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Payroll and Benefits Guide Israel

Last updated: May 09, 2023

Currency
Israeli Shekel (ILS)
Employer Taxes
21.78%
Payroll Frequency
Monthly
Employee Costs
21.10%
Capital
Jerusalem
Date Format
dd/mm/yyyy
Fiscal Year
1 January - 31 December
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Contribution

Employer Employer Payroll Contributions
3.55%
Social Security (on the first 7,522 ILS)
7.60%
Social Security (on income between 7,522 ILS and 49,030 ILS)
8.33%
Severance Pay
6.50%
Pension Fund
Up to 21.78%
Total Employment Cost

Employee

Employee Employee Payroll Contributions
0.40%
Social Security (on the first 7,522 ILS)
7.00%
Social Security (on income between 7,522 ILS and 49,030 ILS)
3.10%
Health Insurance (on the first 7,522 ILS)
5.00%
Health Insurance (on income between 7,522 ILS and 49,030 ILS)
6.00%
Pension Fund
Up to 21.1%
Total Employee Cost
Employee Income Tax
10%
Up to 7,010 ILS monthly income
14.00%
On income between 7,011 ILS-10,060 ILS monthly
20.00%
On income between 10,061 ILS-16,150 ILS monthly
31.00%
On income between 16,151 ILS-22,440 ILS monthly
35.00%
On income between 22,441 ILS-46,690 ILS monthly
47.00%
On income between 46,691 ILS-60,130 ILS monthly
50%
60,131 ILS and above

Employer taxes

Highest
Lowest

Employee taxes

Highest
Lowest

Minimum Wage

General

The monthly minimum wage in Israel is 5,571.75 ILS with effect from 1st April 2023. it  is set to increase every year until 2025 when it will reach 6,000 ILS.

MINIMUM WAGE (PER MONTH)

Highest
Lowest

Payroll

Payroll Cycle

In Israel, the payroll cycle is typically monthly. All employees should receive a salary payment at least once a month, Salaries must be paid until the 9th of the following month.

13th Salary

The 13th-month salary payment is not legally required in Israel.

Recreation Payment

An employee is entitled to a recreation payment after one year of service. The payment is usually made between July and September, and the amount of compensation is determined by law, updated annually, and corresponds to the number of years of employment.

Authority Payments

Authority Payment

Due Date

Method

National Insurance

15th of the following month

Wire – direct debit (via local system)

Provident Fund

15th of the following month

Wire transfer, check

Income tax

19th of the following month

Wire

Working Hours

General

Standard working hours in Israel consists of 42 hours per week and 7-9 hours per day depending on how many days per week are worked. Employees should receive at least 48 hours of rest per week, usually taken on Friday and Saturday, resulting in a working week of Sunday-Thursday.

Forcing an employee to work more than 12 hours a day or 16 overtime hours in a week is illegal.

Overtime

All working hours above the standard hours per week are to be paid as overtime and are regulated by the employment contract/collective agreements. It must also be mutually agreed upon between the employee and the employer before commencing any overtime working hours.

The working week may not exceed 42 hours, allocated over 5 or 6 days of work, provided that each working day does not exceed 9 hours of work.

Employees are entitled to overtime pay which is calculated daily as follows:

  • For the first two overtime hours, the overtime payment is calculated at 125.00% of the regular wage
  • The overtime pay is calculated at 150.00% of the regular wage for any additional work hours during the weekly day of rest
  • Some companies pay a global monthly amount as compensation for overtime pay

Leave

Annual Leave (vacation)

Employees with a 5-day working week are entitled to a minimum of 12 working days of annual leave during their first five years of service. This entitlement increases to 17 working days from the sixth year up to the ninth year, and thereafter, to a maximum of 23 working days.

Annual leave payment is calculated at the regular salary pay rate.

Public Holidays

Public holidays that fall on the weekend are usually lost.

Holidays are based on religious association and days can be swapped out to align with one’s religious observance.

