Israel PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in Israel to companies willing to enter the Israeli market or hire local/expat employees in this country. Traditional approach requires establishing a subsidiary in Israel.  However our solution allows you to start the operations in Israel within days hence save time and money.  WeHG would hire candidates on your behalf while you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf.  

Israel fast facts

Population: 9,492,000
Land area: 20,770 km² 
Capital: Jerusalem
Local currency: New shekel (ILS)

Their economy has leapt off the page in the last few years, growing due to consumer spending, valuable exports, and smart investments. Tax revenues have been high, and Israel is keen to get even more business in their country.

Hiring, Negotiating and Doing Business in Israel

Necessity of written employment contract

In general, Israeli law does not require a written employment contract, and an oral agreement is enforceable. The Notice to Employee and Job Candidate (Terms of Employment and Screening and Recruitment Process) Law, on the other hand, requires employers to provide each employee with written notice of their main employment terms in a prescribed format. A foreign employee’s employment contract must also be in writing, in a language the employee understands, and include specific terms and conditions, according to the Foreign Employees Law. All statutory rights and benefits are implicit in all employment contracts and take precedence over contractual provisions. An employment contract may also be implied by the provisions of any applicable collective bargaining agreement or extension order.

Different forms of engagement: employment, contracting, work with private entrepreneur

Labour contracts in the Israeli labour market can be classified into three major groups: 

• those collectively-bargained;
• personal/individual temporary employment contracts; 
• triangular contractual arrangements with workers hired by independent contractors and suppliers of services, or workers supplied by temporary work-agencies.

Israel Employment Contract

Types of employment agreements

Employment contracts can be for a set amount of time or for an indefinite amount of time. If an employment contract specifies a fixed period of employment, the contract automatically ends at the end of that period, without being considered a resignation or dismissal. An employment contract that does not specify a fixed period of duration is considered to be for an indefinite period of time, but either party can terminate it with notice. Collective bargaining agreements that give workers tenure, on the other hand, limit the ability of employers to fire and terminate employees in the organized sector of the workforce.

Israel working hours

In Israel, a typical work week lasts 43 hours and runs from Sunday to Thursday. However, the maximum regular working hours in a week is 45 hours, i.e. apart from overtime.

As a result, an employee working a five-day week (Sunday to Thursday) has a regular working day of 8.6 hours. Employees working a six-day week will work eight hours per day from Sunday to Thursday, plus three additional hours on Friday.  

Vacation leave in Israel

According to the Annual Leave Law, an employee is entitled to 12 to 14 working days of paid annual leave at the start of employment, which increases yearly based on seniority to a maximum of 21 to 24 working days paid leave. In addition, all employees are entitled to nine paid public and national holidays under the generally applicable expansion order.

Israel Maternity Leave

Every woman working, and is on a salary, who has a child is entitled to maternity leave. Parents who have a child through surrogacy or adoption are also entitled to parental leave after the child is born.

A woman who has worked for the same employer or in the same workplace for at least 12 months is entitled to 26 weeks of maternity leave (divided into 15 weeks of paid leave and 11 weeks of unpaid leave), even if the employer has changed.

The total amount of unpaid maternity leave she can take (including the 11 weeks she is entitled to) is capped at 25% of her previous period of employment with the same employer, or one year, whichever is less.

Israeli Severance Laws

Notice periods

Both employers and employees are to give notice under the Advance Notice for Dismissal and Resignation Law. The length of the notice period is determined by the length of the employment relationship, with a maximum of 30 calendar days. An employer can waive the employee’s attendance during the notice period if the employee is paid in lieu of notice.

Severance payments

A discharged worker is entitled to severance pay of one month’s salary for each year worked under the Severance Pay Law of 1963. When a worker is fired for a serious disciplinary violation, severance pay may be reduced or denied. When a worker resigns, he is not entitled to severance pay unless he falls under one of the statute’s specific provisions, such as resignation due to childbirth, serious illness, or significant deterioration of working conditions. When a worker passes away, his or her dependents are entitled to severance pay. When an employer dies, a worker is entitled to severance pay. A worker is not entitled to severance pay if a collective bargaining agreement requires the employer to contribute to a pension plan.

The goal of this law isn’t explicit. Severance pay can be viewed as providing funds for the worker to live on until he finds another job, as compensation for his contributions to the workplace, as a source of income when retired, or as a means of making it economically unprofitable to dismiss or fire the employee. These are incompatible goals, and some legal scholars have questioned the distinction between discharged employees and those who quit. There have been calls to replace the Severance Pay Act with a universal pension law that would cover all workers.

Israel Tax

A minimum tax rate of 31% generally applies to certain classes of passive income not derived from business or employment earned by a taxpayer under age 60.

Health Insurance Benefits in Israel

The Sick Pay Law entitles employees to 18 sick days per year, up to a maximum of 90. The pay for sick leave is as follows:

• for the first day, employees are not entitled to remuneration;
• for the second and third days, employees are entitled 50% of their salary; and
• from the fourth day onwards, employees are entitled to 100% of their salary.

Sick leave pay is subject to a medical certificate and, unlike vacation days, accrued and unused sick days are not redeemable.

Employees are entitled to use a proportion of their accrued sick days for the illness of a child, parent or a spouse, all subject to certain requirements specified under law.

Additional Benefits in Israel 

Public Transportation Allowance  –  Covers the cost of traveling to work by public transportation. By law, a public transportation allowance must be paid unless this cost is expressly dealt with in the framework of base salary, or in the form of a car allowance.

Car Allowance – Allocation per kilometer multiplied by cost of operating vehicle per kilometer traveled. When car allowances are granted, often there are additional payments for car insurance and auto license fees.

Israel Holidays

• 7th Day of Passover
• Passover
• Independence Day
• Jerusalem Day
• Pentecost/Shavuot
• New Year (2 days)
• Day of Atonement
• Sukkot
• SimChat Torah

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.