1. What is the current legal landscape for Employment and Labour Law in your jurisdiction?

Israeli employment law is protective by design: there is no at-will dismissal, mandatory pre-termination hearings apply to every employer, and a broad network of statutory protections covers categories ranging from pregnant employees and reservists to whistleblowers and employees undergoing fertility treatments. These core features are well established and are covered in detail in our Q&A chapter.

What makes 2026 distinctive is the convergence of several structural shifts that are reshaping day-to-day employment and equity practice.

The ongoing security situation continues to affect workforce planning. Extended reserve duty obligations, expanded protected-category rules, and the potential outflow of senior talent – including C-level executives and founders – exploring relocation outside of Israel are creating practical challenges for employers, particularly in the technology sector. These transitions typically involve not only employment law, but also equity acceleration, tax planning, and trust arrangements, requiring coordinated cross-border advice.

At the same time, the regulatory environment is tightening in areas that cut across traditional employment law. Amendment 13 to the Protection of Privacy Law (in force since August 2025) has introduced substantive transparency and data governance obligations directly relevant to employers using AI-based tools in HR – from candidate screening and performance evaluation to workforce planning. The Privacy Protection Authority’s draft guidance on AI and automated decision-making (February 2025) makes clear that employment decisions are a primary area of regulatory focus. AI in the workplace is no longer a theoretical issue; it is a live compliance matter that requires dedicated policy and governance structures.

Two further trends warrant attention. First, the question of how workers are engaged – as employees or as independent contractors – is becoming more contested. A growing number of professionals, particularly in technology and creative industries, increasingly prefer contractor arrangements for flexibility. However, Israeli courts routinely look beyond the contractual label and will reclassify a contractor as an employee where the substance of the relationship warrants it, with significant financial consequences for the engaging party. Second, trade secret and post-termination confidentiality disputes are increasingly common, and in our experience the statutory protections available under the Commercial Torts Law (1999) – when properly supported by internal classification, access controls, and enforceable agreements – are often more effective than the non-competition covenants that employers typically rely on.

2. What three essential pieces of advice would you give to clients involved in Employment and Labour Law matters?

A. Protect your information – but do it properly.

Many employers invest in broad non-competition clauses, only to discover that Israeli courts will not enforce them absent a recognised justification. Drawing on insights from over 2,500 employment and equity matters, we have found that the most effective strategy is to focus on what the law already protects: genuine commercial secrets. The Commercial Torts Law (1999) provides meaningful protection where the employer can demonstrate that the information was identified as sensitive, access was restricted, and reasonable safeguards were in place. As a firm with a dedicated trade secrets and unfair competition practice, we have represented both public and private companies in these matters and in a number of cases have leveraged our negotiation experience to resolve disputes through carefully structured agreements – securing strong protections for our clients without the need for court proceedings. Where litigation is required, we act swiftly, including through injunctive relief. The key is preparation: by the time an employee departs, the classification and access controls should already be well established.

B. Get the engagement structure right from the start.

The choice between employment and independent contractor engagement is not merely a commercial preference. Israeli courts apply a substance-over-form test and may reclassify a contractor as an employee where the working relationship in practice resembles employment. Reclassification exposes the engaging party to retrospective claims for severance, notice, pension contributions, vacation and recreation pay, often for the entire duration of the engagement. Employers should review their contractor arrangements periodically and ensure that the structure genuinely reflects the commercial reality.

C. Don’t separate the employment conversation from the equity conversation.

In Israel’s technology sector, equity is often the most valuable component of the employment relationship – yet employment agreements and equity arrangements are frequently drafted by different advisers, at different times, with different assumptions. This creates gaps: good-leaver and bad-leaver provisions that conflict with the employment agreement’s termination mechanics, vesting schedules that don’t account for Israeli mandatory notice periods, or Section 102 trustee arrangements that are not aligned with the employment timeline. Treating employment and equity as a single, integrated engagement from the outset avoids costly misalignment – particularly at the moments that matter most: joining, restructuring, and exit.

3. are the greatest threats and opportunities in Employment and Labour Law in the next 12 months?

Wartime pressures – and resilience – in the labour market. The extended security situation has reshaped workforce planning, but Israel’s employment market continues to demonstrate remarkable adaptability. Reserve duty obligations remain significant and protected-category rules have been expanded, creating new compliance requirements that employers need to manage proactively. At the same time, some senior professionals, executives, and founders are exploring international opportunities, which is introducing new dynamics around notice periods, equity acceleration, good-leaver and bad-leaver provisions, and restrictive covenants. These transitions sit at the intersection of employment, equity, and tax – and require coordinated advice across disciplines, including Israeli trustee companies and cross-border tax advisers. For employers, this is also an opportunity: those that handle transitions with clean processes and fair commercial terms strengthen their reputation in a tight-knit market – and are better positioned to attract returning talent as conditions stabilise.

The return-to-office question. Many Israeli employers have moved to require four or five days in the office – and for good reason: in-person collaboration fosters the kind of spontaneous brainstorming, team cohesion, and human connection that are difficult to replicate remotely, particularly in innovation-driven sectors. However, the security situation has periodically disrupted these policies, and the tension between employer expectations and employee flexibility is far from resolved. The legal dimensions are real: overtime obligations apply differently when employees work from home; monitoring and privacy rules (strengthened by Amendment 13) constrain how employers can supervise remote work; and any unilateral change to established working patterns risks being characterised as a deterioration of employment conditions – a specific legal trigger that can expose the employer to claims, even without a formal termination. The challenge for employers is to capture the benefits of in-person work while managing the legal framework around the transition. A clear, documented remote and hybrid work policy that addresses working hours, data protection, expenses, and the circumstances under which the policy may be adjusted is essential.

