4. Types of leave

There is no information about the types of leave for this country.
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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 鈥 14 days of net holiday

7th year 鈥 15 days of net holiday

8th year 鈥 16 days of net holiday

For 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

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.

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.

5. Employment termination

There is no information about employment information for this country.

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.

Probation period

There is no statutory probationary period in Israel.

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.

6. Working hours

There is no information about the working hours for this country.

General working schedule

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

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.

7. Minimum wage

There is no information about the working hours for this country.

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

8. Employee benefits

There is no information about the working hours for this country.

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.

9. Taxes

There is no information about the working hours for this country.

Corporate tax

If a corporation's operations are handled and controlled inside the State of Israel or are formed under its laws, it is considered liable to Israeli taxes. Domestic corporations are taxed on their global revenue. A foreign corporation with an Israeli subsidiary is only taxed on income earned, accumulated, or received in Israel, while a non-resident business without a subsidiary is only taxed on income earned, accrued, or received in Israel.

A tax year is a calendar year, although companies may seek an alternative timetable. Businesses are required to submit yearly tax returns five months after the end of the fiscal year.

The corporation tax rate is 25% as of January 2016. The rate was reduced to 24 percent on January 1, 2017, with another decrease to 23 percent on January 1, 2018.

Individual income tax

Individuals are taxed at graded rates going up to 47 percent. Furthermore, a 3% surtax is levied on yearly taxable income in excess of 647,640 Israeli shekels (ILS), resulting in a maximum income tax rate of 50%. Non-residents pay the same taxes as Israeli citizens. The yearly tax brackets are an accumulation of the monthly brackets in effect throughout the year, which are adjusted for inflation on a regular basis.

The income tax rate is 10% for taxable income of less than NIS 75,480 per year.

The income tax rate is 14 percent for taxable income between NIS 75,720 and NIS 108,600 per year.

The income tax rate is 20% for taxable income between NIS 108,600 and NIS 174,360 per year.

The income tax rate is 31% for yearly taxable income between NIS 174,360 and NIS 242,400.

The income tax rate is 35% for taxable income between NIS 242,400 and NIS 504,360 per year.

The income tax rate is 47 percent for yearly earnings between NIS 504,360 and NIS 649,560.

The income tax rate is 50% for yearly incomes above NIS 649,560.

A minimum tax rate of 31% usually applies to certain types of passive income received by a taxpayer under the age of 60 that is not derived from business or employment.

The Income Tax Ordinance (ITO) establishes variable, fixed tax rates for most kinds of interest, dividends, and capital gains.

VAT, GST and sales tax

In Israel, value-added tax (VAT) is levied on the majority of products and services, including imported goods and services. As of October 1, 2015, the threshold has been reduced from 18% to 17%. Prior to that, it was increased to 18% from 17% on 2 June 2013, where it remained after being raised from 16% on 1 September 2012.

Certain goods, such as exported commodities and the supply of certain services to nonresidents, are zero-rated. For VAT purposes, the value of imported items includes customs duty, purchase tax, and other taxes.

Multinational corporations that offer Internet-based services to Israel, such as Google and Facebook, must pay the VAT tax rate.

In Israel, electronic VAT filing is required.

10. VISA and work permits

There is no information about the working hours for this country.

A professional moving to Israel for work or business should apply for the B/1 work visa (combined work permit and employment visa).

The B/1 work visa is a business visa that allows foreigners to work in Israel for a limited period of time. It is given to professionals, scientists, high-tech workers, and artists.

The following are the Israeli work visa criteria for this permit:

(1) permission from the Ministry of the Interior;

(2) visa interview;

(3) verified certificate of good conduct;

(4) certification of medical exam completed by a mission-approved clinic or hospital;

(5) biometrics (fingerprints and photos);

(6) completed Israeli work permit visa application form;

(7) two passport-size pictures; and

(8) a signed statement from the company declaring that a job of employment is being offered.

Customs will stamp the visa upon arrival in Israel, making it valid for 30 days. Extensions of up to one year are then allowed, allowing the foreigner to leave and enter Israel as many times as necessary.

Specialists working in academic or non-academic fields for more than three months will be issued the B/1 visa, which includes the following requirements:

(1) a higher salary requirement (at least double the average wage);

(2) a CV/resume;

(3) academic certificates (if not in English, diplomas must be officially translated into Hebrew and notarized by an Israeli notary);

(4) a copy of passport (valid for at least a year and three months from the beginning of the procedure); Power of attorney;

(5) application forms that have been completed and signed;

(6) three passport-sized photographs;

(7) marriage and birth certificates (original with apostille) for any accompanying family members;

(8) police clearance (given within the past six months); and

(9) medical clearance (issued within the previous three months).

These personnel may remain and work in Israel for a maximum of five years and three months from the commencement date. The visa typically takes two to three months to complete.

11. Employer Of Record service terms

There is no information about the working hours for this country.

Employment contracts

Identification of the employer and the employee and addresses of both

Duration of the contract (if for a fixed term)

Job description

The salary, payment date, method of payment, procedure for what happens with payment during the employee鈥檚 absence, list of deductions from the work salary to social security and income tax

Social benefits payments that will be made by the employer to the pension insurance (8.33% of monthly salary), provident fund payments

Dates the employment period starts and ends

Notice period

Probation period that does not exceed three months

Length of workdays, workweek, and daily/weekly rest

Vacation, holidays, maternity leave and sick days

The employer鈥檚 contribution to social security payments throughout employment

Minimum assignment length

There is no set length for assignments. This is usually indicated in the employment contract for fixed-term employments.

Payment currency

Israeli Shekel (NIS or ILS)

13.Opening a subsidiary in Israel

There is no information about the working hours for this country.

How to set up a subsidiary

The procedure of establishing your Israel subsidiary will be determined by a number of criteria, including where you incorporate and the kind of organization you choose. By shortening the time it takes to register a subsidiary with the Income Tax Department and the National Insurance Institute, Israel has attempted to make it simpler for international enterprises to establish a presence in the country. To encourage new businesses in the field, the Israeli government will also award research and development subsidies ranging from 20 to 50 percent of total authorized costs.

You should begin the process of establishing an Israel subsidiary by determining the best location for your business. Different areas and localities in Israel may have their own Israel subsidiary laws that affect how much you must pay and how long it takes. We also suggest investigating which entity would be appropriate for your company objectives, since each choice will have an impact on what you can and cannot accomplish. You have the option of forming a limited liability company (LLC), a public corporation, or a foreign firm.

The following are the stages to forming your firm as an LLC:

1. Obtaining an attorney's certification of business registration paperwork

2. Filing documentation with the Ministry of Justice's registrar of corporations

3. Registering for taxes at the Income Tax Department of the Ministry of Finance

4. Registering for VAT at the Customs and VAT Department of the Ministry of Finance

5. Joining the National Insurance Institute

Subsidiary laws

After you've established your business, it's critical to understand the set of Israeli subsidiary laws that apply to LLCs. In Israel, for example, subsidiary rules require LLCs to have a distinct name from the parent company and to have that name authorized by the Registrar of Companies. In addition, you must designate one or more directors. Your directors do not have to be Israeli nationals, but you must have at least one representative who is an Israeli resident.

All Israeli subsidiaries are required to have a registered office in the country. This is also where you should keep all of your necessary documentation. Because subsidiaries are considered resident corporations, you are eligible for tax breaks and incentives that are also offered to local businesses.

13. Why choose Rivermate as your Employer of Record / PEO in Israel

Establishing an entity in

Israel

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

Israel

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

Israel

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

Israel

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

Israel

via our Employer of Record / PEO聽solution.

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