Guide to Hiring In Israel

Key takeaways

• Reasons to hire in Israel: Israel has a high population of multilingual, skilled workers. The country is known for its expertise in technology, finance, manufacturing, and natural gas.
• Financial responsibilities of employers: All employers are required to contribute to Israel's social security and healthcare system, and businesses incorporated in Israel will also need to pay taxes.
• Legal requirements for hiring in Israel: Employers need to follow laws about minimum wages, maximum workweek times, weekly rest days, annual vacation, and medical leave.
• How to hire in Israel: Companies that hire in Israel will either need to be legally registered as an Israeli business, work with an employer of record, or hire independent contractors. The right choice depends on your business needs.

If you're considering hiring in Israel, you're making a smart choice. Israel ranks high among OECD countries for its impressive education rates. The workforce is multilingual, and the most common languages are Hebrew, English, Russian, Arabic, and French. Israel's tech sector is a national strategic pillar, accounting for roughly 17% to 20% of the nation's GDP. It's a hiring destination for cybersecurity, AI, fintech, and deep-tech roles.

Before expanding into Israel, you'll need to understand contracts, taxes, wages, benefits, and other employment laws. Our guide will tell you everything you need to know about hiring in Israel.

What to know before hiring in Israel

If you're expanding your business into Israel for the first time, there are important legal requirements to be aware of. Israel's norms and laws influence hiring practices in the country and many aspects of the employer-employee relationship, including compensation and benefits.

G-P Gia™, our AI-powered global HR agent, can answer your toughest compliance questions about Israel and over 50 other countries. Reduce your reliance on outside counsel and cut the time and cost of compliance by up to 95% with Gia.

Here are four essential things to know about hiring in Israel.

1. Contracts and termination

Written and verbal employment contracts are legally binding in Israel. Written contracts are strongly recommended as they provide clear evidence of the agreed terms and are easier to enforce in disputes. Israeli law requires employers to give employees a written notice of employment terms within 30 days of starting work even if a full contract isn't signed yet.

Employment contracts are governed by Israeli labor laws about compensation, benefits, working hours, vacation, sick leave, and termination conditions.

Israel doesn't recognize at-will employment. Termination generally requires advance written notice or, where applicable, payment in lieu of notice. The notice period depends on factors such as an employee's tenure and pay basis. Employers have to conduct a pretermination hearing to give the employee a chance to respond to the reasons for dismissal.

Employees dismissed after one year of continuous employment get severance pay, which is calculated as one month's salary per year of service. However, there are nuances. For example, resignation under certain circumstances can entitle an employee to severance.

2. Payroll and taxes

Employers and employees contribute to Israel's national insurance (social security) system. This covers unemployment, maternity leave, disability, old-age pensions, and more. National insurance contributions are withheld from employees' paychecks, and employers remit both their own and the employee's share. The contribution rates are tiered:

• For employees earning up to 60% of the average wage, a reduced rate of 8.78% (4.27% employee and 4.51% employer) applies.
• For earnings above 60% of the average wage, the full rate of 19.77% (12.17% employee and 7.6% employer) applies.
• Employees pay a separate national health insurance contribution of 3.23% to 5.17%, but employers don't contribute to the health insurance fund.

The standard corporate income tax rate in Israel is 23%. Technology companies and certain enterprises can be eligible for reduced rates under specific incentive programs. Dividend tax rates range from 25% to 33%, depending on the recipient's status and the source of the dividend.

3. Wages and working hours

As of April 1, 2026, the minimum wage in Israel is ILS 6,443.85 per month.

The standard workweek is 42 hours, usually spread over five or six days. The first two hours of overtime are paid at 125%. Subsequent hours are paid at 150%. Employees in hazardous or on-call positions receive extra compensation or bonuses.

Jewish employees get Shabbat (Saturday) as a rest day. Non-Jewish employees can choose their weekly rest day (Friday, Saturday, or Sunday) according to their faith and agreement with the employer.

4. Leave and benefits

Employees in Israel get paid leave on the country's nine national holidays. Many workplaces have reduced hours or close during the intermediate days of Passover and Sukkot, but this isn't a statutory requirement.

