Table of Contents


Table of Contents


Israeli New Shekel (ILS)

Payroll Frequency


Employer Taxes

20.88% to 24.33%

About Israel

A densely populated, and relatively small, country on the eastern shore of the Mediterranean Sea, Israel is the only country in the world whose population is majority Jewish. It is a liberal democracy with a parliamentary system, that has unfortunately been locked in conflict with the Palestinians and its Arab neighbors over ownership of land considered holy by many Jews, Christians, and Muslims since Israel was created in 1948.

Israel is located in the Levant area of the Fertile Crescent region with a varied climate. The coastal areas, including its capital of Tel Aviv, have typically Mediterranean climates with cool winters and hot summers, while the areas around Negev are deserts with hot, dry climates.

The population of Israel is a little less than 10 million, where about three-quarters of the people classify themselves as Jewish, about 20% as Arabs, and the remainder as non-Arab Christians. Hebrew is currently Israel’s only official language, although Arabic used to also be considered official and is spoken widely amongst the Arab population.

Employment Relationship

• Permanent Employment

Israel's labor law defines a permanent employee as an employee who receives a salary and works a permanent job, the duration of which is not limited at the outset of the employment relationship. They can be hired with a probationary period of up to 12 months. Permanent employment can be terminated by either party by giving an advance notice to the other party. Permanent employees receive social security benefits, unemployment insurance, annual leave, sick leave, maternity leave, and paternity leave benefits.

• Fixed-Term or Specific-Purpose Contracts

Israel's labor law allows for fixed-term employment contracts. The law requires the terms of such agreements to be clearly presented in the contract. Employees on a fixed-term contract are called "provisional employees" and can be hired for a specific job. Israel's labor law does not restrict the maximum length, amount of renewals, or the uses of fixed-term contracts. 

• Temporary Employment Contratcs

In Israel, temporary employees are defined as persons who are employed to do a job for up to 12 months. If the employee continues working after the expiration of the temporary work contract, the employee becomes permanent. Temporary employees are entitled to 2.5 days of sick leave, a severance payment, and annual leave if they are employed for more than three months. Employers can utilize the services of licensed employment agencies or contractors to hire temporary employees. An employee of the human resource contractor can be employed with the user organization for nine months and extended for a maximum of 15 months. Such employees are entitled to the same working conditions as the employees of the user organization. 

Probationary Period

Per Israel's labor law, a permanent employee's initial 12 months of service are considered a probationary period. If employees do not perform satisfactorily, they can be dismissed with the following notice periods during their probationary period: From one month to three months of work – three days Three months to six months of work – one week Six months to 12 months of work – two weeks.

Working Hours

Per Israel's Working Hours and Rest Act, a standard workweek is 42 hours. However, the normal workweek regulations do not apply to the following employees: Police officers of the Israel Police, as well as anyone in the prison service Civil servants whose job requires their availability to work even outside regular working hours Seafarers and fishermen Aircrew members Employees in management roles or positions that require a special degree of personal trust. A working day shall not exceed 8 hours (for those with a 6-day workweek), and night work is limited to 7 hours. Hours worked in excess of these limits are considered overtime. The maximum number of hours worked in a day cannot exceed 12 hours, including overtime. The law entitles employees to a weekly rest period of at least 36 continuous hours, including the Sabbath Day for Jewish employees.  The working hours for employees under 18 years of age are 40 hours per week and not more than eight hours per day. Such employees cannot work on their weekly rest days. Finally, persons under 18 years of age are entitled to a break of at least 14 hours between 2 consecutive working days. 

Holidays / PTO

• Statutory Holidays

The following days are public holidays in Israel: Holiday Date in 2020 Notes Purim March 10 Holiday only in Tel Aviv (date subject to change every year) Shushan Purim March 11 Holiday only in Jerusalem (date subject to change every year) March Equinox  March 20   Aliyah Day April 4   Passover Day April 8 to April 15 Jewish Holiday (April 8 and April 15 are public holidays); intermediate days are optional leave. Yom HaAtzmaut April 29   Lag BaOmer May 12 Date subject to change every year Jerusalem Day May 22 Date subject to change every year Shavuot May 29 National holiday Jabotinsky Day July 9   Hebrew New Year September 19-20 A 2-day national holiday (dates subject to change every year) Yom Kippur September 27-28 Dates subject to change every year Sukkot (Feast of Tabernacles) October 3 National holiday (date subject to change every year) Simchat Torah October 10 National holiday (date subject to change every year) Hanukkah December 11 to December 18 Optional holidays —- Employees in Israel can be required to work on public holidays due to the nature of their job. They are entitled to an additional payment of 50% of their daily wages.

• Paid Annual Leave

Employees are entitled to fully paid annual leave every calendar year from January to December as follows: Up to the first 4 years of employment – 14 days For the fifth year of employment – 16 days  For the sixth year – 18 days For the seventh year – 21 days For the eighth year and onwards – an additional day for each working year up to 28 days. During annual leave, only 1 weekly rest day is included for every 7 days of vacation.  Annual leave should be taken continuously. It can be divided with an employer's permission, but at least one of the leave periods should be 7 days long. An employer should be notified at least 14 days before the commencement of leave. With the employer's consent, an employee may carry over at least 7 days of annual leave in a year and use it in the following 2 years. Annual leave cannot be replaced by compensation. Annual leave allowance is equal to the regular salary and is paid in advance by the employer. If an employee does not avail themselves of annual leave, they lose the right to a leave allowance. 

