Facts & figures

Government Type: Parliamentary democracy

Capital: Jerusalem

Currency: Israeli Shekel

Languages: Hebrew, Arabic, English

GDP Per Capita: 41,715 USD (2018)

Main Business sectors: Hi Tech, Communication, Cyber and Services: 50.7%

Communication: 18.6%

Industry: 17.5%

Employment Rate: 95.3%

Higher Education Rate: 46%

Average monthly salary: 10,428 ILS

Employee Income Tax: 10-50% according to salary

Mandatory paid vacation days: 12-20 days per annum

Israel has been attracting international corporations in the last two decades thanks to its booming Hi-tech and start-up industry.

Israel is considered one of the most developing and interesting countries for fields of Hi-tech, communication, cyber, fintech and life science.

With 6 universities ranked in the 100 best academic institutions globally, the innovative military units and the vibrant entrepreneurial environment, the Israeli workforce embraces global initiatives and is geared up to develop a career in foreign and multinational companies.

Global People, founded in Israel, has a significant advantage in the Israeli market thanks to:

  • Experience in providing global employment solutions
  • Extensive professional network
  • Top networking strategies and good understanding of the broad employment world and culture.
  • An accurately designed process that assures compliance and provides a tangible ROI.

Global people’s services include:

  • PEO and HR management.
  • Realistic calculation of employee compensation.
  • Payroll, tax liabilities, insurance and employee benefits.
  • A designated point of contact for the client and the employees, available for any query or question that may rise.
  • Accessible consultation and professional opinions.

Employment Manual

Israeli labor law applies to all employees in Israel, Israeli or foreign. The labor law includes a set of rules, regulations and case law.

Israeli employees cannot waive any minimum rights, to which they are entitled under the Israeli law.

  • Minimum wage
  • Payment of employee benefits, such as pension contributions and other social benefits
  • Hours of work and rest and payment for overtime.
  • Recuperation pay and vacation days
  • Sick pay
  • Travel expenses
  • Termination of employment payments, such as notice and severance pay

The employment agreement must comply with the Israeli labor law and other regulations while detailing all employment conditions: 

  • Job description
  • Working hours and days
  • Monthly salary
  • Mandatory and industry benefits
  • Pension contribution
  • Specific compensations and options
  • Termination conditions


Israel’s Equal Employment Opportunity Act protects employees from prohibited discrimination in the workplace, and protects employees from:

  • Discriminatory wages and working conditions
  • The consideration of employment or termination on prejudiced reasons
  • Biased promotion or/and professional training 
  • Discrimination based on gender, personal and religious beliefs, age, appearances, etc.


  • The employer must conduct a mandatory hearing where he states the termination reasons. 
  • The employee is entitled to have 2 working days in order to prepare for the hearing.
  • Employees can represent themselves or have a lawyer or other representation.
  • The hearing must be documented and shared with the employee.
  • The employees must have adequate time to present documents and other evidence to state their case.
  • The Employer’s decision must be delivered personally or in writing and include a reference to the employee’s arguments and the company’s response.
  • After the hearing process is fully and legally completed, the employer must provide written notice with the official termination date. 

  • The notice period is calculated according to the employment period

           0-6 months: one day per month
           6-12 Months: 6 days plus 2.5 days for the 7th month forward
           12 months or more: 30 days’ notice

  • According to Israeli law, the employer must pay severance pay at the end of employment.
  • There are various calculation methods that determine the amounts due, depending on the company’s policy regarding section 14 of the labor force.
  • In most Hi tech, cyber and startups companies, the employee agreement includes section 14 of the labor force. The employer makes monthly contributions equivalent to 8.33% of the employee’s monthly salary payment for severance pay component and the employee will receive the severance pay in case of resignation or dismissal.

