Israel, Arabic Isrāʾīl, officially the State of Israel or Hebrew Medinat Yisraʾel, is a country in the Middle East, located at the eastern end of the Mediterranean Sea. Jerusalem is the seat of government and the proclaimed capital, although the latter status has not received wide international recognition. Jews constitute about three-fourths of the total population of Israel. Almost all the rest are Palestinian Arabs, of whom most (roughly three-fourths) are Muslim; the remaining Arabs are Christians and Druze.
*Please note that the official currency is the currency of remuneration when employed through WorkMotion in Israel.
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Fast-track your talent onboarding while ensuring 100% compliance with local regulations. using an Employer of Record in Israel
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Easily onboard your remote talent in Israel through our Employer of Record (EOR) solution. Our subsidiaries and network partners make this process fast and 100% compliant.
Israel, Arabic Isrāʾīl, officially the State of Israel or Hebrew Medinat Yisraʾel, is a country in the Middle East, located at the eastern end of the Mediterranean Sea. Jerusalem is the seat of government and the proclaimed capital, although the latter status has not received wide international recognition. Jews constitute about three-fourths of the total population of Israel. Almost all the rest are Palestinian Arabs, of whom most (roughly three-fourths) are Muslim; the remaining Arabs are Christians and Druze.
*Please note that the official currency is the currency of remuneration when employed through WorkMotion in Israel.
The national holidays mentioned below are valid for the year 2026 and are critical for hiring in Israel planning:
The national holidays mentioned below are valid for the year 2026.
| March 2-3 | Feast of Purim | |
| April 2 | Pesach (Passover) 1st day | Movable - The 15th day of the Hebrew month of Nisan, the first month of Aviv, or spring. |
| April 8 | Passover (Day 7) | Movable - The fourth day of the month of Iyar. |
| April 20 | Israel Independence Day | Movable - The fifth day of Iyar in the Hebrew calendar |
| May 22 - 23 | Feast of Shavout (Pentecost) | Movable - The 50th day, or seven weeks, after Passover. |
| September 12 - 13 | Rosh Hashanah (New Year) 1st and 2nd Day | Movable - The first and second days of the seventh month of the Jewish religious year. |
| September 21 | Yom Kippur (Atonement Day) | Movable - The 10th day of Tishrei, the seventh month. |
| September 26 | Succot 1st day | Movable - The 15th day of the month of Tishri. |
| October 4 | Simhat Torah (Shemini Atzeret) | Movable - The 22nd day of the month of Tishri. |
The approximate time for sharing the contract with an employee in Israel is 7 business days assuming no special requests or changes to our standard employment contract. Any such requests or changes would need to undergo internal and external review, directly leading to a time delay.
NOTE: This number is subject to change and is only an estimation of the Contract Sharing Time. The estimated Contract Sharing Time begins from the moment that WorkMotion has received all required information from both the client and the employee.
The National Insurance Institute provides services and information on pregnancy and childbirth, disabilities, injuries and illness, children, the elderly, and termination of employment.
Rates of National Insurance contributions and health insurance contributions for resident employees:
| Category | From the Wage Division up to 60% of
the Average Wage – (reduced rate) – ILS 7,522. |
| National Insurance Contributions* | 3.55% |
| Health Insurance Premiums | Not paid |
| Pension Insurance** | 12.5% |
| Disability Insurance | 2.5% |
*From the salary portion above 60% of the average salary to the maximum income that is subject to insurance premiums (Full Rate), a contribution of 7.6% is paid by the employer to a maximum limit of ILS 49,030.
**6.5% goes towards benefits and 6% towards compensation.
A working day should not exceed eight working hours. A working week should not exceed 42 working hours. The working day should not exceed seven working hours in night work on the day preceding the weekly rest and on the day preceding a festival on which an employee is not employed, whether by law or by agreement or custom.
The total overtime of the employee during the whole week must not exceed 16 hours, and in any case, an employee may not be employed for more than 12 hours a day (including overtime). As a rule, it is forbidden to make an employee work overtime without a permit from the Minister of Labor. An employer should pay an employee who is employed for over-time hours a wage not less than 1¼ times the ordinary wage for the first two over-time hours in any one day, and not less than 1½ times the ordinary wage for all subsequent over-time hours.
