☑️ The Basics


Currency: NIS, Israeli Shekel (Rate)

Public Holidays: 8 public holidays (see here)

Employer Taxes: 28.28% of gross salary

Official Language: Hebrew

Payroll frequency: Monthly

Three things to know about employing in Israel


  1. VAT of 17% is required in Israel on the total cost of employment unless the team member has no business in Israel and will not be interacting with Israeli customers and clients.
  2. A workweek in Israel is from Sunday to Thursday.
  3. Employees receive an additional benefit called a "recreation payment". The amount of this payment is determined by law and depends on the number of years of employment. This is paid out in spring (normally April) and Fall (normally Sep/Oct) to coincide with traditional holiday periods.

Employment in Israel


Notice Period

The length of the notice period depends on the length of the employee's service, with a maximum of 30 days.

The employer can choose to make a payment to the employee in lieu of having them serve out the notice period.

Termination & Severance

An employer can only terminate an employee after a hearing, following which they must provide the employee with written notice.

Severance pay can depend on whether the employer has been contributing to severance pay fund and on the number of years of service. This pay can be equal to one month's salary for each year of service.

However, employers that make monthly contributions equivalent to 8.33% of the employee’s monthly salary towards a severance pay fund do not need to pay serverance separately. The accrued amount from this fund is released to the employee upon termination.

Probationary period

Between one and 12 months depending on the employment contract.

Minimum Wage

NIS 29.12 per hour

IP protection and non-compete agreements

Non-compete agreements must be clear and limited in scope and time. Agreements that involve compensation from the employer after the end of employment and throughout the non-compete period are more likely to be legally enforceable.

Working Hours

42 hours per week. The workweek is Sunday to Thursday.

Overtime

The first two hours of overtime are paid at a rate of 125% of the regular pay, and 150% after that.

Overtime work and pay rates are usually included in the employment contract.

Paid Holidays

During the first five years of employment, employees are entitled to 12 paid vacation days, which increases with each year of service as follows:

Sick pay and time off

Employees are entitled to 18 sick leave days a year; this leave accrues at a rate of 1.5 days with every month of service.

Upon return to work, the employee must provide a medical certificate from a doctor.

Parental leave

Employees with over a year of service with the same employer is entitled to 26 weeks of maternity leave, and those with less are entitled to 15 weeks of maternity leave.

The payment during this period depends on how long the employee paid national insurance taxes. If the payment was for 10 out of the 14 months preceding the maternity leave, or 15 out of the 22 months preceding the leave, the employee is paid for 15 weeks of the maternity leave. If the employee paid insurance taxes for six out of the 14 months prior, they are entitled to a maternity allowance for eight weeks.

Employees are also entitled to five days of paid paternity leave following childbirth. The first three days will be on account of the employee’s accrued annual vacation days, and the remaining two days will be on account of the employee’s accrued sick leave.

Taxes in Israel


<aside> 💡 You can get a detailed breakdown of the employer contributions for any gross salary by using our Oyster Platform Quote Generator

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Employees


Social Security (21.5%)

Income tax

Employers


VAT (17%)

VAT is required on the total cost of the team member at a value of 17% unless you meet the following criteria:

  1. The job description will states no work with Israeli clients / entities / companies etc.
  2. You agree that the team member has no business in Israel and/or with Israeli companies / clients.

Total social contributions (28.28%)


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