The employee lifecycle also includes a less popular, but sometimes unavoidable, stage: ending an employment relationship. Just as we invest in proper onboarding and long-term retention, when the time comes to part ways with an employee, it’s important to handle it thoughtfully and respectfully whenever possible.
In this section, we focus on managing the termination of employment process in a responsible way, across legal, organizational, reputational, and human aspects.
- The Legal and Accounting guidance included here applies specifically to employment in Israel. It’s important to understand and comply with employment and termination laws in every country where the company operates.
- The Operational and Strategic guidance is included in the section How to Prepare for Employee Departure and applies across all geographies in which the company employs people and, when necessary, ends employment relationships.
It’s important to note that the information provided here is not intended to replace legal advice. If there are any questions or uncertainties regarding the dismissal process, it’s recommended to consult with a qualified legal professional.
Why is it important to terminate employment in line with the law?
When ending an employment relationship, there are clear reasons to follow the law carefully:
- Legal considerations:
To avoid labor court claims that take time and resources, and to limit exposure to compensation claims caused by flaws in the process, even when the termination itself is justified. - Ethical and human considerations:
Employment law helps ensure that termination decisions are not fair or discriminatory. It protects employees from illegal termination in protected situations (such as pregnancy, parental leave, military reserve duty, and similar cases). - Business considerations:
Poorly handled termination processes can hurt a company’s reputation and limit its ability to do business. These issues often come up during due diligence for acquisitions or mergers. Even small compliance failures can raise red flags. Similar checks are also common when large enterprises assess whether to work with an early-stage startup.
The bottom line: terminating employment in line with the law is not just a legal issue. It’s basic fairness that supports a healthy organizational culture and lets the business focus on doing business.
Key Legal Aspects of the Employee Termination Process
A proper dismissal process includes two main stages. The first is a hearing, which is meant to give the employee a fair and reasonable opportunity to present their arguments and respond to the employer’s concerns before a final decision is made.
If the decision to let the employee go is confirmed, the employer is required to provide notice of termination, or payment in lieu of notice, in accordance with the law.
In this section, we walk through the key considerations related to each of these stages:
A. Hearing
A hearing is a legal right of the employee and a legal obligation of the employer. Employers are required to ensure this right is available and to manage the process properly before making a decision.
The purpose of the hearing is to give the employee a chance to respond to the company’s claims before a decision is made on whether to proceed with the termination of employment.
Please note:
- An employee may choose to waive their right to a hearing. In such cases, the waiver should be clearly documented, both in an email and in the termination letter. For example:
“Following your conversation on [date] with [manager’s name], in which you informed us that you are waiving your right to a hearing…” - It’s recommended to seek legal guidance, especially in sensitive cases or when there is a concern that the employee may challenge the process.
What Does the Hearing Process Look Like? Steps and Timeline
1. Informing the employee
It’s recommended to hold a preliminary conversation to inform the employee that they will receive a written invitation to a hearing. This conversation should be prepared in advance. Its purpose is not to argue or debate, but to prepare the employee for the hearing.
Wording is critical and must reflect good faith. The hearing should not be treated as a formality. It is a genuine opportunity for the employee to present their stand, and the employer is expected to listen sincerely and consider what is said before making a final decision. For example, use phrasing like “we are considering” rather than “we have decided.”
The employee may be distressed during this preliminary conversation, so timing matters. It’s best to avoid holding it right before an important meeting. Make sure the person leading the conversation on behalf of the company, whether the direct manager or HR, has enough flexibility and no hard stop that could interrupt the discussion at a sensitive moment.
2. The written invitation to the hearing should clearly state the grounds for the potential dismissal.
- The company should outline, as specifically as possible, the reasons it is considering ending the employment relationship.
- Legal counsel generally recommends using concrete examples and avoiding broad or vague statements.
- Also, presenting 2 or 3 different reasons (e.g professional, cultural, meeting targets) is usually preferable.
The invitation should also specify who will conduct the hearing, when it will take place, and the employee’s right to attend with legal counsel. Employees should be asked to notify the company in advance if they plan to bring a lawyer, so the company can decide whether to do the same.
3. Employees should be given reasonable time to prepare for the hearing, usually 48 hours.
4. During the hearing, the discussion should be documented, and a written record should be shared with all parties involved afterward. To ensure a proper process, no new arguments should be introduced during the hearing if they were not included in the written invitation, as the employee was not given a fair opportunity to prepare and respond.
It’s recommended to avoid reacting impulsively to the employee’s arguments or getting drawn into confrontation. The purpose of the hearing is to listen to the points raised and document them before any decision is made.
💡Our tip: AI-based transcription tools can be useful for documenting a hearing. Using a predefined template for the hearing structure can help generate a clear and consistent record. Make sure to review the output carefully and confirm that it accurately reflects what was said and that all details are correct.
5. The company should communicate its decision to the employee within 24 to 48 hours after the hearing. The decision should be documented in writing. As with earlier steps, it’s best to inform the employee in a conversation first.
B. Advance Notice of Dismissal or Resignation
The employer must give the employee written notice of termination in advance, in line with the employee’s length of service. The notice period starts on the day the employee is informed of the dismissal.
- The length of the notice period depends on the employee’s tenure, as defined by Israeli law.
- Employees with more than one year of service are entitled to 30 days’ notice, unless otherwise agreed in their employment contract.
- Senior employees often have longer notice periods, typically 60 to 90 days, to allow time for proper transition.
- For employees with less than one year of service, the notice period is calculated according to a statutory formula.
- It’s recommended to review the applicable rules or seek legal advice to ensure compliance.
Does the employee need to continue working after being dismissed?
No. The employer can choose to provide payment in lieu of notice if they prefer that the employee does not continue working during the notice period, for example, to avoid creating a negative atmosphere.
In section How to Handle Employment Termination and Layoffs of the playbook, we go beyond the “termination process” and look at employee departures more broadly. You’ll find practical guidance on how to communicate an employee departure to the team, prepare for the transition, and manage a smooth handover. Getting this right matters not only for the employee who is leaving, but for the team and the organization as a whole.
Disclaimer: This playbook is provided for general informational purposes only and does not constitute legal advice or create an attorney-client relationship. Employment laws vary by jurisdiction, and founders should consult a qualified employment attorney before acting on any hiring, termination, or other HR decisions discussed here.