Date Day Holiday Notes
27 Feb 2024 Tuesday Municipal Elections Day
22 Apr 2024 Monday Passover (Pesach) Eve Half working Day
23 Apr 2024 Tuesday Passover (Pesach)
28 Apr 2024 Sunday Seventh Day of Passover Eve Half working Day
29 Apr 2024 Monday Seventh Day of Passover
13 May 2024 Monday Independence Day Eve Half working Day
14 May 2024 Tuesday Independence Day
11 Jun 2024 Tuesday Shavuot Eve Half working Day
12 Jun 2024 Wednesday Shavuot
2 Oct 2024 Wednesday New Year (Rosh Hashanah) Eve Half working Day
3 Oct 2024 Thursday New Year (Rosh Hashanah)
4 Oct 2024 Friday New Year (Rosh Hashanah)
11 Oct 2024 Friday Yom Kippur Eve
12 Oct 2024 Saturday Yom Kippur
16 Oct 2024 Wednesday Sukkot Eve Half working Day
17 Oct 2024 Thursday Sukkot
23 Oct 2024 Wednesday Simchat Torah Half working Day
24 Oct 2024 Thursday Simchat Torah

Sick Days

Sick leave is accrued at a rate of 1.5 days per month with a maximum of 90 days total. Payment during sickness is dependent on the length of leave as follows:

  • For the first day of sick leave, the employee is not entitled to pay
  • On the second and third day of sickness, the employee is entitled to 50.00% of their regular pay
  • From the 4th day onwards, the employee is entitled to 100.00% of their regular pay

Upon return, the employee must provide a medical certificate from a medical professional.

Under the Sick Pay Law amendment an employee suffering from a malignant disease (cancer) or a condition that requires regular dialysis treatments, or who recovered from such a disease, is eligible for full sick pay (100%) from the first day of absence, if on leave from work to receive care or undergo periodic examinations for that condition. (up to a maximum of 90 days).

Employees must provide a medical certificate from a medical professional confirming the necessity of treatment or examination because of the condition.

Maternity Leave

Female employees are entitled to 26 weeks of maternity leave following the completion of one year of service within an organization. The employee may take up to seven weeks of leave before the predicted due date of the child and the remainder after the birth. Israel’s social security system compensates the maternity leave if the employee is eligible which generally equals 15 weeks of fully paid leave and 11 weeks of unpaid leave.

Employees who have worked for their employer for less than one year are entitled to only 15 weeks of maternity leave.

An employee may extend their maternity leave entitlement by three weeks in the case of multiple or complicated births. In the unfortunate circumstance that a mother loses her child after the birth, she may take unpaid maternity leave up to 60 days after the birth.

From the 7th week of leave, the mother can choose to return to work and transfer the remaining maternity leave period to her spouse.

Paternity Leave

Following a partner going into labor and up to 24 hours following the birth, an employee is allowed to be absent from work for up to 5 days as paternity leave. The first three days of this leave will be paid from their accrued annual vacation and the remaining two days will be deducted from their accrued sick leave.

Parental Leave

Fathers can take days off after the birth of a child, but these days will be subtracted from the maternity leave.

Bereavement Leave

In Israel, in the event of a death of an immediate family member, the employee is entitled to up to seven calendar days of paid leave to grieve for their loss. The employer fully compensates bereavement leave once the employee has completed three months of service.

In Israel, employees serving on reserve duty must still be paid by their employer. Military service is mandatory in Israel.

Vacation Days
Public Holidays
Highest
Lowest

PAID MATERNITY LEAVE (DAYS)

Highest
Lowest

Termination

Termination Process

In Israel the standard termination process stipulates that employers must exercise their right to terminate an employee’s employment in good faith, for valid reasons, and in compliance with applicable law, any written employment contracts, workplace customs, and collective bargaining agreements.

The termination of employment procedure includes a hearing process. This means the employer is obligated to provide the worker with a hearing invitation in which the reasons for the intended termination of employment are detailed. The hearing should be scheduled so it leaves the worker enough time to prepare for it. The hearing should be conducted by the worker’s manager. During the hearing, the worker needs to receive a genuine opportunity to express their viewpoint regarding the intention of the employer to terminate their employment. Once the hearing ends, the employer should take the time to consider the arguments raised by the worker seriously and in good faith. The decision made by the employer should be communicated to the worker in writing. It is recommended to provide the worker with a termination letter in person, approximately 48 hours from the time the hearing was held.

According to the labor court’s decisions, in certain circumstances before deciding on termination of employment, employers are required to consider whether they can offer the employee an alternative position.

Under the Prior Notice Before Termination Law, employers must provide the employee with prior written notice when ending their employment.

An employer may choose to pay the employee in lieu of notice, which would be calculated as an equal salary payment to that which the employee would have received had the employee continued to work throughout the notice period.

Notice Period

The employee’s length of service determines the notice period in Israel.

If an employee has served 0-6 months of service, then one day’s notice is required for each month of employment. For each month of service following the sixth month of service until the first year of employment, an employee accumulates 2.5 days of notice. Following one year of service, a 30-day notice is required.

