting 10,815 shekels paid following the termination of employment, 16,445 shekels was awarded. The National Labor Court agreed with the daily rate of 470 shekels but separately considered payments that the employer described as vacation pay during employment. The case shows why the court examines not only the label attached to a payment, but also whether the person actually took leave and when exactly the vacation pay was paid.

If the Employer Created a Negative Balance

An employer may not, without consent, send an employee on leave beyond the accumulated balance and then deduct the payment from wages or future vacation days. When there are insufficient accumulated days, the employee’s consent and the employer’s good faith are crucial. Therefore, an entry such as “minus five days” following imposed collective leave should be compared with notices, consent, and payslips. Such a negative balance cannot automatically be converted into an employee debt in the final settlement.

FAQ

Can an employer reset vacation leave to zero on December 31?

Not automatically. The employer will need to show clear rules, advance warning, and a genuine opportunity to use the days; denial of requests or a constant workload may weigh against the lawfulness of the forfeiture.

Which is more important: the payslip or the internal vacation system?

All documents are assessed, but a balance correctly reflected in the payslip carries significant weight. If the figures differ, the payslips, vacation log, attendance reports, and written approvals must be compared.

Can an employee ask to receive money for vacation leave without terminating employment?

As a general rule, no: during employment, leave is intended for actual rest. Case law allows exceptional circumstances to be assessed, but a payment labeled “vacation pay” does not by itself replace lawful leave.

Will unused vacation leave be paid upon resignation?

Yes. The right to compensation does not depend solely on who ended the employment relationship. Unused days eligible for compensation are paid, and the payslip may establish a larger balance.

How long is there to claim payment after termination?

A claim for compensation for unused vacation leave may be filed within three years after employment ends. Delaying the review of documents is risky: over time, it becomes harder to obtain correspondence, attendance reports, and old payslips.

What to do next

First, request a written breakdown of the balance and compare it with the payslips, timesheets, and leave requests. Then document the specific discrepancy in writing: how many days disappeared, when it happened, and which leave requests were denied. Upon termination, separately review the final settlement and do not miss the three-year filing period.