If you’re expanding your business into Israel for the first time, there are important legal requirements to be aware of. These norms and laws influence hiring practices in Israel and many aspects of the employer-employee relationship, including compensation and benefits.
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Here are four things to know about hiring in Israel.
1. Contracts and termination in Israel
Written and verbal employment contracts are legally binding in Israel. Written contracts are strongly recommended as they provide clear evidence of the agreed terms and are easier to enforce in disputes. Israeli law requires employers to give employees a written notice of employment terms within 30 days of starting work, even if a full contract isn’t signed yet.
Employment contracts have to include terms governed by Israeli labor law, such as compensation, benefits, working hours, vacation, sick leave, and termination conditions.
Israel doesn’t recognize at-will employment. Termination needs advance written notice (ranging from one to four weeks) or payment in lieu of notice. Employers have to conduct a pretermination hearing to give the employee a chance to respond to the reasons for dismissal.
Employees dismissed after one year of continuous employment get severance pay, calculated as one month’s salary per year of service. There are exceptions and nuances (e.g., resignation under certain circumstances can get an employee severance).
2. Payroll and taxes in Israel
Employers and employees contribute to Israel’s national insurance (social security) system. This covers unemployment, maternity leave, disability, old-age pensions, and more. National insurance contributions are withheld from employees’ paychecks, and employers remit both their own and the employee’s share. The contribution rates are tiered:
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For employees earning up to 60% of the average wage, a reduced rate applies: approximately 7.05% (3.5% employee and 3.55% employer).
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For earnings above 60% of the average wage, the full rate applies: approximately 19.6% (12% employee and 7.6% employer).
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Employees pay a separate national health insurance contribution: full rate is 5% and reduced rate is 3.1%. Employers don’t contribute to the health insurance fund on behalf of employees.
The standard corporate income tax rate in Israel is 23% for most businesses. Technology companies and certain enterprises can be eligible for reduced rates under specific incentive programs. Dividend tax rates range from 25–33%, depending on the recipient’s status and the source of the dividend.
3. Wages and working hours in Israel
As of 2025, the minimum wage in Israel is ILS 5,300 per month.
The standard workweek is 43 hours (five days at nine hours per day), but some sectors or agreements call for a 45-hour week (six days at eight hours per day). The first two hours of overtime are paid at 125%. Subsequent hours are paid at 150%. Employees in hazardous or on-call positions receive extra compensation or bonuses.
Jewish employees get Shabbat (Saturday) as a rest day. Non-Jewish employees can choose their weekly rest day (Friday, Saturday, or Sunday), according to their faith and agreement with the employer.
4. Leave and benefits in Israel
Employees in Israel get paid leave on the country’s nine national holidays. Many workplaces have reduced hours or close during the intermediate days of Passover and Sukkot, but this isn’t a statutory requirement.
All employees get paid annual vacation. The statutory minimum is 12–14 days per year (depending on the workweek) for employees with up to five years of service. This increases with seniority. Vacation accrues from the start of employment. Full entitlement is granted after one year. Employees have to take at least seven consecutive days of vacation per year, unless otherwise agreed.
Employees get sick leave with a doctor’s note. The first day is unpaid, the second and third days are paid at 50%, and from the fourth day onward, sick leave is paid at 100% of the regular wage. Many employers pay from the first day as a benefit. National insurance covers sick pay only in certain cases (e.g., long-term illness after exhausting employer-provided sick leave).
Standard paid maternity leave is 15 weeks for employees who have worked at least 10 of the previous 14 months (or 15 of the previous 22 months). Shorter paid leave (eight weeks) is available for those with at least six of the previous 14 months of work. Maternity leave is paid by the National Insurance Institute (NII). Fathers get up to five consecutive days of leave immediately following the birth of their child. Three days are taken from their annual leave. The other two are deducted from their sick leave.
Parents get up to eight days per year to care for a sick child (12 days for single parents), with possible extension to 60 days for serious illnesses. Up to six days per year can be used to care for a parent or parent-in-law. Employees get seven days of paid leave following the death of a close family member.
All Israeli residents have universal health coverage through the NII. Pension contributions are mandatory for both employers and employees. The minimum rates are set by law, and most employees are covered by a pension plan from the start of employment.