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Israel is a country in the Middle East region and bordered by Lebanon, Syria, Jordan, Egypt, the West Bank, and the Gaza Strip. The countryâs government is located in the proclaimed capital of Jerusalem (although both Israel and Palestine claim Jerusalem as their capital).
Most countries maintain their embassies in Tel Aviv, and the city is considered the economic and technological center of the country. There are many holy sites within its borders, so Israel regularly receives visitors of the Abrahamic religions coming to see its rich history.
Fixed-term contracts have no minimum duration. If extended for a second term, the employee is regarded as a "regular" worker. In the event of termination, the employee is entitled to a hearing period as outlined in the termination process.
The standard working week consists of 42 hours. Daily working hours range from 7 to 9 hours, depending on the number of days worked per week. Typically, the working week spans from Sunday to Thursday.
Employees are entitled to a minimum of 48 hours of rest per week. Rest days usually fall on Friday and Saturday, aligning with the Israeli weekend.
All working hours above the standard weekly hours are to be paid as overtime. It must also be mutually agreed upon between the employee and the employer before commencing any overtime working hours.
Employees are entitled to overtime pay which is calculated daily as follows:
Overtime work exceeding 4 hours per day and 16 hours per week is prohibited by law.
The monthly minimum wage in Israel is ILS 5,571 in 2024.
This is a payment intended to cover the expenses of the employee's annual health leave. This payment can be paid annually or in installments for a fixed monthly payment. The employee is entitled to this payment after 10 months of work.
In many collective agreements, the employee is entitled to a holiday gift twice a year. on Passover and the Hebrew New Year.
In Israeli law, probationary periods are allowed and during such a period, the employee is treated as a full-fledged employee in all respects. The duration of the probation period is typically stated in the employment contract or a collective agreement.
For employment to be legally terminated during the probation period, the employee has to go through the hearing process even if they have worked for 2 days for the employer. Employment can be terminated immediately, without notice.
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Taxation of individuals is imposed in graduated rates ranging up to 47%. Additionally, a 3% surtax applies on annual taxable income exceeding 721,560 Israeli shekels (ILS), resulting in a 50% maximum income tax rate.
Non-residents are taxed at the same rates as Israeli residents. The annual tax brackets are an aggregation of the monthly brackets in force during the year, which are periodically updated for inflation.
Employee social security contributions depend on their income level and are subject to a maximum ceiling set by law. Employees contribute to the National Insurance Institute - residents in Israel contribute 3.55% or 7.6% based on level of income.
Israel's social security system is designed to provide financial assistance and support to citizens in various life situations, including retirement, disability, unemployment, and other social needs. An overview of the employerâs contributions:
Employees working a 5-day week are entitled to annual leave based on their years of service. During the first 5 years of service, employees receive a minimum of 12 working days of annual leave.
From the 6th to the 9th year of service, the entitlement increases to 17 working days. After the 9th year, the maximum entitlement reaches 23 working days. Payment for annual leave is calculated at the employee's regular salary pay rate.
Employees must use at least 7 consecutive days of vacation each year and exhaust all vacation days by the year's end. Any unused vacation days are carried over and accumulated. Accrued vacation days are compensated to the employee at the end of the period, based on the average salary of the last 3 months.
Sick leave is accrued at a rate of one and a half sick days for each month of employment up to a maximum of 90 days. days per month.
Payment during sick leave varies based on the duration of the absence:
Upon return from sick leave, the employee must provide a medical certificate issued by a medical professional.
Under the Sick Pay Law amendment, employees suffering from specific conditions such as malignant diseases (e.g., cancer) or requiring regular dialysis treatments are eligible for full sick pay (100%) from the first day of absence.
This special sick pay provision is applicable if the employee is on leave to receive care or undergo periodic examinations related to the specified condition. The maximum duration for full sick pay under these circumstances is 90 days.
Employees must provide a medical certificate from a medical professional confirming the necessity of treatment or examination due to the specified condition.
Female employees are entitled to 26 weeks of maternity leave after completing 1 year of service within an organization. Those with less than 1 year of service are entitled to 15 weeks of maternity leave.
If the employee is eligible, Israelâs social security system compensates for maternity leave, generally providing 15 weeks of fully paid leave (provided she worked for at least 12 months) and 11 weeks of unpaid leave.
Following a partner going into labor and up to 24 hours following the birth, an employee is entitled to paternity leave. The paternity leave period extends for up to 5 days.
During the paternity leave:
If an employee in Israel experiences the unfortunate loss of an immediate family member, they are granted up to 7 calendar days of paid leave to mourn. This period, known as bereavement leave, is fully compensated by the employer once the employee has been with the company for at least 3 months.
Employers are allowed to exercise their right to terminate an employeeâs employment in good faith, in compliance with applicable law (such as employment contracts and collective bargaining agreements).
To start a termination process, the employer has to provide the employee a hearing invitation with the reasons for the intended termination. The hearing is conducted by the employeeâs manager, and the employee gets an opportunity to express their viewpoint regarding the intention to terminate. After the hearing, the employer considers the arguments seriously and in good faith. The decision is then communicated in writing, preferable in person and within 48 hours of the hearing.
An employee with a seniority of 1 year or more is entitled to 1 month's notice. An employee with seniority of less than a year of work is entitled to 1 day of advance notice for each of the first 6 months of work, and 2.5 days for each additional full month of work (parts of a month are not taken into account).
The employer can provide a payment to the employee for the notice period in advance and terminate the employee's work immediately (after the hearing and final decision).
Redundancy compensation is statutory. It is deposited into the employee's pension fund in advance each month in the amount of 1/12 of the monthly payment. Unused vacation days are also paid out with the final salary.
While a 13th-month salary payment is not legally mandated, employees are entitled to a âRecreation Paymentâ after one year at their companies. The bonus is usually paid between July and September, and the amount depends on the number of years of employment.
â Â 3.55-7.6% - Social Security
â Â 6.5% - Pension Fund
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 8.33% - Severance Pay
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 4.65% - Annual Leave
â Â ILS 34.5- Holiday Gift
â Â ILS 225- Travel
â Â ILS 174- Recovery
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 0.5% - State Guarantee Fund
â Â 3.49% - Additional Holiday
You've sourced a full-time employee or contractor located in a country where your company is not incorporated.
Pass us the details of your candidate and we will let you know exactly what it costs to employ your candidate in that country.
Sit back and relax as we onboard your new team member and take care of all the local compliances and admin work.
It can be prohibitively expensive to establish an entity in every country you want to hire talent in, so Remofirst will hire and pay your employee on your behalf while you manage their daily duties. Remofirst will handle formal HR procedures and employment contracts that adhere to local laws, so that you can simply approve invoices via our platform. When you work with an Employer of Record (EOR) you can compliantly hire the best employees around the world.
Unlike full-time employees, contractors work on projects with multiple companies at a given time and are technically self-employed. Full-time employees are solely focused on their employer and usually receive benefits (such as health insurance, equity or stock options, and time off)Â as an additional form of compensation. While it can be cheaper to work with international contractors instead of paying benefits to a full-time employee, you run the risk of misclassification. It's recommended to work with an EOR for contractor onboarding and payments, so you can know that your international contractors are paid compliantly and on time.