All employees get paid annual vacation. The statutory minimum is 12–14 days per year, depending on the workweek, for employees with up to five years of service. This increases with seniority. Vacation accrues from the start of employment. Full entitlement is granted after one year. Employees have to take at least seven consecutive days of vacation per year, unless otherwise agreed.

Employees get sick leave with a doctor's note. The first day is unpaid, the second and third days are paid at 50%, and from the fourth day onward, sick leave is paid at 100% of the regular wage. Many employers pay from the first day as a benefit. National insurance covers sick pay only in certain cases such as long-term illness.

Standard paid maternity leave is around eight to 15 weeks depending on how long the worker has been employed. Maternity leave is paid by the National Insurance Institute (NII). Fathers get up to five consecutive days of leave immediately following the birth of their child. Three days are taken from their annual leave, and the other two are deducted from their sick leave.

Parents get up to eight days per year to care for a sick child, and single parents get up to 12 days of leave. In cases of a serious illness, this leave can last up to 60 days. Up to six days per year can be used to care for a parent or parent-in-law. Employees get seven days of paid leave following the death of a close family member.

All Israeli residents have universal health coverage through the National Insurance Institute. Pension contributions are mandatory for both employers and employees. The minimum rates are set by law, and most employees are covered by a pension plan from the start of employment.

Hiring models for global companies in Israel

The first step to hiring people in Israel is to choose your hiring model. There are several ways you can find talented workers, and the best option will depend on your unique business needs.

• Direct employer registration: If you plan on a long-term presence in the country, you might want to consider opening a business in Israel. You'll need to register as an independent legal entity with the Israeli Corporations Authority and follow all relevant local laws for taxes and business operations.
• Employer of record: If you'd like the benefits of hiring in Israel without having to figure out all the details yourself, try an employer of record (EOR). An EOR is a legal entity that operates in Israel and hires employees for you. They handle the details of local compliance and taxes while you manage day-to-day worker interactions.
• Subsidiary or branch: Much like opening a separate business in Israel, opening a subsidiary or branch gives you the ability to hire workers directly in Israel. It's useful for when you want to maintain a presence in Israel while still operating in other locations.
• Independent contractors: For a flexible and fast hiring experience, consider working with contractors. You hire them to perform a set task for a set amount of time, and you don't have as many obligations as an employer. Just keep in mind that, if you misclassify a regular employee as a contractor, you risk fines and legal issues.

Top hiring hubs in Israel

Some cities in Israel are known for particular industries. Knowing what each one has to offer allows you to focus your hiring efforts in the right place and fill roles faster.

The top talent hubs in Israel are:

• Tel Aviv is the country's main business and technology center. It's home to a large startup ecosystem, multinational tech companies, financial institutions, and creative industries.
• Herzliya is known for its high-tech companies. The city is a popular location for multinational R&D centers.
• Jerusalem is Israel's capital, with a strong presence in government, education, healthcare, and growing technology and biotech sectors.
• Haifa is a major port city and industrial hub, with activity in technology, shipping, chemicals, and research, including the Technion – Israel Institute of Technology.
• Petah Tikva is a center for healthcare, insurance, and high-tech. It has many corporate headquarters and business parks.

Key industries in Israel

The main industries in Israel include:

• Software and IT services: Israel is a hub for software development, with strengths in cybersecurity, fintech, and AI.
• Aerospace and defense contracting: Israel's defense sector produces military and civil aerospace technology that spins off into commercial high-tech applications.
• Diamond industry: Centered in Tel Aviv, Israel is one of the world's largest centers for cutting and polishing diamonds. This is a big source of foreign exchange earnings.
• Financial services: Israel's domestic banking, insurance, and investment sectors are flourishing due to adopting fintech innovations from its high-tech sector.
• Natural gas: The discovery of large offshore natural gas fields has made Israel a regional natural gas producer and exporter.

Cost of hiring an employee in Israel

Whether you're hiring one employee or an entire team in Israel, expenses are inevitable. Budget for the following:

• Entity setup (unless you partner with an employer of record)
• Job advertisements
• Labor costs for applicant review
• Payroll
• Taxes
• Salaries
• Benefits
• Bonuses
• Allowances
• Insurance
• Travel

According to G-P Verified Sources from Gia, the employer burden rate in Israel, which includes costs triggered on top of salaries, is approximately 19–21%.

