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Your Guide to Hiring Employees and

Contractors in Israel

Capital city



Israeli new shekel (₪, ILS)


Hebrew, Arabic, English

Ease of doing business

Very easy

Payroll frequency


Employer taxes

20.88% to 24.33%


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.

These details are subject to change by the respective government and regulatory authorities in each country.