Israel

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, million: 9,3
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 an employment contract to be in writing 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 or her main employment terms using a stipulated form. In addition, the Foreign Employees Law requires a foreign employee’s employment contract to be in writing, in a language known to the employee and including specific terms and conditions.

All statutory rights and mandatory benefits are implied into all employment contracts and supersede contractual stipulations. The provisions of any applicable collective bargaining agreement or extension order may also be implied into an employment contract.

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

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

  • collectively-bargained labour contracts
  • 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 may be for fixed or unlimited periods of time. 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.

An employment contract, which does not specify a fixed period of duration, is considered to be for an unlimited period of time, but can be terminated by notice of either party. However, in the organized sector of the work force collective agreements which give workers tenure limit the employers’ ability to discharge and end the employment contract.

Israel working hours

A typical working week in Israel runs from Sunday to Thursday and is 43 hours long. Accordingly, the regular working day of an employee employed for a five-day week (Sunday to Thursday) is 8.6 hours. Employees employed for a six-day week will work eight hours a day from Sunday to Thursday, with an additional three working hours on Friday. There are currently some regulation processes by the Labour Ministry with respect to shortening the working week to 42 hours. 

Vacation leave in Israel

The Annual Leave Law provides that an employee is entitled to 12 to 14 working days’ paid annual leave on commencement of employment, increasing yearly according to the employee’s seniority to a maximum of 21 to 24 working days paid leave. In addition, according to the generally applicable expansion order, all employees are entitled to nine paid public and national holidays.

Israel Maternity Leave

Maternity and paternity leave are provided for by law, payable through National Security (not the employer); however, the right to be absent from work is statutory.

Israeli Severance Laws

Notice periods

The Advance Notice for Dismissal and Resignation Law requires both employers and employees to give notice. The length of the notice period is set according to the duration of employment, with a maximum of 30 calendar days. An employer can forgo the attendance of the employee during the notice period, provided that it pays the employee in lieu of notice.

Severance payments

Under the Severance Pay Law, 1963 a discharged worker is entitled to severance pay of one months’ salary for each year worked. Such severance pay can be reduced or denied when the worker is discharged for a serious disciplinary violation.

When the worker resigns he is not entitled to severance pay, unless he meets one of the specific provisions in the statute, such as resignation because of giving birth, serious illness, or a significant worsening of employment conditions. When a worker dies his dependant survivors are entitled to severance pay. A worker is entitled to severance pay when his employer dies.

When a collective agreement requires the employer to contribute to a pension plan the worker is not entitled to severance pay.

This law’s purpose is unclear. Severance pay can be seen as giving the worker funds to live on until he finds another job, or as payment for his contribution to the workplace, or to live on when retired or to make it economically not worthwhile to dismiss the employee or for him to quit. These are contradictory purposes and some legal scholars have criticized the differentiation between the discharged worker and those who quit. There have been movements to replace the Severance Pay law with a compulsory pension law covering all workers.

Israel Tax

          Annual taxable income (ILS)

Tax on column 1 (ILS)

Tax on excess (%)

Over (column 1)

Not over

0

75,960

0

10

75,960

108,960

7,596

14

108,960

174,960

12,216

20

174,960

243,120

25,416

31

243,120

505,920

46,545

35

505,920

651,600

138,525

47

651,600

 

206,995

50

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.

 

FAQ Israel

  • What are Israel working hours?

    A typical working week in Israel runs from Sunday to Thursday and is 43 hours long. Accordingly, the regular working day of an employee employed for a five-day week (Sunday to Thursday) is 8.6 hours.

  • Israel Holidays

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

    A discharged worker is entitled to severance pay of one months’ salary for each year worked. Such severance pay can be reduced or denied when the worker is discharged for a serious disciplinary violation.

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