Severance Pay

In Israel, employees who are being dismissed are entitled to severance pay upon completing one year of service. The severance pay is calculated at one month’s salary multiplied by the number of years of employment (including work for part of a year).

Under the Section 14 Arrangement, the employer must carry out monthly contributions equivalent to 8.33% of the employee’s monthly salary payment towards the severance pay component. The accrued amount is to be released to the employee upon termination, even if the employee resigned without circumstances that would entitle the employee to severance pay if the employee was not subjected to the Section 14 Arrangement.

Probation Period

Probationary periods are permitted by Israeli law, and during this time the employee is considered a regular employee for all intents and purposes. The probationary period is stipulated in the employment contract or a collective agreement.

Common Benefits

  • Mobile phones or mobile phone allowances can be provided as a taxable benefit.
  • Meal allowance or vouchers.
  • Study fund – it is very common to give employees a study fund. The employer contributes a monthly amount of up to 7.5% of the monthly salary and the employee contributes an amount of 2.5% of salary. After 6 years the accumulated amount in the fund may be released tax free. There is a tax-free ceiling set at 15,712 NIS which is annually updated.
  • Holiday gifts – it is common to give holiday gifts twice a year for the Rosh Hashana and Passover holidays. These gifts are taxed.
  • Additional annual leave – in some industries it is common to give additional annual leave beyond the legal minimum.

VISA

VISA

For work or business purposes, a professional relocating to Israel should use the B/1 work visa (combined work permit and employment visa).

The B/1 work visa is a business visa granted to foreigners who have been approved to stay in Israel for a limited time for work. It is issued to experts, scientists, high-tech workers, and artists.

Israeli work visa requirements for this permit are as follows:

  • approval from the Ministry of the Interior
  • visa interview
  • verified certificate of good conduct
  • certification of medical exam performed by an approved clinic or hospital recognized by the mission
  • biometrics (fingerprints and photograph)
  • completed Israeli work permit visa application form
  • two passport-size photos
  • a signed document from the employer stating that they are offering a position of employment

Upon arrival in Israel, customs will stamp the visa, validating it for 30 days. Extensions are then possible for up to one year and allow the foreigner to leave and enter Israel as many times as required.

Specialists working in academic or non-academic fields for more than three months will be issued the B/1 visa and require:

  • A higher salary requirement (at least double the average wage)
  • CV/resume
  • Academic certificates (if not in English, diplomas will need to be officially translated into Hebrew and notarized by an Israeli notary)
  • Copy of passport (must be valid for a minimum of a year and three months from the start of the process)
  • Power of attorney
  • Completed and signed application forms
  • Three passport-size photos
  • Marriage and birth certificates (for children under 18) for any accompanying family members (original with apostille)
  • Police clearance (issued within the last six months)
  • Medical clearance (issued within the last three months)

The maximum stay and work period for these employees is five years and three months from the start date in Israel. The visa usually takes between two to three months to process.

VAT

General

The standard rate of VAT in Israel is 17.00%.

Stay up to date on payroll & employment law changes

Version History

February 4, 2024
Tax brackets are updated for 2024
April 1, 2023
The monthly minimum wage in Israel is 5,571.75 ILS with effect from 1st April 2023. It is set to increase every year until 2025 when it will reach 6,000 ILS.
February 22, 2022
The monthly minimum wage has increased in Israel to 5,400 ILS.
Payroll contributions and personal income tax rates have been updated.
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Questions & Answers

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Nofar
Nofar
2 years ago

Hi, what is the amount of the “dmei haavraah” and when is it paid?

Emily Kuhnert
Emily Kuhnert
2 years ago
Reply to  Nofar

Hi, good question. For the private sector, the amount is 378 NIS per day accrued and 429 NIS per day for the public sector and is paid out in the month of July/August. Employees are entitled to this amount if they have been employed for at least one year by the month of July and .5 days are accrued each month. If one has not been employed for a year by this time, the amount is simply paid out the following year or upon termination.

Segun
Segun
2 years ago

What’s the daily minimum wage/per day pay in Israel?

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Segun

The current daily minimum wage for a 5-day workweek is NIS 244.62 and NIS 212 for a 6-day workweek. The minimum wages will change in April 2022.

Segun
Segun
1 year ago
Reply to  Erez Greenberg

Thanks

Barry
Barry
1 year ago

please provide a source for the 16 days of annual leave? As far as I know, the law is 12 days for those that work a 5-day week and 14 for those that work a 6-day week.

