Your Guide to Hiring Employees and
Contractors in Israel
Capital city
Jerusalem
Currency
Israeli new shekel (₪, ILS)
Language(s)
Hebrew, Arabic, English
Ease of doing business
Very easy
Payroll frequency
Monthly
Employer taxes
20.88% to 24.33%
Payroll
Monthly Payroll
All employee payments will be made in equal monthly installments on or before the last working day of each calendar month.
Minimum Wage Requirements:
The minimum wage is ILS 5,300 per month.
Individual Income Tax:
The individual income tax ranges from 10% to 50%. Income tax is calculated according to progressive rates. Multiple additional factors may impact overall rates such as the marital status and the number of children.
The tax rates change annually. These are the rates for 2021.
Up to ILS 75,480
Tax rate: 10%
Between ILS 75,481- 108,360
Tax rate: 14%
Between ILS 108,361- 173,880
Tax rate: 20%
Between ILS 173,881- 241,680
Tax rate: 31%
Between ILS 241,681- 502,920
Tax rate: 35%
Between ILS 502,921- 647,640
Tax rate: 47%
Above ILS 647,641
Tax rate: 50%
Employer Cost:
The employer cost is generally estimated at 29.93% of the employee salary.
- Severance: 8.33%
- Pension Fund: 6.50%
- Bituah Leumi: 7.60%
- Seniority Pay: ILS 156
- Keren Hishtalmut: 7.50%
Working Hours
Work Week
Sunday to Thursday
Overtime Pay & Maximum Hours
Overtime payment is mandatory for hourly-wage workers. Employees can work a maximum of 12 hours of overtime per day, 16 hours of overtime per week.
Employment Termination
In Israel, employers are obligated to follow a fair and transparent process before terminating an employee. Israel requires employers to invite the employee to a hearing with a document in writing that presents the reason(s) why they would like to proceed with a termination
Notice period:
During the first six months, one day of notice is accumulated for each month of employment. In addition to the six days accumulated, 2.5 days of notice are accumulated for each month of employment from the sixth month to the end of the first year. Following the first year, termination requires a 30-day notice.
Probation periods:
Probationary periods are informally allowed in Israel, usually lasting a few months. While employees are to be treated as full employees with all accorded benefits during the probationary period, employers may dismiss employees during the probationary period more easily than they can dismiss more tenured employees.