Labor legislation does not regulate trial periods. Most collective agreements have trial periods ranging from six months to three years. The most common length of trial periods in collective agreements is six-24 months.
Employers have the power to extend trial periods under certain circumstances. However, even dismissals within the trial period must be fair and just and on a basis of reasonable discretion by the employer. This interpretation is an outcome of the Labor Courts’ decisions.
The termination notice periods depend on length of employment service as follows:
| Employment Service | Notice for Monthly Salaried Workers | Notice for Daily or Hourly Workers |
| Less than 6 months | 1 day per month of service | 1 day per month of service |
| 6 to 12 months | 6 days plus 2.5 days per month of service beyond 6 months | 1 day per month of service |
| More than 1 year | 1 month |
|
A working day should not exceed eight working hours. A working week should not exceed 42 working hours. The working day should not exceed seven working hours in night work on the day preceding the weekly rest and on the day preceding a festival on which an employee is not employed, whether by law or by agreement or custom.
The total overtime of the employee during the whole week must not exceed 16 hours, and in any case, an employee may not be employed for more than 12 hours a day (including overtime). As a rule, it is forbidden to make an employee work overtime without a permit from the Minister of Labor. An employer should pay an employee who is employed for over-time hours a wage not less than 1¼ times the ordinary wage for the first two over-time hours in any one day, and not less than 1½ times the ordinary wage for all subsequent over-time hours.
Labor legislation does not regulate trial periods. Most collective agreements have trial periods ranging from six months to three years. The most common length of trial periods in collective agreements is six-24 months.
Employers have the power to extend trial periods under certain circumstances. However, even dismissals within the trial period must be fair and just and on a basis of reasonable discretion by the employer. This interpretation is an outcome of the Labor Courts’ decisions.
The termination notice periods depend on length of employment service as follows:
| Employment Service | Notice for Monthly Salaried Workers | Notice for Daily or Hourly Workers |
| Less than 6 months | 1 day per month of service | 1 day per month of service |
| 6 to 12 months | 6 days plus 2.5 days per month of service beyond 6 months | 1 day per month of service |
| More than 1 year | 1 month |
|
The National Insurance Institute provides services and information on pregnancy and childbirth, disabilities, injuries and illness, children, the elderly, and termination of employment.
Rates of National Insurance contributions and health insurance contributions for resident employees:
| Category | From the Wage Division up to 60% of
the Average Wage – (reduced rate) – ILS 7,522. |
| National Insurance Contributions* | 3.55% |
| Health Insurance Premiums | Not paid |
| Pension Insurance** | 12.5% |
| Disability Insurance | 2.5% |
*From the salary portion above 60% of the average salary to the maximum income that is subject to insurance premiums (Full Rate), a contribution of 7.6% is paid by the employer to a maximum limit of ILS 49,030.
**6.5% goes towards benefits and 6% towards compensation.
WorkMotion provides employer of record (EOR) services in Israel through its established partner network, giving your company a compliant employment structure without the months-long process of registering a local entity.
WorkMotion generates an employment contract aligned with Israeli labor law requirements.
For foreign nationals, a written contract in a language the employee understands is required by law.
WorkMotion handles this automatically, covering the mandatory terms:
The contract reflects the statutory framework governing Israeli employment, including the Wage Protection Law, the Annual Leave Law, and the Advance Notice for Dismissal and Resignation Law.
Before the first payroll run, the employing entity must be registered with the Israel Tax Authority (ITA) to obtain a tax withholding file (tik nikuyim) and with the National Insurance Institute (Bituach Leumi) to open an employer file for social security contributions.
WorkMotion’s partner network manages these registrations on your behalf, so your new hire can start without your company needing to navigate Israeli government filings directly.
Israel’s payroll structure is more complex than most European markets.
Employer contributions include:
WorkMotion configures all of these contribution streams correctly from day one, including income tax withholding across Israel’s seven progressive brackets.
Israeli law requires mandatory pension auto-enrollment for all employees.
If an employee does not select a pension fund within 60 days, the employer must enroll them in a government-designated default fund.
WorkMotion handles this enrollment process, including the required Appendix V (Nispach Vav) documentation where applicable.
Statutory benefits are tracked and administered in line with Israeli law and any applicable extension orders, including:
Israeli payroll runs monthly.
National Insurance contributions and income tax withholdings must be remitted to the relevant authorities by the 15th of the following month.
