Government Unveils War Compensation Plan for Businesses and Employees

The Ministry of Finance, together with the Histadrut and representatives from the business sector, today (Sunday) presented a new economic compensation outline to support businesses and workers affected by the war with Iran. The framework is modeled after the compensation system implemented during the October–December 2023 Iron Swords conflict.

Key Compensation Criteria: 25% Revenue Loss 

According to the outline, businesses that can prove a 25% or greater drop in revenue compared to the same period in a prior year will be eligible for:

• "Business continuity" compensation

• Partial payroll expense support

The plan is currently awaiting approval by the Knesset Finance Committee and may still be modified during deliberations. A major topic of discussion is the reference period for revenue comparison. While the default comparison is to May–June 2024, many businesses were already suffering during that time due to ongoing conflict. Therefore, the committee is considering allowing comparison to May–June 2023 for more accurate eligibility.

Unlike during Operation Iron Swords, this time all of Israel will be covered uniformly under the same compensation guidelines, regardless of geographical location.

Unpaid Leave Rules Relaxed for Affected Workers

Under the updated outline, unpaid leave eligibility rules will be temporarily eased to support workers unable to work due to war-related disruptions.

Key changes:

• Employees will be eligible for unemployment benefits after just 14 days of unpaid leave, instead of the standard 30-day requirement.

• This special rule applies from June 14 to June 30.

• The usual "continuity rule", which requires 30 consecutive days to qualify, will not apply.

These provisions are subject to legislative approval, but are expected to pass swiftly given the wide-ranging impact of the conflict.

What Will Businesses Receive?

To clarify some of the practical implications of the outline, Haaretz consulted CPA Nadav Gil, partner and incentives group leader at Deloitte Israel:

• Small businesses that meet the eligibility criteria will receive compensation based on the magnitude of their revenue loss, with formulas to be determined by the Ministry of Finance.

• The state is expected to allocate several billion shekels to fund the compensation program, although exact figures will depend on final eligibility numbers and the duration of the conflict’s impact.

This new compensation model reflects a broader and more flexible approach to economic recovery, recognizing that the effects of the Iran-Israel conflict have been nationwide, and not limited to specific zones as in previous military operations.