Hire and pay employees in
Israel, hassle-free

With Deel, your business can easily hire employees in Israel. No more worrying about local laws, complex tax systems, or managing international payroll. Deel takes care of everything in 150+ countries.

The average onboarding time frame in Israel is 2 days with Deel.

Currency

New Shekel ILS/NIS

Capital

Jerusalem

Official Language

Hebrew

Payroll Cycle

Monthly

Onboard, pay and manage employees in Israel with Deel.

Usually, to hire in Israel, your business needs an entity. That means a local office, an address registered as a subsidiary, and an account with a local bank. All of this, plus navigating regional benefits, payroll, tax, and HR laws, can take months.

Deel lets you hire employees in Israel quickly, easily, and compliantly. We even automate tax document collection, payroll, benefits, and more. For your existing direct employees, we can manage your entire payroll operation from end-to-end.

Download the Guide

All the necessary benefits for Israel
built right in

Deel allows you to provide localized benefits for employees in Israel within minutes. All in one manageable online dashboard.

  • Pension Fund
  • Public Health Insurance
  • Private Healthcare - Unisure (optional)
  • Private Health Insurance - Menorah Mivtachim
  • Private Healthcare - Allianz (optional)

Our quickstart guide to hiring in Israel

Navigate the tabs below to learn everything you need to know about hiring an employee in Israel

Minimum Wage Requirements

The minimum wage is ILS 5,500 per month.

Individual Income Tax

The individual income tax ranges from 10% to 50%. Income tax is calculated according to progressive rates. Multiple additional factors may impact overall rates such as the marital status and the number of children.

The tax rates change annually. These are the rates for 2021.

Gross Annual Income (ILS) Tax Rate (%)
Up to 81,480 10%
81,481 - 116,760 14%
116,761- 187,440 20%
187,441- 260,520 31%
260,521- 542,160 35%
542,161- 698,280 47%
Above 698,281 50%

Payroll Cost

The employer cost is generally estimated at 18.38%-22.43% of the employee salary.

  • Severance - 8.33%
  • Pension Fund - 6.50%
  • Bituah Leumi - 7.60%*
  • Pension Agent Fee: 0.6% of the premiums paid      

Annual costs for seniority pay will apply. Costs are NIS 418 multiplied by:

  • 5 for employees with 1 year of seniority
  • 6 for employees with 2 and 3 years of seniority
  • 7 for employees with 4 to 10 years of seniority

* 3.55% for gross monthly salaries up to ILS 7,522. 7.60% for gross monthly salaries over ILS 7,522, capped at a maximum salary for the contribution of ILS 49,030

 

These costs are provided as estimates and are intended solely for general informational purposes. To fully comprehend all associated costs and fees related to the terms of any employment agreement for this country, please contact our Sales team for a quote.

Overtime Pay & Maximum Hours

Standard working hours are 8.4 hours per day, 5 days a week. The standard workweek is from Sunday to Thursday.

The standard workweek can be extended up to 42 hours per week.

Overtime payment is mandatory for hourly-wage workers. Overtime payment is not mandatory for employees with a fixed salary as it is adjusted for in their salaries. Hours outside of standard work hours are considered overtime. Employees can work a maximum of 12 hours of overtime per day, 16 hours of overtime per week. For the first 2 hours of overtime, employees are paid 125% of their hourly wage. For every hour after that, employees are paid 150% of their hourly wage.

Maternity Leave

Pregnant employees, who have worked for 12 months for the same employer, are entitled to 26 weeks of paid leave. Employees who have worked for less than 12 months for the same employer or in the same place of employment are entitled to 15 weeks of paid leave.

The employee is not entitled to be paid a salary, but for some of the period, is entitled to be paid a Maternity Allowance (Maternity Pay) by the National Insurance Institute, based on the period for which national insurance taxes were paid.

  • Employee who paid national insurance taxes for 10 out of the 14 months - Maternity allowance of 15 weeks
  • Employee who paid national insurance taxes for 15 out of the 22 months - Maternity allowance of 15 weeks
  • Employee who paid national insurance taxes for 6 out of the 14 months - Maternity allowance of 8 weeks

The maternity allowance rate is determined according to the employee's gross salary based on which National Insurance payments are made, up to the maximum amount of ILS 1,485.83 per day.

The employee is not entitled to any payment or maternity allowance for the remaining weeks of the maternity leave.

