G-P’s Employer of Record (EOR) model allows your company to start hiring talent in minutes via our global entity infrastructure. Unlike a Professional Employer Organization (PEO), G-P allows your company to expand your global footprint without the hassle of entity setup and management.
Our global employment products, including G-P Meridian Prime™ and G-P Meridian Core™, are backed by the largest team of HR and legal experts in the industry. We handle the growing complexities of compliant global expansion — so you can focus on opportunities ahead.
As a global EOR expert, we manage payroll, employment contract best practices, statutory and market norm benefits, employee expenses, as well as severance and termination. You’ll have peace of mind knowing you have a team of dedicated employment experts assisting with every hire. G-P allows you to harness the talent of the brightest people in 180+ countries around the world, quickly and easily.
Hiring in Israel
When negotiating terms of an employment contract and offer letter with an employee in Israel, it may be useful to keep the following standard benefits in mind.
Employment contracts in Israel
Israeli labor law does not require a written employment contract; however, it is strongly recommended to put one in place. The contract should be in the local language, and spell out the terms of the employee’s compensation, benefits, and termination requirements. An offer letter and employment contract in Israel should always state the salary and any compensation amounts in Israeli shekel rather than another currency.
Most employment agreements include clauses regarding confidentiality, assignment of intellectual property, and noncompetition. It should be noted however that restrictive provisions concerning future employment of an employee are valid only if such limitations are aimed at protecting the employer’s legitimate interests, including trade secrets.
It is highly likely that in most cases, restrictive terms will not be held enforceable. Nevertheless, and in light of the deterring value of non-compete provisions, it is recommended to include such clauses in the employment agreement.
Working hours in Israel
The standard workweek in Israel is Sunday through Thursday, although non-Jewish people may choose Friday, Saturday, or Sunday as their main weekly holiday. Locals may not work on Saturday unless their employer is open on Saturdays with a special permit.
The workweek may not exceed 42 hours, allocated over 5 or 6 days of work, provided that each workday does not exceed 9 hours.
Employees are entitled to overtime, pay which is calculated as follows:
- For the first 2 overtime hours, the remuneration is 125% of the regular wage
- For any additional hour of work as well as for work during the weekly rest day, remuneration shall amount to 150% of the regular wage.
- Some companies pay a global monthly amount as compensation for overtime pay
Holidays in Israel
Israel celebrates the following official public holidays for which employees are given the day off, including:
- Passover
- Memorial Day (Half Day)
- Independence Day
- Pentecost
- Rosh Hashanah (New Year)
- Yom Kippur (Day of Atonement)
- Sukkot (Feast of Tabernacles)
- Shmini Atzeret/Simchat Torah
Independence Day is observed by all citizens, while others are Jewish religious holidays that non-Jewish people do not observe.
Vacation days in Israel
Employees in Israel have the right to paid annual leave, the length of which depends on the employee’s period of service. The minimal period required by law is between 10 and 23 days per year.
Israel sick leave
Employees have the right to receive sick leave at a rate of 1.5 days for each month of employment with the right to accumulate up to 90 days.
- Employees are not entitled to any payment for the 1st day of sickness
- For the 2nd and 3rd days, employees are entitled to 50% of the salary
- From the 4th day onward, employees are entitled to 100% of the salary
- It should be noted that it is common for some industries to pay full salary for sick leave from day 1.
All workers who are employed for more than 1 year with the same employer are entitled to an annual payment for convalescence. The minimal period is between 5 and 10 days per year, and the current rate per day is around ILS 330. This pay can be included in the employee’s salary, subject to the employee’s written consent.
Maternity and paternity leave in Israel
Pregnant women are entitled to 7 weeks of maternity leave at full pay provided that they were employed by the company for the previous 6 to 10 months. The employee is also entitled to the same position upon returning.
- Employees who have worked more than 10 months receive 14 weeks of paid leave. Half of that time can be taken prior to the birth of the child.
Fathers receive an 8-day paternity leave following the birth of their child. This includes 3 paid vacation days and 5 days of sick leave paid by the employer.
In general, it is forbidden to dismiss a pregnant employee who worked for over 6 months (even if the employer was not aware of the pregnancy on the day of notice). Dismissal is also prohibited throughout the employee’s pregnancy, as well as during the maternity leave and a period of 60 days after that. The dismissal of a pregnant employee can only be done with a permit.
Health insurance in Israel
All Israeli citizens are entitled to healthcare as stipulated under the National Insurance Law. There is only 1 national insurance institute in Israel to which the payments are funded to. These payments are compulsory taxes for social welfare.
Israel supplementary benefits
Some companies in Israel contribute to “managers’ insurance” policies or to pension funds. This provides for a monthly allocation into an insurance fund of 18.3% of the employee’s salary, paid in part by both the employer and employee. A portion of the employers’ contribution is in lieu of severance pay.
Some employers provide disability insurance of up to 2.5% of the employee’s salary.
Employees are entitled to be compensated for their travel expenses, the rate of which is updated periodically. This is calculated on the basis of the days actually worked during which the employee used public transportation to and from the workplace.
- Some employers provide a company car or pay a separate fee for the use and maintenance of the employee’s car. Specific terms are subject to Collective Bargaining Agreements and to the employee’s employment contract.
- Travel expenses can be included in the employee’s salary, subject to the employee’s written consent.
Generally, we recommend budgeting 20% for benefits on top of the gross salary to allocate the total employer’s cost including benefits in Israel.
Termination/severance in Israel
Employment may be terminated by resignation, dismissal, retirement, death, or the expiration of a limited period of employment. Dismissal entitles the employee to severance pay, however, there are certain circumstances in which the dismissed employee is not entitled to severance, i.e. with cause.
The minimal statutory period of prior notice for dismissal and for resignation of employees whose salaries are paid on a monthly basis is:
- 1 day for employees who have worked up to 6 months.
- 6 days, plus an additional 2.5 days for each full month worked, starting from the 7th month, for employees who have worked between 6 months and 1 year.
- 30 days after completion of the first year of employment.
- Unless specifically indicated otherwise, the employer has the right to terminate employment without the delivery of a notice, and provide a severance payment in lieu, if required.
Paying taxes in Israel
Employees pay progressive income tax in Israel starting at 10% and increasing to a maximum of 50%. Both employers and employees contribute a portion of salary to National Insurance and Health Insurance.
Why G-P?
At G-P, we help companies unlock the power of the everywhere workforce through our industry-leading global employment platform. Let us handle the complex and costly tasks involved in finding, hiring, onboarding, and paying your team members, anywhere in the world, with the speed and guaranteed global compliance your business needs.
Contact us today to learn more.
