Israel has a population of more than 9 million people with a highly educated workforce and leading industries including technology and research and development. There are some considerations before starting a business in Israel, including company formation and registration, depending on the industry.

Payroll and Tax Considerations:

  • Written and oral contracts are binding. An employer is required to provide a form listing the terms within 30 days of the employee start date
  • The standard work week is 42 hours per week, with certain jobs exempt such as police officers, civil servants, seafarers and fisherman, aircrew members and employees in certain management positions
  • All employees over the age of 18 must receive the minimum wage
  • The government determines the minimum wage each April
  • Minimum wage depends on the days of work. Employees working 5 days a week receive ILS 212 per week and those who work 6 days receive ILS 244 per week
  • Overtime is only allowed in case of emergency, and is limited to 4 hours per day and 100 hours per year. Overtime is paid at 125% of regular pay for the first 2 hours, then 150% for the remainder
  • Severance is paid in certain situations, generally 1 month pay for each year of service
  • The tax rate is graduated, beginning at 10% for those making less than ILS 75,960 per year to 50% for those making over ILS 651,600

HR and Statutory Requirements

  • Employees are entitled to annual leave each calendar year. The leave is 16 days for each of the first 5 years of service and goes up to 28 days depending on years of service
  • Employees earn 1.5 days of sick leave for each month worked
  • Parents are entitled to use up to 8 sick days a year to care for a sick child
  • All female employees receive 26 weeks of maternity leave, 7 weeks can be used before childbirth. Employees can choose to shorten the maternity leave, but it cannot be less than 15 weeks. In case of complications, maternity leave can be extended by 4 weeks
  • Fathers have the right to 7 days of paternity leave and can be extended to 2 weeks if they have multiple births
  • The legal retirement age in Israel is 67 for men and 62 for women
  • Employees who have paid at least 60 months of insurance within the 10 months preceding retirement are eligible to receive a pension. The basic pension for people under 80 years old is ILS 1,558 per month

Holidays in Israel

  • April 16 – Passover (Day 1)
  • April 22 – Passover (Day 7)
  • May 5 – Yom Ha’atzmaut
  • June 5 – Shavuot
  • September 26 – Rosh Hashana
  • September 27 – Rosh Hashana (Day 2)
  • October 5 – Yom Kippur
  • October 10 – Sukkot (Day 1)
  • October 17 – Shemini Atzeret / Simchat Torah

If you are expanding your business in Israel or need to simplify operations, Blue Marble can help. Our cloud-based payroll platform with customized reporting gives you real-time access to your employee payroll in 150+ countries. We have a global consulting services team to help set up business entities, create custom employment agreements, identify statutory benefits and more. We provide a dedicated US-based service team and direct access to in-country experts when questions come up. To learn more about simplifying payroll in Israel, click here