Employment Law

Israeli Employment Contract

Although not legally required, we strongly recommend that you always have written employment contracts in place for all employees in Israel. These contracts should be written in Hebrew, use the Israeli Shekel currency, and include details such as parental leave, holiday allowance, wages/wages and other relevant details.

Working with our Israeli PEO, Horizon's team of local experts can provide assistance in drafting strong employment contracts that comply with local regulations.

Fixed Term

Indefinite

Working Hours in Israel

The standard working week in Israel is Sunday to Thursday, and because Jews do not work on Saturdays, businesses must apply for a permit to be allowed to work.

The maximum working time is 43 hours, and may not exceed 9 hours per day. Any hours worked in excess of these limits must be compensated at overtime rates, which are 25% for the first two hours and 50% for more than two hours, or any work done on the Sabbath (Saturday).

Israel Vacation

Israeli workers are legally entitled to a certain amount of paid leave each year. The number of days varies based on the length of employment, but ranges from 10 to 23 days. Some employers may choose to offer more days as part of their benefits package.

Israeli Healthcare System

Israel Sick Leave

Workers in Israel can accrue 1.5 days of sick leave for every month of work. No salary will be paid for the first day of absence, 50% of the normal salary will be paid for the second and third days, and 100% of the normal salary for subsequent days. Many employers choose to offer more generous sick leave, but this is not required by law. Workers are also eligible for daily rehabilitation payments for a limited number of days after working for their employer for more than one year.

Parental Leave in Israel

Female employees who have worked for their employer for more than six months can enjoy seven weeks of paid leave at 100% of their regular salary, and their position must be retained by the company. After ten months of employment, they are entitled to 14 weeks of leave and may take seven weeks before giving birth.

After the birth of a child, the father can take eight days of leave (five of which are paid by the employer and three of which are paid by the employer).

Taxes in Israel

Employees in Israel and their employers are required to contribute to national insurance and health insurance funds. The employee contribution is 12% of salary and the employer contribution is 6.75%. Israel's income tax is progressive, with rates ranging from 10% to 50% depending on income level. As of 2020, Israel’s corporate tax rate is 23%.

Health Insurance in Israel

In Israel, health care is universal and workers can choose between four different levels of coverage. Some people also choose to pay for private insurance, so employers may want to offer private insurance as a benefit to their employees.

Termination and Dismissal of Israel

In Israel, when employees are fired without just cause, they are generally entitled to severance pay.

For termination, notice must be given. During the first six months of employment, only one day's notice is required. For a job of at least six months, six days are required plus two and a half days for each month after six months. After one year of employment, 30 days' notice is required.

Severance packages can often be offered in lieu of notice if the employee wishes.

For companies expanding overseas for the first time, dealing with employee layoffs and dealing with severance packages can be complicated. Remoly's Israeli PEOs can reduce risk for foreign companies and provide guidance along the way.  

Israel Salary and Benefits

Israel’s Compensation Law

As of January 2020, the minimum wage in Israel for someone working 5 days a week is NIS 212 per week. Those who work six days a week have a higher tax rate of NIS 244.62.

Welfare Administration in Israel

Setting up and running a benefits system for your employees in Israel can be complex if you are unfamiliar with the country, laws and customs. If you want to manage the setup independently, you should expect this to take several weeks and may delay your scaling process.

Remoly can help simplify this phase of your expansion by providing our tailor-made Israeli PEO and benefits administration outsourcing services. We can provide expert advice on the best course of action and take care of your benefits set-up and administration, helping you focus on your expansion in Israel.