Guide to employment, payroll and benefits in


Rivermate offers complete payroll, benefits and compliance services for


01. Overview

Last updated: 

August 19, 2021

Israeli New Shekel
Ease of doing business
GDP growth

02. Grow your team in


with Rivermate

Payroll, benefits, taxes, and compliance can be difficult to manage in


, particularly if you don't have established local relationships. You can hire employees in


effectively, conveniently, and in full compliance with all relevant labor laws using Rivermate's global employment solution. We handle the responsibilities and legal risks associated with foreign employment so you can concentrate on growing your company.

03. Summary

Israel, officially known as the State of Israel, is a nation in Western Asia that lies on the Mediterranean Sea's southeastern shore and the Red Sea's northern shore. It shares land boundaries with Lebanon to the north, Syria to the northeast, Jordan to the east, the West Bank and Gaza Strip to the east and west, and Egypt to the southwest. Tel Aviv is Israel's economic and technical base, while Jerusalem is the state's seat of government and declared capital, despite international recognition of Israel's jurisdiction over Jerusalem being limited.Israel has proof of the earliest hominid migration out of Africa. Archaeological evidence of Canaanite tribes dates back to the Middle Bronze Age, while the Kingdoms of Israel and Judah originated during the Iron Age. Around 720 BCE, the Neo-Assyrian Empire defeated Israel. The Babylonian, Persian, and Hellenistic empires eventually annexed Judah, which had previously existed as Jewish autonomous provinces. By 110 BCE, the successful Maccabean Revolt had established an independent Hasmonean kingdom, but by 63 BCE, it had become a client state of the Roman Republic, which had founded the Herodian dynasty in 37 BCE and formed the Roman province of Judea in 6 CE. The failed Jewish revolts resulted in widespread devastation, the expulsion of the Jewish people, and the renaming of the area from Iudaea to Syria Palaestina. Over the ages, there has been a Jewish influence in the area to some degree. The Arabs took the Levant from the Byzantine Empire in the seventh century CE, and it remained under Muslim rule until the First Crusade in 1099, followed by the Ayyubid conquest in 1187. In the 13th century, Egypt's Mamluk Sultanate expanded its influence over the Levant until it was defeated by the Ottoman Empire in 1517. National awakening among Jews in the nineteenth century led to the founding of the Zionist movement, which was accompanied by immigration to Palestine. After being ceded by the Ottomans at the end of World War I, the land was ruled by the British Empire as a mandate from 1920 to 1948. After the British agreed to supply arms and establish a Jewish Brigade in 1944, the mandate was heavily bombed during WWII, and Yishuv Jews served for the Allies. In 1947, the United Nations adopted a Partition Plan for Palestine, proposing the establishment of separate Arab and Jewish states as well as an internationalized Jerusalem, amid rising tensions and the British desire to satisfy both Arab and Jewish factions. The Jewish Agency approved the proposal, but Arab leaders opposed it. The Jewish Agency proclaimed Israel's independence the following year, and the Arab–Israeli War of 1948 saw Israel take control of the majority of the former Mandate territory, while rival Arab states retained the West Bank and Gaza.

04. Public holidays

05. Types of leave

Paid time off

Full-time workers who work five days a week are entitled to 12 net holiday days within their first five years of employment (not counting the monthly rest day), and then as follows:6th year – 14 days of net holiday7th year – 15 days of net holiday8th year – 16 days of net holidayFor 8 years, you can get an extra holiday day each year, up to a total of 20 net vacation days after 12 years.Employees who work part-time have their leave entitlement determined based on the amount of real working days, all according to a clear accounting mechanism outlined in the applicable legislation.

Public holidays

In Israel, there are nine national holidays: Rosh Hashana, Sukkot, Yom Kippur, Passover (2 days), Shavuot, and Independence Day.

Sick days

Sick leave accrues at a cost of 1.5 days per month, up to a limit of 90 days.The person is not entitled to pay on the first day of maternity leave.The employee is entitled to 50% of their daily salary for the second and third days.The employee is entitled to 100% of their daily salary starting on the fourth day.The employee must present a doctor's medical certificate upon return.

Maternity leave

A woman who has worked with the company for less than a year is entitled to 15 weeks of maternity leave.A woman who has worked with the company for more than a year is entitled to 26 weeks of maternity leave (which includes 15 paid weeks and 11 unpaid weeks).

Paternity leave

The spouse or parent of a woman who has given birth is entitled to be absent beginning with the labour contractions and continuing for up to 24 hours after the delivery on account of accumulated sick leave.In addition, for the first five calendar days after the birth, the parent or wife is entitled to five days of paid paternity leave. The first three days will be taken from the employee's annual holiday days, and the remaining two days will be taken from the employee's sick leave.

Parental leave

After the birth of an infant, fathers will take days off, but these days will be deducted from their maternity leave.

Other leave

Bereavement Leave: If a member of the employee's immediate family dies, the employee is entitled to paid mourning days and up to 7 calendar days of paid leave, as is customary in his faith (including the weekly rest day). The employee's absence from work due to sorrow is entirely compensated and will not be excluded from the employee's annual vacation or sick leave allowance. The right to a grievance period is contingent on completing three months of work, according to the statute.

