Gaining familiarity with Israel’s employment regulations is a necessary step when Onboarding employees in the country. The following section should guide you through the process compliantly.
Employee Contract
Public and Provincial Holidays
Leave Information
Basic
Employment contracts in Israel should be in a language that employers and employees understand. Although, English is most commonly used.
Probation Period
In Israel, the probation period will depend on the employer’s discretion. But generally, it can be up to 12 months.
13th Month Pay
A 13th month pay is not mandatory in Israel. However, most employers in Israel provide 13th month pay for their employees.
Employee Benefits
Employee Benefits for Israeli employees may include the following:
- Transportation Allowance
- Health Insurance.
- Pensions.
- Convalescence Pay
In Israel, the payroll cycle is monthly.
The National minimum wage in Israel is 5,400.00 ILS per month.
The standard working hours in Israel are 48 hours for a five-day workweek.
Employer Payroll Cost:
| Type of Contribution |
Rate |
| National Insurance |
For residents |
0 – 6,331 ILS |
3.55% |
| 6,331 ILS – 45,075 ILS |
7.6% |
| For non-residents |
0 – 6,331 ILS |
0.59% |
| 6,331 ILS – 45,075 ILS |
2.65% |
| Severance Pay |
8.33% |
| Pension Fund |
6.50% (7.50% including disability insurance) |
| Advance Study Fund |
Up to 7.5% |
Employee Payroll Cost:
| Category |
|
|
Rate |
| National Insurance |
For residents |
0 – 6,331 ILS |
0.40% |
| 6,331 ILS – 45,075 ILS |
7% |
| For non-residents |
0 – 6,331 ILS |
0.04% |
| 6,331 ILS – 45,075 ILS |
0.87% |
Health Insurance (Residents only)
|
0 – 6,331 ILS |
3.10% |
| 6,331 ILS – 45,075 ILS |
5% |
| Pension Fund |
6% |
Employee Income Tax
| Taxable Annual Income (ILS) |
Tax on First amount |
Tax Rate |
| 0 – 77,400 |
0 |
10% |
| 77,400 – 110,880 |
7,740 |
14% |
| 110,880 – 178,080 |
12,427 |
20% |
| 178,080 – 247,440 |
25,867 |
31% |
| 247,440 – 514,920 |
47,369 |
35% |
| 514,920 – 663,240 |
1140,987 |
47% |
| Above 663,240 |
210,697 |
50% |
VAT
The Standard VAT rate in Israel is 17%.
Termination is contingent on valid grounds and adherence to legal protocols, involving a comprehensive hearing process with reasons communicated in writing. It is advisable to personally deliver the termination letter, preferably within 48 hours post the hearing.
Notice period for employees in Israel is given as per the table below:
| Year of Employment |
Notice period |
| 1st year |
1 day for every month worked |
| 2nd year |
14 days |
| 3rd year |
21 days |
| After 3 years |
1 month |
Severance pay
Severance pay in Israel stipulates that employees who have worked for the same company for one year or more are paid one month's salary for each year of service when they are terminated.
Foreign employees in Israel need to apply for a work visa from the Israeli Ministry of Interior. Employers are required to secure a work permit on behalf of their employees to legally work in the country.