Hire in Israel
Here’s where you get started with human resources best practices and hiring in Israel.
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Employment Law
- Basic Laws (which set out constitutional rights, first passed in 1992 by the Knesset -Israeli Parliament)
- Statutory rights, as set out in statutes and regulations
- Rights set by collective agreements and extension orders of collective agreements
- Individual labour contracts.
These legal sources are interpreted by the National Labour Court, which is the main judicial body developing labour and social security law. International standards, especially ILO conventions and EU standards, are used by the government and courts as guidelines, even though they are not binding.
- In Israel, employment law applies to all employees located in Israel (whether Israeli or foreign).
- Israeli labour legislation provides minimum mandatory requirements which cannot be waived by employees.
EMPLOYMENT CONTRACT
There is no specific requirement for a written employment contract and an oral agreement is legally binding. However, the Notice to Employee and Job Candidate (Terms of Employment and Screening and Recruitment Process) Law obliges the employer to provide each employee with a notice of his/her main employment terms using a stipulated form in Hebrew . The form must include the below details:
- Employer’s and employee’s information (name, address, ID number)
- Employment start date
- Term of employment
- Position and main duties
- Direct supervisor
- Salary
- Working hours per day and per week
- Rest day
- Social benefits and payments
- Details of pension fund & contribution to pension fund
- Applicable collective bargaining agreements
Contract Terms
All statutory rights and mandatory benefits are implied into all employment contracts and supersede contractual stipulations. If an employer wishes to change existing employment agreements, it must be done in writing and is subject to the employee’s consent.
Probation Period / Trial Period
For collective agreements, the most common length is 6-24 months. Employers have the power to extend trial periods under certain circumstances, but it has to be fair and just and on a basis of reasonable discretion by the employer.
Working Hours
It is common practice in many sectors to work only 5 days a week (Sunday-Thursday). Employees are entitled to continuous rest of at least 36 hours/week.
Weekends in Israel are Friday to Saturday.
Overtime
Employers must pay 125% of the worker’s normal wages for the first 2 hours of overtime in a day and 150% for any hours thereafter. For work done on a holiday or Saturday, the rate is 150% and a vacation day.
Timesheets
An employer is legally obligated to keep a registry of the total work hours, rest hours, overtime hours, overtime pay, and holiday work pay. Record keeping can be mechanical or digital. If it is done manually, the employee signs the timesheet daily and the time sheet is approved by a supervisor.
Termination
A hearing process (shimua) must be conducted before making the final decision about termination and redundancies.
This is so the employee hears the reasons for his/her intended dismissal and is has the opportunity to express an opinion regarding the dismissal, and to allow the employer to reach an informed decision.
The employer shall notify the employee in writing in advance that his or her dismissal is being considered and the reasons therefor, and during the hearing the employee should be given a genuine opportunity to present any argument he/she may have.
A failure to properly carry out the hearing procedure may result in the annulment of the dismissal or may entitle the employee to damages.
Notice
Both employee and employer are required to provide each other with an advanced written notice before their termination of the employment. The statutory periods for advance notice vary depending on the employee’s seniority and salary payment basis (hourly/monthly).
An employer may terminate the employment without giving advance notice to the employee, but the employer will be liable to a payment in lieu of the advance notice.
Prohibited dismissals/Permit for dismissal required
Pregnant women, women on maternity leave or for 60 days thereafter, women staying in shelters for abused women, employees who have been called up for military and/or reserve service, employees on sick leave, employees undergoing infertility treatment and bereaved families.
Collective Redundancies/Mass Layoffs
The Employment Service Law obliges employers to notify the Employment Service Bureau in case of the termination of more than 10 employees at once or in the same month.
Some collective agreements contain provisions requiring the employer to notify and consult with the employees’ union prior to dismissal. The common procedure is that the employer determines the need for a collective dismissal and the number of workers to be dismissed. The employer must then submit a list of the candidates to the union, who can suggest an alternative list.
Termination for Cause
If an employee is discharged for a serious disciplinary violation the employer is not required to give advance notice or pay in lieu thereof.
Notice Period
The amount of notice depends on the period employed and if paid monthly (salaried workers)/hourly (wage workers).
For salaried workers:
- <6 months – 1 day per month of service;
- 7-12 months – 6 days plus 2.5 days per month of service >6 months
- >1 year – 1 month.
For hourly workers:
- In 1st year of service: 1 day for each month worked;
- In 2nd year: 14 days + 1 day for every 2 months worked beyond 1 year
- In 3rd year: 21 days + 1 day for every 2 months worked beyond 1 year
After 3 years: 1 month.