• Sick Leave

Employees are entitled to 1.5 days of sick leave per month worked. Employees can accrue sick leave year on year up to a total of 90 days in a year. Employees cannot be dismissed during sick leave. The employee must generally present a doctor's authorization (te'udat machala) to receive compensation. Employers are not required to compensate the employee for the first day of sick leave. Compensation for the second and third days is required and must be paid at a rate of 50% of the employee's salary. The following days must be paid at a rate of 100% of the employee's salary. Individual employment contracts or collective agreements with the employer may provide for better conditions regarding sick leave. In cases of prolonged illness, the Israeli National Insurance Institute will pay compensation after accumulated sick leave is exhausted, adjusted according to the claimant's age.  Parents are entitled to use up to eight sick days per year to care for a sick child under the age of 18 on the condition that their spouse does not take sick leave for the same purpose. A single parent with a child under the age of 18 may take up to 12 sick days a year to care for a sick child.

• Maternity Leave

Israeli labor law grants all female employees 26 weeks of maternity leave, 7 weeks of which can be used before the delivery date. They must have worked for at least 12 months at the same workplace to be eligible for maternity leave. An employee can choose to shorten the leave, but it can not be less than 15 weeks. In case of complications during birth or pregnancy, maternity leave can be extended by 4 weeks. For multiple births, maternity leave is extended by 3 weeks for each additional child after the first. If, after birth, the child has to be hospitalized for more than 2 weeks, maternity leave can be extended by a maximum of 20 weeks.  Employees become eligible to receive a maternity allowance from the government after they have worked for 6 months for the same employer. The National Insurance Institute of Israel pays maternity benefit for a maximum of 15 weeks. The maternity allowance is paid in 1 payment to the entitled mother's bank account. The maternity allowance is determined according to the mother's income (based on which the mother has paid insurance contributions) and has a ceiling of ILS 1,655 (Israeli shekels) per day.  The daily allowance to which the mother is entitled is the higher of the following amount: The mother's income in the 3 full months preceding cessation of work, divided by 90 The mother's income in the 6 full months preceding cessation of work, divided by 180.

• Paternity Leave

Israeli law grants male employees the right to 7 days of paternity leave, during which they receive an allowance paid by the National Insurance Institute, immediately after their child's birth. This leave can be extended to 2 weeks in case of multiple births. Employees are entitled to paternity allowance if they fulfill the following conditions:  The mother is entitled to payment of the maternity allowance for either 15 weeks or 8 weeks. They have paid insurance contributions for 10 out of 14 months, or 15 out of 22 months that preceded the day of work termination. Paternity allowance is paid in a single installment, either individually or to a joint bank account shared with the employee's spouse. The allowance rate is calculated according to average income (conditional on the employee's payment of insurance contributions) in the last 3 or 6 months. The maximum paternity allowance amount is currently ILS 1,655 (Israeli shekels) per day.

Termination of Employment

• Notice Period

Israeli law requires employers to provide advance notice of dismissal to employees. The notice must be in writing and indicate the date of entry into the workforce. Wage workers are entitled to the following notice periods: During the 1st year of service – 1 day for each month of work During the 2nd year of service – 14 days, plus 1 day for every 2 months of work in the 2nd year During the 3rd year of service – 21 days, plus 1 day for every 2 months of work in the 3rd year After 3 years of service – 1 month. Salaried workers are entitled to the following notice periods: During the 1st 6 months of service – 1 day per month of service During months 7 through 12 – 6 days plus 2.5 days per month of service beyond 6 months After 1 year – 1 month. Employees on probation are also entitled to notice ranging from 3 days to 2 weeks. The notice period can be waived, in part or entirely, by paying compensation to the employee in place of notice. If employers fail to give advance notice to a dismissed employee, they will be liable to pay compensation equal to the regular salary of the employee for the duration of the notice period. 

• Severance Benefits

According to Israel's labor law, the following employees are entitled to receive severance pay: Employees dismissed after working continuously for 1 year (entitled to severance pay equal to 1 month's pay for each year of service) Seasonal employees who have been dismissed after working for 2 seasons in 2 consecutive years Employees who have been dismissed due to bankruptcy or the death of their employer If an employee resigns due to poor health, the resignation is considered a dismissal, and the employee becomes eligible to receive severance pay. In the case of an employee's death, their dependents (spouse and children) become eligible to receive severance pay as if the employee were dismissed. The following employees are also considered to have been "dismissed," and therefore, are also eligible for severance pay equaling 1 month's pay for each year of service if they have been working continuously for 1 year: Female employees who resign within 9 months of delivery to care for their children Employees who leave employment within 9 months of the adoption of a child under 13 years of age Employees who resign within 9 months of receiving a foster child under 10 years of age Employees on a fixed-term contract that the employer does not renew Employees who resign to take up national, civil, or military service or serve in the Israel Police or the Israel Prison Service Female employees who resign to stay at a shelter for battered women that is approved by welfare services.