Hire in Israel

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Last updated at June 16, 2022

Currency

Israeli New Shekel (ILS)

Capital

Jerusalem

Time Zone

GMT+3

Key Country Facts

Introduction

Israel (Arabic Isrāʾīl), officially State of Israel or Hebrew Medinat Yisraʾel, country in the Middle East, located at the eastern end of the Mediterranean Sea. Jerusalem is the seat of the government and the proclaimed capital, but the latter status has not received wide international recognition.

 

Area

Israel is a small country of about 22,000 km2 and it has a relatively diverse topography, consisting of a lengthy coastal plain, highlands in the north and central regions, and the Negev desert in the south. It shares borders with Lebanon to the north, Syria to the northeast, Jordan on the east, the Palestinian territories of the West Bank and the Gaza Strip to the east and west, and Egypt to the southwest.

 

Climate

Temperatures in Israel vary widely, especially during the winter. Coastal areas (Tel Aviv & Haifa), have a typical Mediterranean climate with cool, rainy winters and long, hot summers. Areas at elevation of >750 metres (2,460 ft) (same elevation as Jerusalem) will usually receive at least one snowfall each year, while the south (Arava & Southern Negev) has a desert climate.

 

Culture

Israel’s diverse culture stems from the diversity of its population. Jews from diaspora communities around the world brought their cultural and religious traditions back, creating a melting pot of customs and beliefs. Arab influences are present in its architecture, music and cuisine. Israel is the only country in the world where life revolves around the Hebrew calendar. The official day of rest is Saturday, the Jewish Sabbath.

 

Religion

The vast majority of Israelis identify as Jewish (74.3%), followed by Muslim (17.8%), Christian (1.9%), Druze (1.6%) and some other religion (4.4%). The religious affiliation of Israeli Jews varies widely: 49% self-identify as Hiloni (secular), 29% as Masorti (traditional), 13% as Dati (religious) and 9% as Haredi (ultra-Orthodox).

 

Official Language

Israel has one official language, Hebrew. Arabic is spoken by the Arab minority, and due to mass immigration from the former Soviet Union and Ethiopia, Russian and Amharic are widely spoken. English was an official language (1917-1948) and retains a role comparable to that of an official language.

 

 

Country Name HR at a Glance

Employment Law

Employment relations in Israel are regulated by a number of sources: constitutional rights, as determined by:

  • 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

Israel has extensive mandatory employment legislation protecting employees’ rights. Israeli labour legislation provides for minimum mandatory requirements & benefits, which cannot be waived by employees, and cover all types and ranks of employees.

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

Israeli legislation does not regulate trial periods, but it is permitted and 3 months is common practice. During such a period, an employee would be considered a regular employee for all intents & purposes.

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

The working week shall not exceed 43 hours and not more than 6 days.

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

Any working hour in excess of the regular daily hours and >42 hours are considered overtime. The calculation is made on both a daily and weekly basis. Employees cannot be employed for more than 12 hours a day, including overtime and not including breaks. The weekly overtime limit is 16 hours.

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

Timekeeping is relevant not just for keeping track of work hours in order to compile payment of salary but also for keeping track of overtime pay, sick leave, pensions, and severance benefits.

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

Hearing

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

Employers and employees have to give written notice to each other before firing/quitting work.

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

Severance Pay (Pitzuim): If an employee is fired, he/she is entitled to one month severance for every year worked. Pitzuim is deposited into the employee’s pension fund by the employer. If an employee resigns voluntarily, the law does not mandate severance even though some employers do pay. Any pitzuim accumulated in a pension fund belongs to the employee.

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

Israeli courts generally do not enforce non-competition covenants, unless the employer can demonstrate factors that necessitate their recognition. Even so, it is expected that employees are bound in writing to their duty of confidentiality.

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

Histadrut, or the General Organization of Workers in Israel, is Israel’s national trade union centre and is a federation of 28 unions. The unions are organised on the basis of industry, profession and trade.

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

There is no limitation on fixed-term employment contracts, but there must be a justified reason for using it. As with any other contract, it should be subject to good faith non-discrimination obligations.

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

Israeli employers are allowed to deliver employees’ payslips via electronic and digital devices. The Israeli pay slip is made up of several sections :

  • 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

An employee is entitled to a number of days of paid annual leave in each year. This depends on length of the employee’s service with the employer, the period of employment in each calendar year and the number of the employee’s working days.

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

Every employee is entitled to 18 sick days per year (paid partially by employer). An employee can accumulate a maximum of 5 years of sickness days (90 days). The employer will pay for each sickness day according to the three month average salary of the employee (basic salary).

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

Employees who are absent from work due to death of a first-degree relative (parent, child, spouse, sibling) are entitled to receive full pay for up to 7 calendar days.

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

Israeli law provides for certain entitlements and protections to pregnant women, women who recently gave birth (or adopted children) and women undergoing fertility treatment. Under certain circumstances, similar protections may also be afforded to men. In addition, under certain circumstances, parents may use their entitlements to sick leave in order to look after their sick children.

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

There are 12 paid public holidays per year.

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.

Several other holidays are observed, either unofficially at a national level or by official local public observance.

 

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