Payment of wages for the duration of the notice period can be made in lieu of notice.
Redundancy / Severance Pay
The following are payments which an employer may pay in certain situations:
Maanak Peraydah: A one-time payment for leaving, above and beyond Pitzuim.
Dmai Histaglut: Adjustment pay, usually amounting to several months of extra salary.
Post-Termination Restraints / Restrictive Covenants
Customer & employee non-solicitation are both permissible, but typically the restriction cannot be for >12 months. During the period of non-compete, it is acceptable to pay a compensation equivalent to 50-75% of last drawn salary.
Trade Unions / Collective Agreements
An employer may not object to the incorporation of a workers’ union and is required to negotiate with the union in good faith.
Membership is voluntary, i.e. even where they are mandated by law, there are no legal sanctions for non-observance.
The Wage Protection Law allows union dues to be deducted by the employer from the workers’ salary and transferred to the union by the employer.
Fixed Term Contracts
Fixed-term contracts is for work that will be complete in a specific amount of time or for a specific project. The contract is over when the time expires or the project is completed. Employees must be treated equally.
If an employment contract specifies a fixed period of employment, the contractual relationship is automatically terminated at the end of this period, without being considered a resignation or a dismissal.
The termination of a fixed-term contract prior to its expiry by one party (the employer) may entitle the other party (the employee) to damages in the amount of the salary for the remaining term.
Tax and Social Security
Personal Income Tax
Israeli tax residents are taxed on their worldwide income. Non-resident individuals are subject to income tax on Israeli-sourced income and capital gains tax on gains from assets situated in Israel (subject to special exemptions for non-residents). Sourcing rules determine when income is to be regarded as being from an Israeli source.
Taxation of individuals is imposed in graduated rates ranging up to 47%. Additionally, a 3% surtax applies on annual taxable income exceeding 647,640 Israeli shekels (ILS), resulting in a 50% maximum income tax rate. Non-residents are taxed at the same rates as Israeli residents.
| Annual Taxable Income above (ILS) [Column A] | Annual Taxable Income not above (ILS) | Tax on Column A | Tax on Excess (%) |
|---|---|---|---|
| 0 | 75,480 | 0 | 10.0 |
| 75,480 | 108,360 | 7,548 | 14.0 |
| 108,360 | 173,880 | 12,151 | 20.0 |
| 173,880 | 241,680 | 25,255 | 31.0 |
| 241,680 | 502,920 | 46,273 | 35.0 |
| 502,920 | 647,640 | 137,707 | 47.0 |
| 647,640 | 205,725 | 50.0 |
SOCIAL SECURITY
Employers are obligated to pay national insurance contributions based on a percentage of each employee’s income on a monthly basis. Employers are responsible for withholding employees’ contributions from wages and remitting these together with the employer’s own contributions.
Payment rates of national insurance and health insurance are calculated according to the insured’s earned and unearned income, and according to their work status (employee, self-employed, unemployed, student, etc.).
| Employer Contribution(%) | Employee Contribution (%) | |
|---|---|---|
| National Insurance (on the 1st 6,331 ILS) | 3.55 | 0.40 |
| National Insurance (6,331 ILS – 44,020 ILS) | 7.60 | 7.00 |
| Severance Pay | 8.33 | 0.00 |
| Health Insurance (on the 1st 6,331 ILS) | 0.00 | 3.10 |
| Health Insurance (6,331 ILS – 44,020 ILS) | 0.00 | 5.00 |
| Education Fund (capped at 15,712 NIS) | 7.50 | 2.50 |
| Pension Fund | 6.50 | 6.00 |
| Disability Insurance | 2.50 | 0.00 |
EMPLOYEE PENSION SCHEMES
Under the Supervision of Financial Services Regulations (Provident Funds) implemented in 2016, the employer is now responsible for operating employee pension schemes.
Pension operations include submitting data and payments to the pension producers (insurance companies, pension funds, advance study funds, provident funds) and receiving feedback and error reports concerning the accuracy of the amounts and the data remitted for the employees.
It is the duty of the employer to pay the monthly fees of a firm which is licensed to provide pension operations as follows, whichever is higher:
- 0.6% of the premium + V.A.T.
- NIS 10.5 plus V.A.T.
This cost is deducted from management fees that is paid by the employee for his/her pension products.
The services of the pension operations vendor also includes:
- Depositing payments for employees
- Submitting the data connected to the payments
- Dealing with enquiries and error reports from the pension producers
*The above rates serve as a broad guideline. Actual rates charged will differ.