WorkMotion processes payroll in New Israeli Shekel (ILS), calculates gross-to-net salary accurately across all contribution tiers, and ensures filings are submitted on time.
Late or incorrect remittances trigger penalties from the National Insurance Institute. WorkMotion’s payroll process is designed to eliminate that exposure.
Israeli employment law changes frequently.
In 2025 and 2026 alone, employers have had to navigate updates to:
WorkMotion monitors these changes and applies updates to payroll calculations and employment terms as they take effect, so your HR team doesn’t need to track Israeli regulatory developments independently.
For most companies hiring one to ten employees in Israel, the comparison between EOR and entity setup is straightforward, but the numbers are worth seeing clearly.
| EOR via WorkMotion | Setting Up an Israel Entity | |
| Setup cost | No entity setup cost | Typically tens of thousands of USD in legal, accounting, and registration fees |
| Time to first hire | Days from signed contract | Typically 3–6 months for full registration with the Registrar of Companies, ITA, and Bituach Leumi |
| Ongoing legal exposure | Compliance managed by WorkMotion’s partner network | Your company carries full liability for labor law, payroll accuracy, and regulatory changes |
| Ongoing admin burden | Single monthly invoice; payroll, contributions, and filings handled | Requires a local accountant, legal counsel, and dedicated HR resources |
| Exit flexibility | Wind down employment without entity dissolution | Closing an Israeli entity requires formal deregistration with multiple authorities |
EOR is the right fit when you’re hiring a small number of employees in Israel, testing the market before committing to a permanent structure, or need to move quickly on a key hire.
Entity setup becomes worth evaluating once you have a large, established team in Israel and the ongoing EOR fee outweighs the cost of maintaining a local subsidiary.
Use WorkMotion’s Employment Cost Calculator to model the full cost of hiring in Israel before making that decision.
Israel’s employment framework is detailed, actively enforced, and changes more frequently than most foreign HR teams expect. These are the compliance gaps that catch companies off guard.
Israeli law requires employers to enroll employees in a pension fund. If the employee doesn’t choose one within 60 days, the employer must assign them to a government-designated default fund.
Missing this deadline triggers fines of up to NIS 35,000 per violation from the National Insurance Institute, plus potential employee lawsuits for retroactive contributions with interest.
WorkMotion manages pension enrollment from the first payroll cycle, including the required documentation and default fund assignment where needed.
Many foreign employers treat severance as a one-time exit cost.
In Israel, severance is funded continuously: employers contribute 8.33% of gross salary every month into a dedicated severance fund (pitzuim) under Section 14 of the Severance Pay Law.
Under Section 14 arrangements, which apply to most Israeli employees, the accumulated fund is released to the employee upon any termination, including voluntary resignation.
Employers who don’t set this up correctly from day one face retroactive liability. WorkMotion builds severance contributions into payroll from the start.
Israel does not recognize at-will employment.
Every termination requires a valid, documented reason, and in most cases, a formal pre-termination hearing (shimua) where the employee has the right to respond to the grounds for dismissal.
Skipping this step can invalidate an otherwise justified termination, even if the performance or conduct issues are well-documented.
WorkMotion’s team guides clients through the correct termination process to avoid labor court exposure.
Bituach Leumi contributions are calculated across two income tiers, with different rates applying below and above a threshold that is updated annually based on the average national wage.
For 2026, the average wage benchmark is ILS 13,769, which affects the contribution ceiling. A temporary National Insurance surcharge introduced in 2025 to cover wartime expenses also remains in effect.
Employers who apply flat-rate calculations, or who don’t update their payroll systems when thresholds change, end up under-remitting, which triggers penalties and retroactive payment demands.
WorkMotion applies the correct tiered rates on every payroll cycle.
Israel’s military reserve system means employees may be called up for reserve duty at any time.
Employers are required to continue paying wages during reserve duty periods, then claim reimbursement from the National Insurance Institute.
The following have all been subject to temporary legislative changes in recent years:
WorkMotion tracks these obligations and handles the administrative process so your HR team doesn’t need to manage it case by case.
While a written employment contract is not strictly required for Israeli nationals, employers are legally obligated to provide every employee with a written employment notice covering:
For foreign national hires, a full written contract in a language the employee understands is mandatory.