What does a company need to hire employees in Israel?

Make sure you cover these essentials before expanding your team in Israel:

• Register your company with the Israeli registrar of companies.
• Get a company number.
• Apply for a taxpayer identification number.
• Register for VAT (if applicable).
• Register for payroll tax and withholding.
• Register with the National Insurance Institute.
• Set up pension fund arrangements.
• Open a local bank account.
• Register each new employee with Bituach Leumi.
• Set up payroll systems.

Setting up an Israel subsidiary can take weeks or months. Use G-P EOR to hire full-time employees in Israel without setting up your own entity. Build your team in Israel at a lower cost and with peace of mind that you're doing so compliantly.

Steps to hiring in Israel

The hiring process in Israel is similar to the one you're likely familiar with in your own country. The hiring process follows five basic steps: advertising the job, evaluating applications, interviewing candidates, sending job offers, and onboarding new employees.

1. Advertise job vacancies

Create a detailed job description and define the role based on responsibilities and qualifications. Determine compensation and benefits in line with Israeli labor law. Under the Equal Rights for Persons with Disabilities Law, employers must ensure that job ads and recruitment processes are accessible to people with disabilities. Some popular places to advertise job vacancies in Israel include LinkedIn, Glassdoor, and JobMonster.

2. Evaluate applications

Collect applications and review resumes. Screen candidates based on their qualifications, experience, and fit for the role.

3. Interview candidates

Interview candidates who made it onto your shortlist. You can do these interviews in-person or virtually. Use structured, nondiscriminatory interview questions. Gia can help you create questions that follow anti-discrimination laws in Israel, so you can find the best fit for the role while complying with local regulations.

4. Making job offers

Contact your chosen candidate to offer them a position with your company. Prepare a compliant employment contract that includes all legally required terms such as salary, benefits, working hours, and leave. Both parties sign the contract before the employee starts work.

You must provide a written notice of non-selection for candidates who reached the final stages of the recruitment process but weren't hired.

5. Onboard new employees

Now, you can onboard new employees. Start by registering your new hire with the NII. Next, set up payroll and pension fund contributions.

If you're working with an EOR like G-P™, you won't have to worry about the administrative burden of onboarding. We'll streamline the process, so you can focus on training your new hire and integrating them into your company culture.

Hiring contractors in Israel

Working with independent contractors in Israel can be a cost-effective way to test the market and build a presence without the commitment of full-time employees.

Contractors based in Israel understand local consumer behavior, rules, and business practices. They'll be ready to start working quickly with their own equipment and established work processes.

Hiring contractors allows you to easily adjust your workforce based on your business needs, without the complexities and costs of employment.

Before you enter an agreement with an independent contractor in Israel, consider the following:

1. Employees vs. independent contractors

It's important to understand the difference between employees and independent contractors. In Israel, employers hire employees to do work and, in return, pay them a regular salary and benefits. Independent contractors provide services. Unlike employees, contractors set their schedules, use their own equipment, and work on specific projects rather than having an ongoing role.

2. Penalties for misclassification

Classifying someone as a contractor when they're not can lead to severe penalties. If misclassification occurs, you'll have to:

• Back pay all employment-related benefits.
• Back pay all social security contributions.
• Face fines for violations of labor laws, including failure to provide written employment terms, noncompliance with minimum wage, and other statutory requirements.

3. How to pay contractors

G-P Contractor™ takes away the messy, time-consuming process of hiring and paying international contractors. You can create and issue contracts and pay contractors with just a few clicks, all while ensuring a compliant process.

Hire employees and contractors in Israel with G-P

Our Global Employment Platform and its AI-powered products, EOR, Contractor, and Gia, support companies as they build and manage global teams.

G-P is the recognized leader in global employment with more than a decade of experience; the largest team of HR, legal, and compliance experts; and a global proprietary knowledge base.

Make your expansion to Israel easier with G-P. Contact us or book a demo today.

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