Employees
Salary Payment
Wages must be paid no later than the 9th of the month (for the previous month) and on a monthly basis.
Payslip
- Specific information (header) – name, start date, department, employee ID, employer’s address, tax number, pay period
- Payments (tashlumim) – itemized breakdown, e.g. base pay, travel expenses, overtime hours, non-cash benefits
- Mandatory deductions (nikuei chova) – income tax, social security, health tax and pension payments
- Voluntary deductions (nikuei reshut/hitcheivuyot) – advances on payroll, repayment of loans
- Annual accured totals (meida klali/mitstabrim) – e.g. vacation and sick pay balances
Annual Leave
In general, however, the amount of annual leave ranges from 10 days per year for new employees up to 24 days per year for long-serving employees.
Sick Leave
Payment is made as specified below:
- 1st day—no payment is due
- 2nd & 3rd day —50% of daily rate of employee’s salary
- From 4th day forward—100% of daily rate of employee’s salary
Sick days may be utilized for special absences such as child sickness, parent sickness, spouse sickness, abortion, fertility treatment, pregnancy and delivery by a spouse.
The employee may use up to 8 sick days a year due to a child’s sickness and up to 6 days a year due to a parent’s sickness (providing that his/her spouse didn’t use sick days as well). These sick days are part of the 18 days mentioned above and are not additional days.
Compassionate & Bereavement Leave
The right is recognized as long as they have worked at least 3 months at their place of employment.
Part-time employees are eligible for wages only for the days on which they were to be working.
Maternity & Parental Leave
All employees are entitled to take Unpaid Leave following Maternity Leave for up to 60 days.
Maternity Leave
A female employee who has continuously worked for the same employer for:
≥ 12 months – 26 weeks maternity leave
< 12 months – 15 weeks maternity leave
- An employer is not required to pay an employee’s salary during the period of maternity leave, although contributions towards pension insurance during certain periods of the maternity leave must continue to be paid.
- An employee is entitled to maternity leave even if the fetus/baby died after the birth.
Paternity Leave
The mother’s spouse may take maternity leave in the following situations:
- If a mother entitled to maternity leave has chosen to cut it short, once 6 weeks after the birth have passed, her spouse may replace her and take the remaining period of the maternity leave.
- To take a one-week paternity leave at the same time as the woman’s maternity leave, as long as the woman forfeits, in writing, her maternity pay for the last week in which she was entitled to it.
- He is the exclusive caregiver because the mother is disabled or ill (with a doctor’s letter), and unable to care for the child.
Salary payment/Allowance during Maternity Leave
Employees on maternity leave are not paid a salary, but is entitled to a Maternity Allowance (Maternity Pay) by the National Insurance Institute for part of the leave period, based on the national insurance taxes paid.
Shortening Maternity Leave
An employee who worked at least 12 months, is entitled to shorten her maternity leave, provided that the maternity leave is not less than 15 weeks.
If an employee informs her employer that she would like to return to work early from maternity leave, the employer may not delay her return more than 3 weeks.
A woman can choose to shorten her maternity once 6 weeks have passed (or any time after that) if her spouse takes the remaining maternity leave instead of her.
Extending maternity Leave
A woman who gave birth to more than one baby in the same labor is entitled to extend the maternity leave by 3 weeks (beyond the 26 weeks given by law) for each additional child born and receive a maternity allowance for this period.
Hospitalisation of Mother/Newborn
A mother/newborn who must remain in the hospital after childbirth, or be re-hospitalized during regular maternity leave for at least 15 days, is entitled to extend maternity leave and receive additional maternity pay for the period of extension.
Social Benefits during Maternity Leave
Employees continue to accrue social benefits during maternity leave (e.g. convalescence pay, annual vacation days, sick days, and severance pay.
However, the number of annual vacation days that the employee is entitled to during the year of the maternity leave is determined by the number of days that he/she actually worked during that year.
The employer must continue making contributions to the employee’s monthly pension plan but only for the time which the employee receives a maternity allowance. An employer who has contributed to the employee’s provident fund or Advanced Study Fund must continue contributing during the employee’s maternity leave. If an employer provides its employees with a holiday gift, the gift must also be provided.
Public Holidays
All holidays start at sunset, thus workplaces typically close down on the afternoon of the holiday’s eve.
The specific dates of these holidays change every year because the holidays are on the Jewish calendar.