WorkMotion generates the correct documentation for each hire, covering both the statutory notice requirement and the additional obligations that apply to non-Israeli employees.
Israel has one of the highest concentrations of tech talent per capita globally, with a startup ecosystem of over 6,000 active companies and deep expertise in cybersecurity, AI, and enterprise software.
German, Dutch, and UK-headquartered SaaS companies regularly hire Israeli engineers, product managers, and R&D leads when they can’t find the right profile domestically.
WorkMotion’s EOR service in Israel lets these companies bring on senior tech hires in days, without registering a local entity or navigating Israeli payroll law independently.
US-based technology and fintech companies often use Israel as a strategic hiring base, both for local market access and for the country’s strong English-language professional workforce.
Rather than setting up an Israeli subsidiary before they know whether the market will work, these companies use WorkMotion’s employer of record service in Israel to hire their first one or two employees quickly, test the model, and scale from there.
Not every hire requires a full market entry strategy.
A 50-person B2B software company in Amsterdam that finds the right sales director in Tel Aviv doesn’t need a six-month entity setup process. They need a compliant employment contract, payroll in ILS, and pension enrollment handled correctly from day one.
WorkMotion’s EOR model is built for exactly this use case: a single strategic hire in a country where the company has no existing infrastructure.
Israel’s employment framework is detailed, actively enforced, and changes frequently, from tiered National Insurance contributions and mandatory pension auto-enrollment to the formal termination hearing process and ongoing reservist obligations.
Getting any of these wrong creates real legal and financial exposure for your company.
WorkMotion’s employer of record service in Israel, delivered through our established partner network, handles every layer of that compliance:
Your team manages the work. We manage the employment.
If you have a candidate in Israel and need to move quickly, book a demo to see exactly how WorkMotion gets your new hire onboarded: compliantly, without a local entity, and without months of setup.
WorkMotion provides employer of record services in Israel through an established partner network rather than a wholly owned subsidiary. This structure still gives your company a fully compliant employment arrangement, covering contracts, payroll in New Israeli Shekel (ILS), National Insurance contributions, and pension enrollment, without you needing to register a local entity. The partner network model is standard for Israel EOR and does not reduce the compliance coverage your employees receive.
Annual leave entitlement in Israel starts at 12 days per year for employees in their first five years of service and increases incrementally with seniority, reaching 20 days after ten years. Separately, Israeli law requires employers to pay recreation pay (dmei havra’a) once per year: the rate for private sector employees is currently ILS 418 per day, with most employees entitled to between 5 and 10 days depending on tenure. This is a statutory obligation, not a discretionary benefit, and must be factored into your total employment cost projections from day one.
Notice periods in Israel are set by the Advance Notice for Dismissal and Resignation Law and are tied to the employee’s length of service. During the first year, notice accrues at one day per month of employment; from the second year onward, employees are entitled to one month’s notice. Employers can pay out the notice period in lieu of requiring the employee to work it, but the formal pre-termination hearing (shimua) process must still be completed. Skipping it can expose your company to labor court claims even when the underlying grounds for dismissal are well-documented.
Under Section 14 of Israel’s Severance Pay Law, employers contribute 8.33% of gross monthly salary into a dedicated severance fund (pitzuim) on an ongoing basis. When a Section 14 arrangement is in place, which applies to the vast majority of Israeli employment contracts, the accumulated fund is released directly to the employee upon any termination, including voluntary resignation, and the employer has no additional severance liability. The arrangement must be formally documented in the employment contract; employers who fail to set it up correctly from the start can face retroactive severance claims calculated on the employee’s final salary, which is typically higher than the contributions that would have been made monthly.
Beyond gross salary, Israeli employers contribute across several mandatory streams. National Insurance (Bituach Leumi) employer contributions are tiered: 4.51% on the portion of monthly salary up to approximately ILS 7,522, and 7.6% on salary between that threshold and the contribution ceiling of approximately ILS 50,695. Employers also contribute a minimum of 6.5% to a mandatory pension fund and 8.33% to the severance fund under Section 14. Taken together, total employer on-costs in Israel typically add 20–25% to gross salary, depending on compensation level, and this figure can shift when annual wage benchmarks are updated. WorkMotion’s Employment Cost Calculator lets you model the full cost of a specific hire in Israel before you commit.
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