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A guide to employing and growing your team in Israel
Fast and compliant market entry. Hire top local talent without the need for a legal entity
Israel’s labor market is characterized by a mix of statutory laws and Expansion Orders (Tzavei Harchava) that apply specific benefits to entire sectors. Employment is heavily regulated by the Ministry of Labor and the National Insurance Institute (Bituach Leumi). Digital reporting for employers has become mandatory in 2026 to ensure real-time tax compliance. As of April 1, 2026, the national minimum wage is ?6,443.85 per month (approximately ?35.40 per hour), reflecting a 3.3% adjustment based on the average wage.
Employer Contributions
National Insurance (Bituach Leumi): 3.55% (Lower tier up to ?7,522) / 7.6% (Upper tier)
Pension (Mandatory): 6.5% (Calculated on the pensionable salary)
Severance Pay (Pitzuim): 6.0% or 8.33%
Study Fund (Keren Hishtalmut): 7.5%
Total Employer Contribution: ~16.05% – 22.43%
Employee Payroll Taxes
National & Health Insurance: 3.5% (Lower tier) / 12% (Upper tier)
Pension Contribution: 6.0%
Income Tax: Variable (Deducted via Mas Hachnasa)
Total Employee Contribution: ~9.5% – 18%
Employee Income Tax Rates
Israel uses a monthly progressive tax system. In 2026, tax brackets were expanded to provide relief for middle-income earners. Every resident is also entitled to Credit Points (Nekudot Zikuy), where each point is worth 242/month in tax reductions.
Up to 7,010: 10%
7,011 – 10,060: 14%
10,061 – 19,000: 20%
19,001 – 25,100: 31%
25,101 – 54,300: 35%
54,301 – 67,630: 47%
Above 67,630: 50% (Includes a 3% Surtax)
Statutory Leave
Employees are entitled to a minimum of 14 to 28 calendar days of annual leave based on tenure (minimum 12 working days for a 5-day week in years 1-5). Israel observes approximately 9 to 10 Jewish public holidays annually, which are paid if they do not fall on a Saturday. Additionally, the work week is capped at 42 hours, with any excess treated as overtime.
Pregnancy and Maternity Leave
Mothers are entitled to 26 weeks of maternity leave for a first child, provided they have worked for the same employer for at least 12 months. Of this, 15 weeks are fully paid by the National Insurance Institute, and the remaining 11 weeks are unpaid. The postnatal period provides a “Nursing Hour” (Sha’at Hore), allowing parents to work one hour less per day for 4 months after returning.
Paternity Leave
Fathers are entitled to 5 days of leave following birth: the first 3 days are deducted from the father’s annual leave/unpaid, and the last 2 days are deducted from sick leave (paid at 50%). Additionally, fathers can share the last 7 weeks of the paid maternity leave with the mother if she returns to work.
Work-Related Injury Leave
Sick Leave: 1.5 days accrued per month (up to 90 days total). Payment: Day 1 (Unpaid), Day 2 & 3 (50%), Day 4+ (100%).
Recuperation Pay (Dmei Havra’a): A mandatory annual payment after one year of service, currently ~?418 per day (tenure-based).
Bereavement: 7 days for the death of an immediate relative
Termination Process
Dismissal requires a Hearing Process (Shimu’a), where the employee is given a chance to argue against the termination. Permanent employees are entitled to Severance Pay of one month’s salary per year of service. Most companies use Clause 14, where the employer deposits 8.33% monthly into a fund; this money belongs to the employee even if they resign.
Notice Period
Notice is based on tenure:
First 6 months: 1 day per month served.
7-12 months: 6 days + 2.5 days for every month after the 6th.
After 1 year: One full month’s notice.
Probation Period
There is no statutory limit on probation in Israel, but the market standard is 3 to 6 months. Notice periods and the right to a “Hearing” still apply even during probation, though the hearing can be shorter and less formal than for long-term employees.