06. Employment termination

Termination process

In Israel, labor court rules on employee termination are stringent. Without prior warning, an employer is not permitted to terminate an employee. Employers must send an invitation letter to the employee inviting him to a hearing. The letter must include the reasons for considering terminating the employee's employment as well as information of the grievances. Employers are expected to give employees at least two days to prepare (weekends and holidays are not included). The employee has the right to represent himself or to have a lawyer or other representative appear on his or her behalf at the hearing.

During the hearing, the employer should limit his or her remarks to the arguments included in the invitation and must give the employee an opportunity to respond. Before reaching a final decision to terminate the employee, the employer must listen to and examine the employee's counterclaims. Additionally, the hearing must be documented, and a copy must be delivered to the employee upon request.

Once the employee has concluded his or her points, the hearing is concluded, and the person conducting the hearing informs the employee that the employer will now examine what the employee has said and will make a decision regarding the employee. Employers are not permitted to deliver any decision immediately following the conclusion of the hearing session or during the hearing session itself.

Employers may not quickly dismiss an employee following a hearing, but must allow sufficient time to ponder and examine the employee's argument as stated at the hearing.

A decision should be communicated to the employee (ideally in person) within a reasonable time of the hearing date (while taking in consideration the scope of the employees claims as were raised during the hearing). The decision should be in writing and should include a reference to the employee's arguments and the company's response to them at the hearing session.

If the termination process is not carried out correctly, a labor court may have the employee reinstated or compensated by the employer.

Notice period

If the employer decides to fire the employee after the hearing, the company must give the employee written notice with the date of dismissal. For each month of employment within the first six months, one day of notice is accrued. From the sixth month through the conclusion of the first year, 2.5 days of notice are accumulated in addition to the 6 days accumulated. Termination beyond the first year needs a 30-day notice.

Severance pay

The employer is required to make monthly contributions to the severance pay component equal to 8.33 percent of the employee's monthly salary payment. The accrued amount is to be released to the employee upon termination, even if the employee resigns without the occurrence of circumstances that would entitle them to severance pay. The amount of severance pay is determined by the employee's length of service. Severance is paid at the rate of one month's salary for each year worked. If the employer contributes 8.33 percent to severance pay on a monthly basis, he will avoid having to pay severance in the event of termination.

Probation period

There is no statutory probationary period in Israel.

07. Working hours


The standard workday lasts seven to nine hours, depending on the number of days worked per week, and 43 hours per week. The majority of employees work five days a week, but can work up to six. Evening work, including overtime, should not exceed 58 hours per week. Employees are entitled to a minimum 45-minute break per workday and a brief break to pray in the workplace. Additionally, employees receive a minimum of 48 hours of rest per week, which is typically taken on Friday and Saturday.


Overtime hours are limited to two per day and sixteen per week. Employees are not permitted to work more than 12 hours per day, inclusive of overtime. Overtime is compensated at a rate of 125 percent of regular pay for the first two hours and 150 percent thereafter.

Overtime expected to exceed two hours per day and work required on rest days require approval from the Ministry of Economy, Office of Work and Rest. The employer is required to report to the Office of Work and Rest on how the overtime and days of rest permits are used.

08. Minimum wage


In Israel, the monthly (gross) minimum wage is NIS 5,300, and not less than NIS 29.12 per hour.

09. Employee benefits


According to the National Insurance Law, all Israeli citizens are entitled to health care. There are four health care funds for basic treatment, and citizens can choose one of them. They can also increase their coverage by purchasing supplementary health insurance.

Some Israeli businesses contribute to "managers' insurance" policies or pension funds. This provides for a monthly allocation of 18.3 percent of the employee's salary into an insurance fund, paid in part by both the employer and the employee. A portion of the employer contribution is used to replace severance pay.

Some employers offer disability insurance to their employees in the amount of up to 2.5 percent of their annual salary.

Employees are entitled to reimbursement for travel expenses, with the rate changing on a regular basis (the current maximum rate per day is around ILS 20 or US $5). This is calculated based on the number of days worked during which the employee used public transportation to and from work.

Some employers provide a company car to their employees or charge a fee for the use and upkeep of the car. Collective bargaining agreements and the employee's employment contract govern specific terms.

Travel expenses may be included in the employee's salary with the employee's written permission.

10. Why Rivermate as your Employer of Record / PEO?

Establishing an entity in


to hire a team takes time, money, and effort. The labor law in


has strong worker employment protection, requiring great attention to details and a thorough awareness of local best practices. Rivermate makes expanding into


simple and effortless. We can assist you with hiring your preferred talent, managing HR and payroll, and ensuring compliance with local legislation without the hassle of establishing a foreign branch office or subsidiary. Our PEO and Global Employer of Record solutions in


give you peace of mind so you can focus on running your business.

Please contact us if you'd like to learn more about how Rivermate can help you hire employees in


via our Employer of Record / PEO solution.

Ready to get started? Our friendly staff is ready to assist you with all your questions, let's connect.