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Israel

Introduction
 

General overview & country facts, as well as labour regulations.
Employer Contributions
 

These are additional costs incurred by employers over and above the employee’s monthly gross salary and/or bonus.
Employee Contributions
 

These are costs incurred by employees that reduce their monthly gross salary and/or bonus to determine their net “take home” pay.
Employment Terms
 

All you need to know about salary & bonuses, working hours & overtime, probation period, notice period & severance pay, as well as all leave types.

COUNTRY PLAYBOOK

Israel
Everything you need to know about payroll, benefits & hiring top talent in Israel

Currency

Israeli Shekel (ILS)

Salary payment frequency

Monthly

Capital

Jerusalem

Time Zone

GMT +2:00

Official Languages

Hebrew and Arabic

Is English spoken?

Yes
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Introduction

General Overview & Economic Facts
  • Israel, officially known as the State of Israel, is both a Jewish and democratic state
  • Israel is a country in located in Western Asia, on the Eastern end of the Mediterranean Sea
  • It has a population of around 9 million people and covers an area of 22 145 square kilometers (8550.23 sq mi). Israel makes up only 1% of the landmass in the Middle East
  • Israel is a developed free market economy, ranking 19th on the Human Development Index (2019)
  • It has the world’s 31st-largest economy by nominal GDP and the 50th-largest by PPP. Israel has the highest standard of living in the Middle East
Why Employ In Israel?
  • Israel’s main exports are diamonds, precious metals and stones, electrical, mechanical and computer machinery and equipment, and chemical products
  • 15.67% of the population is between the ages of 15 and 24 years, with 37.2% of the population being between the ages of 25 and 54. Israel has a youthful population who is committed to education making it an attractive place to employ hard working and ambitious employees
Overview Of The Labour Law
  • Israeli labor law is governed by the Basic Laws, the Hours of Work and Rest Law among others
  • Labor unions are legal in Israel and a third of the Israeli workforce is unionized
  • Workers’ rights in Israel extend to both foreign and Israeli workers. Workers’ rights govern  minimum wage, hours worked per week, leave and mandatory contributions by employers 
  • The Israeli workforce have high levels of immigrants. The foreign workers law exists in Israel to protect foreign workers from unfair labor practices
Fun Country Facts
  • Israel has more museums per capita than any other countries in the world
  • Israel is the only liberal democracy in the Middle East
  • Israel has more than 3000 high-technology companies and startups, making it the country with the largest number of high technology companies in the world
Why Use Playroll Services For Israel?
  • Employing in Israel requires companies to have their own legal entity in the country as well as to manage payroll, employee benefits, taxes and legal compliance. This can get quite complicated, especially with the complexity of employment laws in Israel
  • With Playroll’s Employer of Record services, your team will be employed by our established legal entities in each country
  • We will take care of payroll, employee benefits, taxes, legal compliance and provide ongoing employee support, so that you can focus on growing a thriving team
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Employer Contributions

These are additional costs incurred by employers over and above the employee’s monthly gross salary and/or bonus.

National Insurance
Called Bituach Leumi

Resident worker

3.55% – 7.60%

3.55% of gross effective monthly salary up to ILS 6331.00

7.60% of gross effective monthly salary between ILS 6332.00 – 44 020.00

Foreign worker

0.59% – 2.65%

0.59% of gross effective monthly salary up to ILS 6331.00

2.65% of gross effective monthly salary between ILS 6332.00 – 44 020.00

Pension Plan
Calculated on gross monthly salary

If pension plan is a pension fund

Pension fund
6.50%

Severance pay
8.33%

If pension plan is a Manager’s Insurance policy

Pension fund
5.00%

Disability Insurance
1.50%

Severance pay
8.33% 

Transport Allowance

Called Tachbura Tziborit. Calculated per day based on cost of discounted public transport

Maximum of ILS 26.40 per day

Convalescence Pay

Called D’mei Havra
Determined by Ministry of Economy

After 1 year of employment
ILS 1890.00

After 2 to 3 years of employment
ILS 2268.00

After 4 to 10 years of employment
ILS 2646.00

After 11 to 15 years of employment
ILS 3024.00

Study Fund

Called Keren Hishtalmut
Optional monthly amount based on gross monthly salary limited to ILS 16,000.00 per month

7.50%

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Employee Contributions

These are costs incurred by employees that reduce their monthly gross salary and/or bonus to determine their net “take home” pay.

