Employer of Record in Israel

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Israel

Israel is a country rich in history, religion, and innovation. Jerusalem, its capital, is a sacred city for Judaism, Christianity, and Islam, with landmarks like the Western Wall and Dome of the Rock. Tel Aviv, a modern metropolis, is known for its vibrant nightlife, beaches, and startup culture. Israel is famous for its archaeological sites, such as Masada and the ancient port of Caesarea. The Dead Sea, the lowest point on Earth, is a natural wonder attracting visitors worldwide.

Languages

Hebrew, Arabic, English

Population

9.5 Million

Capital City

Jerusalem

Currency

Israeli New Shekel (ILS)

Cost of living ranking

19th

VAT (Value Added Tax)

17%

Hiring in

Israel

Employment Contracts

Employers are required to provide employees with a written employment contract detailing essential terms such as:
Job responsibilities.
Compensation.
Working hours.
Leave entitlements.
Termination conditions.
This written contract must be provided within 30 days of the employee's start date to ensure clarity and mutual understanding.

Probationary Period

While not mandated by law, probationary periods are common and typically last between 1 to 3 months. During this time, employees are entitled to the same rights as regular employees.

Payroll Management in

Israel

Payroll Frequency

Employees are generally paid on a monthly basis, with payments made by the 9th day of the following month.

Minimum Wage

As of 2022, the minimum wage is set at 32.31 ILS per hour, which translates to approximately 5,880 ILS per month for full-time employees.

Overtime

Standard working hours are 42 hours per week. Overtime is compensated at:
125% of the regular hourly rate for the first two hours of overtime.
150% for any additional hours thereafter.
The maximum allowable overtime is capped at 16 hours per week.

Taxation in

Israel

Employee Contributions

Social Security (Bituach Leumi): Employees contribute approximately:

0.4% on income up to 7,122 ILS.
7% on income between 7,122 ILS and 47,465 ILS.

Health Insurance: Employees contribute approximately:

3.1% on income up to 7,122 ILS.
5% on income between 7,122 ILS and 47,465 ILS.

Employer Contributions

Social Security: Employers contribute:

3.55% on income up to 7,122 ILS.
7.6% on income between 7,122 ILS and 47,465 ILS.

Pension Fund: Employers contribute approximately 6.5% to the employee's pension fund.
Severance Pay: Employers contribute approximately 8.33% towards severance pay.

Income Tax

Israel employs a progressive income tax system with rates ranging from 10% to 50% depending on income levels.

Leave in

Israel

Types of Leave in Israel

Annual Leave

Employees are entitled to a minimum of 12 days of paid annual leave after one year of service. This entitlement increases with tenure.

Sick Leave

Employees accrue sick leave at a rate of:
1.5 days per month for up to a maximum of 90 days(total).
Payment during sick leave is structured as follows:
First day: unpaid.
Second and third days: 50% of regular pay.
From the fourth day onward: 100% of regular pay.

Maternity Leave

Female employees are entitled to a total of 26 weeks of maternity leave after one year of service, with at least 15 weeks paid by social security(the employer pays for the first 60 days).

Paternity Leave

Male employees are entitled to up to 5 days of paternity leave:
The first three days are deducted from annual leave.
The remaining two days can be taken from sick leave.

Benefits in

Israel

Mandatory Benefits

Pension Fund: Mandatory contributions from both employer (6.5%) and employee (6%) to a pension fund.
Health Insurance: Universal health coverage funded through employee and employer contributions.

Termination in

Israel

Notice Period

The required notice period varies based on tenure:
Up to 6 months: 1 day per month of employment.
Between 6 months and 12 months: 6 days plus an additional 2.5 days for each additional month.
Over 1 year: At least 1 month.

Grounds for Dismissal

Termination must be based on justifiable reasons such as misconduct or inability to perform duties. Grounds should be clearly stated in work rules.

Restrictions on Dismissal

Termination is prohibited during periods such as maternity leave and for an additional 30 days thereafter.

Severance Pay

Employers contribute approximately 8.33% of the employee's salary towards severance pay, which is payable upon termination under certain conditions.

ON THIS PAGE

Overview

Hiring

Payroll

Taxes

Leave

Benefits

Termination

Employment Contracts

Probationary Period

Payroll Frequency

Minimum Wage

Overtime

Employee Contributions

Employer Contributions

Income Tax

Types of Leave in Israel

Mandatory Benefits

Notice Period

Grounds for Dismissal

Restrictions on Dismissal

Severance Pay

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