Paternity Leave

Employees, who have worked for 12 months for the same employer, are entitled to 1 month of paid paternity leave if the mother is back to work. Out of 1 month, 1 week must be overlapping with mother’s leave, and the remaining 3 weeks must be taken while the mother is back at work. The employee will receive 100% of the salary during this period, and Social Security will be responsible for this pay.

Parental Leave

In Israel, no law covers parental leave. However, employees may be entitled to maternity leave and paternity leave.

Sick Leave

Employees are entitled to 1.5 days of paid sick leave per month, for up to 18 days. The first day is unpaid and considered as a qualifying period. The sick leave is paid at different rates and by the employer.

Employees can accrue sick leave up to 5 years, a total of 90 days.

Day Number Pay (% of base salary) Payer
1 0% Employer
2 - 3 50% Employer
Over 4 days 100% Employer

Termination Requirements

Terminations must respect complex rules and the rules of an employee’s employment country. The off-boarding is always handled by the Employer with the primary stakeholders. It may include ad-hoc fees as well as required or recommended steps on specific termination cases.

Compliant terminations include:

  • Voluntarily by the employee
  • Unilaterally by the employer for any reason except:
    • Discrimination (based on age, parenthood, fertility treatments, race, sex, nationality, etc.)
    • Filing a complaint with a legal authority against his employer or an employee of the employer concerning violations of law at the workplace
    • When an employee is absent from work according to instructions of security forces during an attack or other national emergency
    • Reasons specified in a collective agreement, employment contract, or case law
  • By mutual agreement
  • By the expiration of the contract

Notice Period

The notice period in Deel employment agreements in Israel is:

Length of Employment Notice Period
During probation period 1 day per month worked

After probation period

30 days

 

 

 

 

This is the standard in the high-tech sector in Israel.
When an employee is terminated, the employer must pay the notice period salary and all mandatory payments such as unused PTO. The employee works during the notice period, unless the employer waives this right. If the employer doesn’t want the employee to keep working, he can release the worker on garden leave after the hearing, but must still pay for the notice period.

Severance for Employees

In Israel, all employees are entitled to severance pay. Severance pay is 8.33% of the salary for each year of employment. The amount paid is taken from the Severance fund that the employer must pay towards every month.

To protect you from unforeseen financial risks arising from terminations, Deel applies a Severance Accrual to all employment agreements in this country.  Deel has extensive expertise in managing litigation risk globally and our Severance Accrual calculation is based on the prevailing common-law or statutory entitlements and local best practices. In the event your employee resigns or is not entitled to severance, all unused amounts will be returned to you.

Paid Time Off

Full-time employees are entitled to 12 days of paid time off (PTO) a year for a 5 day work week.

Part-time employees are entitled to the same as full-time employees (pro-rata) or at 70% of full-time wages.

PTO accrues monthly and is calculated by dividing base pay by 21.67 days per month and multiplying the value, by 10 or 12 (based on employee workweek). The employer must make sure that employees use a minimum of 7 days of PTO per year. Employees are eligible for annual leave after 3 months of work.

Public Holidays

Israel celebrates 9 public holidays:

  1. First Day of Passover
  2. Seventh Day of Passover
  3. Yom Ha'atzmaut
  4. Shavuot
  5. Rosh Hashanah
  6. Yom Kippur
  7. First day of Sukkot
  8. Shemini Atzeret
  9. Simchat Torah

Additional elections holidays may also apply.

Onboarding

Onboarding takes 2 business days after the client signs the SOW.

Employment Contract Details

Contracts must be in Hebrew or English and can be bilingual. They must be in writing and signed by both parties.

A contract must include:

  • Name
  • Start date
  • Base Salary
  • Transportation
  • Vacation Days
  • Sick Days
  • Pension
  • Termination conditions

Probation Period

The typical probation period is 3 months. If the person does not have an active pension fund, it can reach six months. Probationary periods are permitted by Israeli law, but an employee would still be considered a regular employee during such a period.
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Hiring in Israel, hassle-free

With Deel, your business can easily hire employees in Israel with our EOR solution. If you have an entity, our Global Payroll solution takes care of payroll and compliance for your direct employees. Our 250+ in-house experts handle everything from managing local laws, complex tax systems, or your payroll in Israel and 150+ countries.

Group (8)

Starting at 599 USD

Management fee

Group (9)

18.38%-22.43%

Estimate Employer Cost

*of employee salary

Want to learn the cost of hiring an employee in Israel?

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