Payroll and Benefits Guide - Israel

Israel
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Currency

Israeli Shekels
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Capital

Jerusalem
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Employer Taxes

18.38% – 22.43%
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Date Format

dd/mm/yyyy
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Fiscal Year

1 Jan – 31 Dec

Fun Facts

At more than 200 museums, Israel is the nation with the highest proportion of museums per person in the world.

It has a reputation for developing cutting-edge agricultural technologies, such as drip irrigation systems that use less water.

The Dead Sea, which is the lowest spot on Earth, has a salt content so high that people can float on its surface with ease.

The cherry tomato originated from Israel in the ’70s.

Because of its high startup density, Israel is known as the “Startup Nation.”

Hebrew is one of the oldest languages in the world.

Israel

Contributions

Employee Payroll Tax

Contribution TypeRate
Social Security0.40% – 7.00%
Health Insurance3.10% – 5.00%
Pension Fund6.00%

Employer Payroll Tax

Contribution TypeRate
Severance Pay8.33%
Social Security3.55% – 7.60%
Pension Fund6.50%

Payroll

Payroll Cycle

In Israel, the payroll cycle is usually monthly. Salaries should be paid to all employees at least once every month.

13th Salary

There are no legal requirements regarding 13 month salaries in Israel. However, there is a bonus called recreation payment awarded annually after one year of service.

Work Hours and Week

Depending on how many days are worked each week, the standard workweek in Israel is 42 hours from Sunday to Thursday with 7-9 hours per day. Employees should get at least 48 hours of rest every week.

It’s against the law to make an employee work more than 12 hours per day or 16 overtime hours per week.

Overtime

There are no laws regarding overtime and is decided by employment contracts.

The overtime work must be agreed upon by the employer and employee and calculated as follows:

  • For the first two hours, it is paid at 125.00% of the usual rate.
  • For the second hour onwards, it is paid at 150.00% of the usual rate.
  • Some businesses provide reimbursement for overtime pay on a monthly basis.

Israel

Leave

Paid Time Off

For the first five years of employment, employees are given a minimum of 12 working days of yearly leave. After that, they are entitled to 14 days, and from the sixth year onward, one extra day per year of service, up to a maximum of 20 days which is paid at the usual salary rate.

In accordance with the law, an employee who works a 6-day week is entitled to six days off for every seven days of leave taken (because Saturday is counted as one of the days taken off at jobs where individuals work six days a week).

Public Holidays

There are 9 public holidays in Israel.

Sick Days

It accumulates up to 90 days total. at a rate of 1.5 days per month worked. The following payment schedule varies according to the length of leave:

  • No payment on the first day
  • For the second and third day, 50.00% of pay is given
  • For the fourth day and up, 100% of pay is given

If on leave from work to receive care or undergo routine examinations for that condition, an employee who has malignant disease (cancer) or a condition that necessitates regular dialysis treatments, or who has recovered from such a disease, is eligible for full sick pay (100%) from the first day of absence. (for a maximum of ninety days).

To be eligible, the employee must provide medical certification to prove the necessity of such leave.

Maternity Leave

If the expecting mother has worked for a year or more, they are given 26 weeks of leave, 15 of which are paid by social security while the 11 are not.

If they have not worked for a year, they are only given 11 days.

Both leaves are paid by social security.

In the event of multiple births or complicated deliveries, an employee’s three weeks of paid maternity leave may be extended. She may take unpaid maternity leave for up to 60 days following the birth if she tragically loses her child after giving birth.

Paternity Leave

The first five days after the birth of a child are considered paid paternity leave for spouses; the first three of these days will be paid on account of their annual paid leave, and the next two days on account of their accumulated sick leave.

Other Leave(s)

In the case of a family death, an employee should be given up to seven days of paid leave.

Military service is compulsory in the country. Therefore, employees on reserve duty should be compensated by their employer.

Termination

Termination Process

The usual termination procedure in Israel requires employers to exercise their right to terminate an employee’s employment in accordance with applicable legislation, any formal employment contracts, workplace conventions, and collective bargaining agreements, and to do so in good faith and for justifiable grounds.

A hearing process presided by the worker’s manager is a part of the job termination process. This means that the worker must get a hearing invitation from the employer outlining the specific reasons why the employment is being terminated. The employee must be given a sincere opportunity to speak during the hearing.

After the hearing is over, the employer needs to take the time to seriously and in good faith weigh the worker’s reasons. The employee should receive written notice of the employer’s choice. It is advised to provide the employee a letter of termination in person about 48 hours before the hearing.

The usual termination procedure in Israel requires employers to exercise their right to terminate an employee’s employment in accordance with applicable legislation, any formal employment contracts, workplace conventions, and collective bargaining agreements, and to do so in good faith and for justifiable grounds.

Employers have the option of paying employees in lieu of notice, which is computed as an amount equivalent to what the employee would have made had they remained to work throughout the notice period.

Notice Period

In Israel, the notice time is determined by the employee’s length of service.

One day’s notice is needed for every month that a person has worked for the company if they have 0 to 6 months of service. An employee accrues 2.5 days of notice for every month of service after the sixth month up through the first year of employment. A 30-day notice is required after one year of service.

Severance Pay

Employees who are terminated after one year of service are eligible to severance pay. One month’s income multiplied by the total number of years of employment (including part-year employment) equals the severance payment.

Probation Period

Probation Period

The typical probationary period depends on the employment contract.

Immigration

A professional moving to Israel for work or business should use the B/1 work visa.

Foreigners who have been authorized to enter Israel temporarily for the purpose of employment are given the B/1 work visa, which is a business visa. It is given to experts, scientists, tech professionals, and creatives.

The visa will be stamped at customs upon arrival in Israel, giving it a 30-day validity. After that, extensions are permitted for up to a year and permit the foreigner to visit and exit Israel as often as necessary.

The foreigner could only stay up to five years and three months using this visa.

VAT

The usual VAT rate is 17.00% in Israel.