National Insurance

Called Bituach Leumi

Resident

0.40 – 7.00%

0.4% of gross effective monthly salary up to ILS 6331.00

7.6% of gross effective monthly salary between ILS 6332.00 – 44 020.00

Foreign worker

0.04 – 0.87%

0.04% of gross effective monthly salary up to ILS 6,331.00

0.87% of gross effective monthly salary between ILS 6,332.00 – 44,020.00

Pension Fund
Calculated on gross monthly salary

6.00%

Study Fund

Called Keren Hishtalmut
Calculated on gross monthly salary limited to ILS 16,000.00

2.50%

Income Tax
Income Tax is ‘Pay As You Earn’
Calculated on gross monthly earnings

Income bracket per annum

0.00 – 6290.00
10.00%

6290.00 – 9030.00
14.00%

9030.00 – 14490.00
20.00%

14490.00 – 20140.00
31.00%

20140.00 – 41910.00
35.00%

41910.00 – 53920 .00
47.00%

53920.00 or more
50.00%

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Employment Terms

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General

Minimum Wage
  • ILS 5,300.00 per month
Working Hours
  • Maximum of 42 hours per week (maximum 7 hours of night work)
  • Minimum meal interval of 45 minutes
  • Typical working hours are 08h30/09h00 to 18h00 Sunday to Thursday
Overtime
  • Maximum of 12 hours per day (including overtime hours) and 16 overtime hours per week
Notice Period
  • Employed between 0 and 6 months- 1 day per month of service
  • Employed between 7 and 12 months- 6 days plus 2.5 days per month of service beyond 6 months
  • Employed for 12 months or more- 1 month
Severance Pay
  • Severance pay is 100% of the employees’ base salary, seniority pay, family allowance, cost-of-living allowance, professional increase for each completed year of service
Probation Period
  • There is no statutory probation period
  • Optional probation periods are for a minimum 1 month and a maximum 12 months
Bonus
  • There is no statutory bonus
  • Some employers pay a 13th month salary. This is a rare benefit & most employees do not receive this
    Public Holidays

    Public holidays 2022

    • March 17th – Purim (Tel Aviv)
    • March 18th – Shushan Purim (Jerusalem)
    • April 16th – Passover
    • April 22nd – Seventh day of Passover
    • May 5th – Independence Day – Yom Ha’atzmaut
    • June 5th – Feast of Shavuot
    • September 26th – 27th – Rosh Hashanah
    • October 5th – Yom Kippur
    • October 10th – First day of Sukkot
    • October 17th – Simchat Torah
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    Leave

    Paid Leave / Vacation Days
    • Employed between 1 and 5 years – 12 days per year
    • Employed for 6 years – 14 days
    • Employed for 7 years – 15 days
    • Employed for 9 years – 17 days
    • Employed for 10 years- 19 days
    • Employed for 11 or more years – 20 days
    Sick Leave
    • Paid leave
    • Paid by employer
    • Minimum of 18 days, maximum of 30 days 
    Maternity Leave
    • Paid leave
    • Paid by Social Security
    • Employed between 0 and 1 year- 15 weeks
    • Employed for 1 year or more- 26 weeks
    Paternity Leave
    • Paid leave
    • Partially paid by employer
    • Leave entitlement is deducted from those to which the mother is entitled
    Family Responsibility Leave
    • Paid leave
    • Paid by employer
    • Paid 7 days per year
    Start hiring in Israel today!