Benefits to the Employee in Israel
Statutory Benefits
All employees in Israel receive a range of benefits in addition to base salary, mandatory benefits and social security payments:
- Health services
- Maternity & paternity allowance
- Army service leave
- Experience premium
- Severance pay
- Termination notice
- Disability benefit
- Employment injury compensation
- Unemployment benefit
- Public transportation or car allowance
Healthcare
Every resident in Israel must be part of one of the country’s 4 official health organisations – Clalit, Leumit, Maccabi, or Meuhedet. The local healthcare insurance system in Israel is known as “Kupot Cholim“ and provides all Israeli residents with free access to basic medical care. The local healthcare system is funded via contributions deducted from salaries. The contributions collected are then split between the four health funds.
Education fund
Customary benefit but not mandated by law for employees to participate in conferences or for education. Employers contribute up to 7.5% of monthly salary into the fund, and employees contributing 2.5%. Contributions are tax-free up to a gross monthly salary of 15,712 NIS.
Vacation Pay
An employee that completes one year of work is entitled to a once a year vacation pay, where payment is defined by length of service multiplied by a predefined daily rate.
- Year 1 – 5 days
- Years 2 & 3 – 6 days
- Years 4-10 – 7 days
- Years 11-15 – 8 days
- Years 16-19 – 9 days
- >20 years – 10 days
Convalescence (Recuperation) Pay
An employee that completes one year of work is entitled to a once a year convalescence pay (378 NIS per day) multiplied to the number of days according to the seniority accrued in his workplace:
- Year 1- 5 days
- Years 2 & 3- 6 days
- Years 4-10- 7 days
Visas and Foreign Workers
General Information
A request for a visa can be submitted by any company registered in Israel or by a company outside of Israel that grants power of attorney to a representative in Israel. An employer of a foreign worker is obligated to enter into a written employment agreement with the worker that details the conditions of employment in a language the worker can understand, with a copy given to the worker.
Failure to sign an employment contract with a foreign worker is a criminal offence.
Foreign workers are entitled to the same work conditions that Israeli employees are legally entitled to. The salary of a foreign worker has to be at least minimum wage and he/she must be paid transportation costs and convalescence pay.
Work Visas
The Population and Immigration Authority (PIBA) grants the work visas (B/1 work permit). A foreign worker would be able to receive permission to work in Israel in one of the following sectors: caregiving, agriculture, construction, or other experts.
Criteria for Visas
The work visa can be granted for a period of up to 63 months and can be issued based on:
- Professionals in a specific field (e.g. expert researcher, foreign reporter, senior manager at MNC)
- Expert professional payment indicator (e.g. foreign expert whose wage is >2x average Israeli wage)
Duration of Visas
Once the employee obtains the working visa, the employee will be considered a non-permanent worker in Israel and is permitted to stay for as long as 63 months. For foreign workers who are eligible for the working visa under the ‘Professionals in a Specific Field’ category, the visa must be renewed after 24 months.
Short Term Visas
Short-term working visas are valid for 45 days and are granted to foreign professionals whose expertise is needed to perform a temporary task (e.g. consultations, inspections, equipment repairs). The worker must have a passport from a country which does not require a visa to enter Israel.
Experts in hi-tech sector Visa
1. Innovation Visa for Foreign Entrepreneurs (pilot) – up to 24 months, and can be upgraded to Work Visa for a period of 5 years if innovation project turns into a company.
2. BETA- Tech Talent Relocation Program – 1 year (or more) program
Public Holidays in 2022
| S.No | Occasion | Date |
|---|---|---|
| 1. | Purim* | February 26th |
| 2. | Shushan Purim* | February 28th |
| 3. | Parliamentary Elections | March 23rd |
| 4. | 1st day of Pesach (Passover) | March 28th |
| 5. | 7th day of Pesach (Passover) | April 3rd |
| 6. | Yom Ha’atzmaut (Memorial Day)* | April 14th |
| 7. | Yom Ha’atzmaut (Independence Day) | April 15th |
| 8. | Victory Day | May 9th |
| 9. | Jerusalem Day* | May 10th |
| 10. | Shavuot (Pentacost) | May 17th |
| 11. | Tisha B’Av (Day of Fast) | July 18th |
| 12. | Rosh Hashanah (New Year) | September 7th |
| 13. | Rosh Hashanah (New Year) | September 8th |
| 14. | Yom Kippur (Day of Atonement) | September 16th |
| 15. | Sukkot (Feast of Tabernacles) | September 21st |
| 16. | Simchat Torah | September 29th |
| 17. | Hanukkah* |
*Observances that are a National Holiday but are not non-working days.
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