Contractor reclassification risk. As more professionals – particularly in technology and creative sectors – choose to work as independent contractors for flexibility, the gap between commercial expectation and legal reality is widening. Courts continue to apply a substance-over-form analysis, and the financial exposure from reclassification can be substantial. This represents both a threat (for employers that have not reviewed their arrangements) and an opportunity (for those that structure their engagements correctly from the outset).

4. How do you ensure high client satisfaction levels are maintained by your practice?

Avnery Law is a boutique Israeli employment and equity practice, advising both companies and executives. The firm was founded on a straightforward premise: that clients deserve the depth and professionalism of a leading commercial law firm, delivered with the focus, agility, and personal accountability of a boutique practice.

Our founder, Eti Avnery, headed employment and incentive departments as partner at leading Tel Aviv commercial law firms for over 15 years, advising Israel’s top technology companies across more than 2,500 employment and equity matters. That depth of experience – and the professional standard it demands – informs everything we do at Avnery Law.

Our approach rests on five principles:

Lean, focused, senior-led. Every matter is handled directly by experienced counsel. There is no delegation chain and no layers between the client and the decision-maker. This means faster turnaround, sharper advice, and accountability at every stage – at a cost structure that reflects the work actually done, not the overhead of a large firm.

End-to-end service through a trusted network. Employment and equity decisions rarely exist in isolation. A senior departure may involve equity acceleration, tax optimisation, pension, and trust considerations; a restructuring may require coordination with corporate, regulatory, and immigration advisers. We work closely with a carefully curated network of Israel’s leading tax advisers, trustee companies, and other specialists to deliver a complete, coordinated solution – not just an employment law opinion.

Negotiation as a core discipline. Much of our work involves resolving sensitive employment matters – executive separations, trade secret disputes, restrictive covenant negotiations – where the outcome depends as much on how the conversation is conducted as on the legal analysis. We bring a well-developed negotiation practice to these situations, and our track record in achieving favourable outcomes for clients, often without the need for litigation, is central to the value we deliver.

Dual-sided perspective. We advise both companies and senior executives. This dual perspective gives us a practical understanding of what both sides need, expect, and will accept – which makes our advice more realistic, our negotiations more effective, and our agreements more durable.

Cross-border fluency. We work extensively with multinational employers operating in Israel, Israeli technology companies with US-parented equity structures, and executives navigating cross-border transitions. We understand the intersection of Israeli employment law with US equity practices, international tax planning, and the practical realities of managing a workforce across jurisdictions.

5. What technological advancements are reshaping Employment and Labour Law and how can clients benefit from them?

AI is no longer a future consideration for Israeli employment law – it is a present one. Employers are already using AI-based tools for candidate screening, performance analysis, and workforce planning.

However, the most significant technological shift is not only about regulating AI in the workplace – it is about how AI is transforming the delivery of employment law services themselves.

The traditional model of employment law advisory – hourly billing, opaque scoping, and reactive engagement – is increasingly misaligned with the expectations of sophisticated employers, particularly technology companies and scaling businesses that require consistent, predictable legal infrastructure.

At Avnery Law, we have developed what we believe to be one of the first AI-powered employment, commercial and incentive law service models in Israel – designed around client outcomes rather than billable hours, and built specifically for the way our clients already work.

At its core is a proprietary AI engine that handles document classification and intake – analysing the client’s own materials, identifying gaps, and structuring the information that feeds into the legal work product. The AI does not draft legal language; it accelerates the process by which experienced counsel can deliver precise, client-specific documents and advice. The result is a faster, more transparent, and more cost-effective service – with pricing known in advance.

Importantly, our approach to AI in service delivery reflects the same principles we advise our clients to follow in their own workplaces: transparency about how AI is used, human oversight at every decision point, and full compliance with the evolving regulatory framework – including Amendment 13 to the Protection of Privacy Law and the Privacy Protection Authority’s recent guidance on automated decision-making.

Clients working with us benefit from AI-powered efficiency without the compliance risk that comes from less considered implementations.

In practice, this enables two new service formats alongside our traditional advisory work:

Monthly subscription packages – for employers that need ongoing access to employment and equity documents, templates, and compliance tools. The subscription includes AI-powered document generation from the firm’s proprietary template library, with each output reviewed and finalised by experienced counsel. Clients get the consistency and speed of a technology platform with the legal quality of a specialist firm.

Ad hoc legal kits – pre-scoped, outcome-based packages for defined needs: Startup Employment Kits (employment agreements, IP assignment, handbook, and equity framework); Equity & Incentives (Section 102 trustee arrangement packs); Protection & Compliance (NDA suites; termination and separation toolkits); M&A and Transactional Support (due diligence and post-closing integration); * Contractor Engagement structures.

Each kit is priced in advance based on scope and deliverables, not hours.

We believe this model – combining AI-powered efficiency with senior legal oversight – represents the direction in which employment law practice is heading. Technology should make specialist legal advice more accessible, not less. Clients benefit from predictability, transparency, and the ability to access high-quality employment and equity legal work without the friction of traditional billing.