The complete guide to hiring in Israel.

1. Employment law fundamentals

Israeli employment law is highly employee-protective. The cornerstone legislation includes the Employment of Workers Act, the Wage Protection Law, the Hours of Work and Rest Law, the Annual Leave Law, the Severance Pay Law, and a robust framework of collective bargaining agreements (Heskem Kibutzi). Many Israeli workers are covered by an "extension order" (Tzav Harchava) that extends a sector-specific collective agreement to all employers, most relevantly the General Pension Extension Order which makes pension contributions mandatory.

Israel does not have an at-will employment doctrine. Termination requires cause, notice, a hearing (Shimua), and severance pay in most cases. Misclassification of employees as contractors is a high-risk area: Israeli courts apply substance-over-form tests and routinely reclassify long-term contractors as employees, exposing the company to back-pay, social contributions, and severance.

2. Hiring & employment contracts

Every Israeli employee must receive a written notice of employment terms (Hodaa al Tnaei Avoda) within 30 days of starting, per the Notification to an Employee Law. While Hebrew is not strictly required by law, contracts are typically bilingual (Hebrew + English) for foreign-owned employers, the Hebrew version controls in disputes before Israeli labour courts.

Mandatory clauses

• Identity of employer and employee
• Job title and main duties
• Direct supervisor
• Start date and duration (if fixed-term)
• Workplace and working hours
• Salary breakdown: base, bonuses, allowances, payday
• Social contributions (pension, severance, Keren Hishtalmut)
• Annual leave entitlement
• Notice period
• Applicable collective agreement, if any

Common optional clauses

• Confidentiality, enforceable, generally for 2–5 years post-employment.
• Non-compete, narrowly enforceable. Israeli courts will not enforce a non-compete that simply restricts career mobility; it must protect a legitimate business interest (trade secrets, customer lists) and be reasonable in scope, time, and geography. Plan for 6–12 months max with paid garden leave.
• IP assignment, assign all inventions to the employer, but note Israeli Patent Law §134 governs employee-inventions and the right to compensation for "service inventions" (a long-running litigation area).
• Section 14 arrangement, see pension & severance below. Critical for tax-efficient severance handling.

3. Working hours & overtime

Under the Hours of Work and Rest Law, the standard work week is 42 hours over 5 days (typically Sunday–Thursday). Daily limit is 8.6 hours under a 5-day week. The work day is bounded by mandatory rest: at least 36 consecutive hours of weekly rest, which for Jewish employees must include Saturday (Shabbat).

Overtime

Senior managers, employees in "position of trust" (Mishrat Emun), and employees whose work-pattern cannot be effectively supervised are often exempt from overtime, but this is a narrow, contested exemption. Most tech engineers do qualify for overtime in court, despite contracts often stating otherwise.

4. Leave entitlements

Annual paid vacation

The above is the statutory minimum. Israeli tech workers expect 22–24 days as a market standard. Unused vacation can be accrued and must be paid out on termination.

Sick leave

1.5 days accrue per month, up to 90 days total. Pay structure: day 1 unpaid, days 2–3 at 50%, day 4 onward at 100%. Most tech employers waive this and pay sick days from day 1 at 100%, it's market-standard.

Parental leave

• Maternity leave: 26 weeks total. The first 15 weeks are paid by Bituach Leumi (subject to caps); the remaining 11 are unpaid but job-protected.
• Paternity / partner leave: The non-birthing parent can split part of the maternity leave with the mother, or take 5 days of paid leave at birth + 3 sick days.
• Pregnancy protection: No firing of a pregnant employee without Ministry of Labour approval. Hard to obtain. Protection extends 60 days post-leave.

Military reserves (Miluim)

Reservist employees are paid by the employer during service; the employer then receives reimbursement from Bituach Leumi at a capped rate. Reservists cannot be fired during service or for 30 days after, and pay must be calculated using the higher of pre-service or post-service salary.

Convalescence (Dmei Havraa)

An annual payment after the first year of service. In 2026, the recommended rate in the private sector is about ₪432 per day × 5 days for year 1 (₪2,160), scaling up with tenure. Usually paid as a lump sum in July or with the September payroll.

5. Salary & minimum wage

The Israeli minimum wage as of 2026 is ₪6,247.67/month for a full-time position (or ₪34.32/hour). Updates typically arrive in April and again when triggered by average-wage indexing.

Market salary benchmarks (Israeli tech, 2026)

USD figures use ₪3.6 per $1 (typical 2026 range).

Equity grants (RSUs / ISOs / NSOs) are universal in Israeli tech. The 102 Capital Gains Track is the standard tax-efficient vehicle, most foreign employers extend their global stock plan with an Israeli sub-plan filed with the ITA. EORIL can guide on filing and trustee selection.

6. Benefits & equity

The Israeli benefits stack goes well beyond statutory minimums. To stay competitive on senior tech offers, plan for:

• Keren Hishtalmut (study fund): 7.5% employer + 2.5% employee. Tax-exempt up to ₪15,712/month base. The single most popular benefit in Israeli tech, many candidates will negotiate hard for it.
• Private health insurance: Top-up over national health (Bituach Briut Mamlachti). Typical premium ₪150–400/month/employee, often family-extendable.
• Meal cards (Cibus / Ten Bis): ~₪36–55 per working day, loaded on a card usable at restaurants and grocery delivery. Mostly tax-exempt up to the daily cap.
• Transportation allowance: Reimbursed at the public-transit equivalent or via leased vehicle.
• Vehicle lease (Rechev Hevra): Common for senior roles. Carries a taxable benefit ("Shovi Shimush") added to gross salary; the value depends on the car's tax group.
• Mobile phone allowance: Either reimbursed or company plan; small taxable benefit.
• Gift days (Yamei Mvatza): Typically 3–5 additional days per year on top of statutory leave.
• Wellness budget: Increasingly common, gym, therapy, ergonomic setup.
• Equity: 102 Capital Gains Track is standard; vesting typically 4 years with a 1-year cliff.

