Employer of Record in Israel

General Information

• Currency: Israeli Shekel (ILS)
• Employer Taxes: 21.78%
• Payroll Frequency: Monthly
• Employee Costs: 21.10%
• Capital: Jerusalem
• Fiscal Year: 1 January – 31 December

Main Aspects of the Labour Code

Minimum Wage

General: The monthly minimum wage in Israel is 5,880 ILS with effect from 1^st April 2024. It  is set to increase next year to 6,000 ILS.

Payroll

Payroll Cycle: In Israel, the payroll cycle is generally monthly. Employees are required to receive their salaries at least once a month, with payments to be made no later than the 9th of the following month.

13th Salary

The 13th-month salary payment is not legally required in Israel.

Working Hours

General: In Israel, the standard working hours are 42 hours per week, typically divided into 7 to 9 hours per day, depending on the number of workdays per week. Employees are entitled to at least 48 hours of rest each week, usually taken on Friday and Saturday, which means the standard workweek runs from Sunday to Thursday.

It is illegal to require an employee to work more than 12 hours a day or exceed 16 overtime hours in a week.

Overtime: All hours worked beyond the standard weekly hours are classified as overtime and must be regulated by the employment contract or collective agreements. Overtime must be mutually agreed upon by both the employee and employer before it begins.

The workweek in Israel cannot exceed 42 hours, spread over 5 or 6 days, with no single day exceeding 9 hours of work.

Overtime pay is calculated daily as follows:

• For the first two overtime hours, the rate is 125% of the regular wage.
• For any additional overtime hours worked on the weekly day of rest, the rate is 150% of the regular wage.

Some companies may offer a fixed monthly amount to cover overtime pay.

Leave

Annual Leave (Vacation):

Employees working a 5-day week are entitled to a minimum of 12 working days of annual leave during their first five years of employment. This entitlement increases to 17 working days from the sixth to the ninth year and then rises to a maximum of 23 working days thereafter.

Annual leave payments are made at the employee’s regular salary rate.

Public Holidays

Public holidays that fall on the weekend are usually lost.

Holidays are based on religious association and days can be swapped out to align with one’s religious observance.

Sick Days

Sick leave accrues at a rate of 1.5 days per month, with a maximum total of 90 days. Sick leave payment is structured as follows:

• First Day: No pay.
• Second and Third Days: 50% of regular pay.
• From the Fourth Day Onwards: 100% of regular pay.

Employees must present a medical certificate upon returning to work.

Under the Sick Pay Law amendment, employees with malignant diseases (such as cancer) or conditions requiring regular dialysis, or those recovering from such conditions, are entitled to full sick pay (100%) from the first day of absence, up to a maximum of 90 days, provided they are on leave for treatment or periodic examinations. A medical certificate confirming the necessity of treatment or examination is required.

Maternity Leave

Female employees in Israel are entitled to 26 weeks of maternity leave after completing one year of service with their employer. This leave can be taken up to seven weeks before the expected due date, with the remainder taken after the birth. The social security system provides compensation for maternity leave, typically covering 15 weeks of fully paid leave and 11 weeks of unpaid leave, provided the employee meets eligibility requirements.

Employees with less than one year of service are entitled to 15 weeks of maternity leave.

In cases of multiple or complicated births, maternity leave can be extended by three weeks. If a mother experiences the loss of her child after birth, she is entitled to take unpaid leave for up to 60 days following the birth.

From the 7th week of maternity leave, the mother may choose to return to work and transfer the remaining leave period to her spouse.

Paternity Leave

When a partner goes into labor, an employee is entitled to up to 5 days of paternity leave, which can be taken up to 24 hours after the birth. The first three days of this leave will be paid from the employee’s accrued annual vacation days, while the remaining two days will be deducted from their accrued sick leave.

Parental Leave

Fathers can take days off after the birth of a child, but these days will be subtracted from the maternity leave.

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