On Friday, the Ministry of Finance published draft legislation for the economic assistance plan following the 12-day war with Iran, which affected nearly every business in Israel and kept huge swaths of the population out of work. The draft legislation, which is open for public comment until Tuesday, provides assistance to affected businesses and eases eligibility for unemployment benefits.
According to the draft law regarding unemployment benefits, workers who were placed on unpaid leave by their employer during the entirety of the war will be eligible for unemployment benefits. In response to a request from the Histadrut, up to one full day of work during that 12-day period will not be considered an interruption in the continuity of the unpaid leave, even for those who received wages for that day of work.
The draft law also proposes opening unemployment benefits to those who worked at least six out of the last 18 months—with military service also considered to be work—down from a restriction that provided benefits only to those who worked at least 12 out of the last 18 months. In addition, the requirement to use up accrued vacation days before qualifying for unemployment during unpaid leave has been canceled, and it was agreed that unemployment benefits will be paid to employees on unpaid leave from the first day, not after five unemployment days, as is usually the case.
Employees over age 67 are generally not eligible for unemployment benefits, so the draft law proposes providing a grant of up to 75% of their salary, no more than 134 shekels ($39) per day. Salaried employees who also have income as freelancers will be able to submit a certificate from an authorized official—an accountant or tax advisor—on the amount of their self-employment income during the relevant period, for the purpose of deductions from unemployment benefits.
The National Insurance Institute will be reimbursed by the Ministry of Finance for the costs of unemployment benefits for employees placed on unpaid leave during this period.
Employers are generally forbidden from purring new parents on unpaid leave during the first 60 days after their return to work. The proposed law clarifies that employers who did so in response to their war were not violating the law. The days new parents were absent from work will not count toward that 60-day period during which new parents are protected from dismissal or reduction in the scope of their position.
The second draft law regulates compensation for small and medium-sized businesses. Businesses that report a drop in income of 25% or higher between June 2025 and 2024 will be eligible for compensation. (Businesses located on the front line will be able to compare their activity to 2023, before the war with Hamas broke out.)
Compensation for eligible expenses will be limited based on the size of the business and its annual turnover. A business that brings in up to 100 million shekels ($29 million) annually will be eligible for compensation of up to 600,000 shekels ($177,000). For businesses with higher turnover up to 400 million shekels ($118 million) annually, the compensation cap will gradually increase in proportion to the business’s revenue, reaching a maximum of 1.2 million shekels ($350,000).
Businesses with an annual turnover over 400 million shekels will not be compensated under this framework, nor will businesses with annual turnover less than 12,000 shekels ($3,500). Businesses that suffered direct damage rendering them unusable for at least three months will be eligible for additional compensation.
The framework will not apply to organizations funded by the state either directly or indirectly. Public institutions will still be eligible for assistance—provided that grants and donations make up no more than 75% of their income.
Wage expenses will be considered part of the fixed costs eligible for compensation. Businesses will be entitled to compensation for wage expenses up to 75% of the salary paid to employees (up to the national average wage) during the eligible period—multiplied by 1.25. This amount will then be multiplied by the rate of decline in the business’s turnover—so the greater the damage to the business, the more the state will participate in its wage costs. The state will compensate all wages paid during this period, regardless of whether the employees attended work.
The compensation claim will be submitted online to the Tax Authority within 90 days of July 16. The compensation will be paid within 14 days from the date eligibility is determined. If no decision is made regarding the applicant’s eligibility for compensation within 21 days of submitting the claim, then a 60% advance payment will be made. If no decision is made within 150 days, an additional 10% advance will be paid.