7. Bituach Leumi (National Insurance): 2026 rates

Israel's National Insurance Institute (Bituach Leumi) is the social-security system covering pensions, unemployment, maternity, work-injury, disability, and survivor benefits. Both employer and employee contribute, with a reduced-rate threshold and an insurable income cap.

In addition, employees pay Health Insurance contributions (no employer share): 3.23% up to ₪7,703 and 5.16% above.

8. Pension & severance (Pitzuim)

Per the General Pension Extension Order, every employee in Israel, after a 6-month waiting period for new employees, or 3 months if they already had a pension, must be enrolled in a pension fund. Contributions:

The severance 8.33% is accrued monthly into the pension fund. It approximates one month's salary per year of service, Israel's statutory severance entitlement.

Section 14 arrangement

If the employment contract includes a Section 14 Arrangement (Sidur 14), monthly severance contributions replace the statutory severance obligation. Once accrued and released, those funds belong to the employee regardless of how employment ends, including resignation. Without Section 14, the employer must top up severance on termination if the fund balance is below 1 month's salary × years of service. Section 14 is almost always preferable for employers; EORIL contracts include it by default.

Keren Hishtalmut

A tax-advantaged study fund. Not legally mandatory but expected in Israeli tech: 7.5% employer + 2.5% employee, tax-exempt on contributions up to ₪15,712/month base salary. Funds can be withdrawn tax-free after 6 years.

9. Income tax (2026 brackets)

Israel uses progressive monthly tax brackets, frozen for 2026 (the government proposed adjustments but they were not enacted at time of writing).

Credit points (Nekudot Zikui)

Every Israeli resident receives 2.25 credit points by default. Each point is worth ₪242/month (₪2,904/year) in 2026, reducing tax owed. Additional points apply to women (+0.5), new immigrants, single parents, parents of young children, and discharged soldiers. Credit points reduce tax owed, not taxable income.

What is taxable

Taxable income = gross salary − employee pension contribution − employee Keren Hishtalmut (up to cap). These deductions are "recognized expenses" (Nikuyim Mukarim).

10. Termination

Israeli termination is process-heavy. Skipping any step exposes the employer to wrongful-dismissal claims, additional severance, and compensation for emotional distress.

Notice period

Hearing (Shimua)

Before any decision to terminate, the employer must hold a pre-termination hearing: notify the employee in writing of the intended termination and the reasons, give a reasonable preparation period (typically 3–7 days), let them respond (with representation if requested), and document the outcome. Skipping the hearing, even when the cause is obvious, is grounds for a wrongful-dismissal award.

Severance pay (Pitzuim)

Statutory severance is 1 month's salary per year of service, pro-rated. If a Section 14 arrangement was in place, the accrued severance fund satisfies this obligation. Otherwise, the employer must top up the difference at termination.

Protected populations

• Pregnant employees and new parents (60 days post-leave)
• Active reservists and 30 days post-service
• Employees on sick leave (cannot be fired during the leave)
• Whistleblowers under the Protection of Workers (Disclosure of Offences) Law

11. Public holidays

Nine statutory paid public holidays per year (Jewish calendar; dates shift each year):

1. Rosh Hashanah (2 days)
2. Yom Kippur
3. Sukkot (1st day)
4. Simchat Torah
5. Pesach (1st day)
6. Pesach (7th day)
7. Yom Ha'atzmaut (Independence Day)
8. Shavuot

Many employers also give paid time off on Erev Chag (the eve of each holiday) and on the intermediate days of Sukkot and Pesach (Chol HaMoed). Non-Jewish employees can substitute their own religious holidays.

12. Visas & immigration

Hiring foreign nationals in Israel requires a B/1 work visa. The standard path is a Foreign Expert visa for specialized roles, requiring a minimum salary of 2× the Israeli average wage (~₪25,690/month in 2026). The process typically takes 8–12 weeks and involves the Population & Immigration Authority and the Ministry of Interior.

Key visa categories

• B/1 Foreign Expert: for specialized roles paying ≥ 2× average wage. Renewable up to 5 years and 3 months.
• B/1 Service Provider: short-term technical assistance.
• SUV (Innovation Visa): for entrepreneurs launching tech ventures in Israel.
• A/5 Temporary Resident: for spouses of Israeli citizens.
• Aliyah / Israeli citizenship: for Jewish foreign nationals, different track, handled by Misrad HaPnim and the Jewish Agency.

EORIL handles visa case evaluation, paperwork, and submission as part of our Visa & Immigration service. See pricing.

13. Hiring in Israel via an EOR

An Employer of Record (EOR) in Israel is a local company that legally employs your workers on your behalf. EORIL becomes the registered employer for tax, payroll, and compliance, Bituach Leumi, pension, severance, Keren Hishtalmut, vacation, sick leave, while your team manages the day-to-day work.

EOR vs setting up an Israeli entity

For most foreign companies hiring fewer than 15–20 employees in Israel, an EOR is significantly faster, cheaper, and lower-risk than incorporating. As your headcount grows, EORIL helps you transition from EOR to your own entity when it makes sense.