Employment Taxes

Total Employment Cost: 23.43%

  • Severance Pay: 8.33%
  • Social Security and Health Insurance: 3.55%-7.6%%
  • Pension Fund: (including Disability Insurance) 5%- 7.5%
  • Social Security and Health Insurance: 3.5% – 12%
  • Pension Fund: 6%

Up to 6,330 ILS per month: 10%

6,331 – 9,080 ILS per month: 14%

9,081 – 14,580 ILS per month: 20%

14,581 – 20,260 ILS per month: 31%

20,261 – 42,160 ILS per month: 35%

42,161 – 54,300 ILS per month: 47%

Over 54,301 ILS per month: 50%

  • Every employee is entitled to a monthly contribution to a pension fund
  • The employee can choose both the pension fund and investment method
  • The employee must pay social security, health insurance and disability insurance

Mandatory paid leave days

1-5 employment years: 12 days 

6th year: 14 days

7th year: 15 days

8th year: 16 days 

9 years or more: 20 days

The paid leave days above do not include sick days, national and religious holidays and bereavement leave.

  • Sick leave is accumulated monthly- 1.5 days per month and is capped at 90 days per year.
  • The employee is not entitled to compensation for the first day of sick leave.
  • On the second and third day, the employee is entitled to 50% of their regular pay.
  • The employee is entitled to 100% of their regular pay from the 4th day onward.
  • The employee must submit an adequate medical certificate to receive compensation for sick days. 
  • People acting as legal gradients, parents attending to children or people caring for elderlies can take sick days to take care of their dependents. 
  • There are 9 national holidays, based on the Jewish and Israeli calendar.
  • Muslim and Christian employees are entitled to holidays’ paid leave, instead of the Jewish holidays’ leave or personal paid leave days. 
  • Mothers or fathers employed for one year or more can choose to take 105 days of maternity or parental leave.  
  • A parent working for more than one year can take an additional 11 unpaid weeks off.
  • Fathers and life partners can take days off after a child’s birth, which will be subtracted from the maternity leave.
  • Upon returning from maternity leave, the employee is entitled to work an hour less to care for the infant. 
  • Women returning from maternity leave are protected by law from dismissal and downgrade of salary and rank.
  • Women undergoing fertility treatments are protected by law from dismissal, downgrade of salary and rank for the duration of the medical procedures.

Specific Employee Benefits and Industry Benchmarks

Every country has different benchmarks regarding employee benefits, and they vary depending on the market and type of position. These benchmarks, as detailed below, act as a key factor when choosing an employer in Israel, especially in the fields of Hi Tech, Communication, Cyber and Life-science industries.

Israel’s most luxurious employee benefit consists of an additional salary, paid either when completing a year of employment or with the December salary. 

The 13th salary is a benefit reserved for executives in the financial sector and tech talents.

The Education fund (Keren Hishtalmut in Hebrew) is considered one of Israel’s most popular savings plan and a favorable voluntary employee benefit since it grants a tax exempt saving to employees. 

The education fund’s monthly contributions are 10% of the employee’s gross salary and are divided between the employer (7.5%) and the employee (2.5%).

Employees can cash the fund after six years and enjoy a tax exemption. 

Since all Israeli citizens enjoy a governmental medical insurance plan, a private medical insurance plan is considered a complementary employee benefit, which includes medical insurance for private medical services for the employee and their children under the age of 18. Employees may also include their partners in their medical insurance and enjoy special rates. 

Employees holding executive positions often receive a car for professional and private uses. This benefit usually includes all maintenance costs and a gasoline allowance.

Granting this benefit might have taxation consequences for the employees, that can amount to 3500 ILS per month, but since public transportation in Israel is lacking, it is a favorable benefit.

Some employers provide lunches for the staff in a designated cafeteria in house and offer a full lunch at a subsidized price. 

Those who wish to subsidize lunch without catering in house, give a daily allowance that can amount to 50 ILS per day to allow them to enjoy their favorite restaurants. The lunch allowance is considered an industry benchmark in the Tech Sector.

Although the Israeli mandatory paid leave quota includes a total of 21 days, many employees include additional paid leave days as a request during negotiations. 

The industry benchmark regarding an additional day is calculated according to the civil service benchmark of 22 paid leave days for the first year, excluding holidays.

The civil service imposes its benchmark in this case as well, and employees may ask to be compensated for all sick days regardless of the sick period.

Employers offer gifts to their employees twice a year: on the Jewish new year and on Passover. Employers can also offer gifts for the employees’ children for other holidays and other special occasions. 

Employers in the Tech and Communication industry usually hold special events and galas to mark holidays and other special occasions and invite all employees for an evening of fine dining, live concerts, Etc. 

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