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Barry

As we state in our CountryPedia, the working Time Act 1997 is responsible for providing the entitlement. The Act provides a basic annual paid leave entitlement of four weeks, although an employee’s contract can provide even more leave. The following link is a government source – //www.citizensinformation.ie/en/employment/employment_rights_and_conditions/leave_and_holidays/annual_leave_public_holidays.html#:~:text=Most%20employees%20are%20entitled%20to,in%20your%20contract%20of%20employment.

Claudia
Claudia
1 year ago

As an employee perk, what is the average lunch allowance in Israel? Is it cumulative?

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Claudia

A lunch voucher is given monthly and typically to employees in the tech industry. Depending on the size and value of the company, the allowance ranges between 500 NIS and 1200 NIS per month.

Chaim
Chaim
1 year ago

Do you get Severance Pay when going on pension

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Chaim

Pension savings in Israel are made up of over a third of compensation component funds. Savings are significantly reduced when compensation funds are withdrawn. There will also be a reduction in the old age pension when that day comes. There is generally some tax exemption associated with severance pay. There are also tax benefits associated with retirement. By taking advantage of today’s tax benefits, retirees may lose out on their rights to tax benefits in the future.

Sara
Sara
1 year ago

In Israel, can you switch payroll providers any time during the year? I know a Jan 1st switch is best, but if you can’t do it in January, can you later in the year?

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Sara

Since the taxation year runs from Jan-Dec, it is always best to decide on such change at the beginning of the calendar year.

Nadia
Nadia
1 year ago

Are there rules or what is typical for PTO carryover?

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Nadia

It is at the employer’s discretion to decide if a carryover is allowed. Many companies will allow a minimum of 5 days or more to carry over.  

Karen Teobengco
Karen Teobengco
8 months ago

How to compute the severance pay? Because i work for my previous employer for 25 months (2yrs and 1 month) i resigned, they compute my severance pay just 19 months instead of 25 months, they told me that there is a new law for computing severance pay, they say the computation is strt at the 6months of working of the foreign work. I just want to know if its true that there is a new law for severance pay, thank you

Enny Shmurin
Admin
Enny Shmurin
8 months ago

Hello,

Generally, workers who have been employed consecutively with the same employer for 1 year are entitled to receive severance. If you can provide more details on what is meant by ‘foreign work’ we will be glad to look into this further.

Additionally, if an employee decides to resign, it’s important to note that the release of the severance funds depends whether they signed under section 14. However, as the question lacks some context, I would advise to seek legal advise in order to fully comprehend the terms and implications associated with their employment terms.

Karen Teobengco
Karen Teobengco
8 months ago
Reply to  Enny Shmurin

What i mean is foreign worker., because im a foreign worker here in israel as a caregiver. I’ve start working from my last employer is april 21,2022 and i resigned may 31,2023, they compute my severance pay just 19 months instead of 25 months, i ask them about it and they told me that there is a new law for computing severance pay, it only start to compute on the 6months of working of the foreign worker. But i check on internet even in kavlaoved there is no new rules severance pay, Can you please check this computation if its right? Because for me i think its not enough for my severance pay,. Or if there is a new rules can you please show it to me., thank you for answering my question.,

Monthly salary : 5,572
Number of months: 19
Number of days: 9
Percentage : 6
Total :6,189,12

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Payroll and Benefits Guide
in Israel

What’s covered in this guide:

  • Employer/employee contributions
  • Minimum wage
  • Working hours
  • Visa requirements

And more...

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Public Holidays Calendar

Israel
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Date Day Holiday Notes
27 Feb 2024 Tuesday Municipal Elections Day
22 Apr 2024 Monday Passover (Pesach) Eve Half working Day
23 Apr 2024 Tuesday Passover (Pesach)
28 Apr 2024 Sunday Seventh Day of Passover Eve Half working Day
29 Apr 2024 Monday Seventh Day of Passover
13 May 2024 Monday Independence Day Eve Half working Day
14 May 2024 Tuesday Independence Day
11 Jun 2024 Tuesday Shavuot Eve Half working Day
12 Jun 2024 Wednesday Shavuot
2 Oct 2024 Wednesday New Year (Rosh Hashanah) Eve Half working Day
3 Oct 2024 Thursday New Year (Rosh Hashanah)
4 Oct 2024 Friday New Year (Rosh Hashanah)
11 Oct 2024 Friday Yom Kippur Eve
12 Oct 2024 Saturday Yom Kippur
16 Oct 2024 Wednesday Sukkot Eve Half working Day
17 Oct 2024 Thursday Sukkot
23 Oct 2024 Wednesday Simchat Torah Half working Day
24 Oct 2024 Thursday Simchat Torah