Hiring guide in Israel

What should I know about hiring in Israel?

Hiring remote employees in Israel can be complex, with many regulations and requirements that employers must know. Several aspects must be considered while recruiting, including job contracts, working hours, social security contributions, and immigration regulations. 

Every employee in Israel is entitled to a written employment contract that outlines all of their employment details, including their pay, working hours, and notice requirements. Also, it’s critical to be aware that several Israeli businesses have collective agreements that specify the terms and conditions for workers, including pay and working hours. 

Social security in Israel, including healthcare, retirement, and unemployment insurance, is provided by the National Insurance Institute, to which all Israeli employers must make a mandatory contribution on behalf of their workers. To ensure a smooth and lawful employment process in Israel, it is essential to have a thorough understanding of and abide by these requirements.

Why is Israel a good choice for finding remote employees?

With a highly educated workforce, a vibrant startup ecosystem, and a strong culture of entrepreneurship, Israel offers a wealth of talented professionals with experience in the latest technologies and tools required for remote work. 

Israel has a long history of valuing work-life balance, making it an excellent place for telecommuters who love a balanced professional and personal life. 

Your remote workers in Israel will have access to lightning-fast internet thanks to the country’s well-developed network infrastructure. Additionally, Israel has a high level of English proficiency, making it easy to communicate with remote employees.

How can Native Teams help you hire in Israel?

When your demand spikes and you need to hire more workers, diving into Israel’s job market and labour laws can feel overwhelming. That’s where Native Teams comes in. We can help you find the right employees in Israel while ensuring your company stays compliant with all local laws and regulations, making the hiring process smoother and stress-free.

Hire your first Israeli employee with Native Teams.

Legal requirements for hiring in Israel

Employers must follow the laws and regulations listed below to ensure that employment procedures are fully compliant.

Legal framework

Types of employment contracts

In Israel, an employer is anyone involved in industrial, trading, or agricultural activities who hires employees for paid services. An employee is an individual providing services for wages or salary under a contract, which can be indefinite or fixed-term. Any changes in employment terms must be communicated in writing and agreed upon by the employee.

Employee classification is determined by specific rules in case law rather than choice. Key considerations include the role’s importance to the employer’s business, the level of control exerted over the employee, the employee’s financial independence and business activities, provision of work-related resources by the employer, location and duration of employment, and payment methods and tax obligations.

An employer can be an individual or a corporation, while an employee works for another party in exchange for wages or salary under a contract. Employment contracts, whether full-time or part-time, must adhere to standard agreements, and any changes in terms require written communication and employee consent.

Content of an employment contract

An employment contract is the foundational document that defines the relationship between an employer and an employee. It details all agreements and expectations to ensure clarity and legal protection for both parties.

By law, employers must provide written notice of working conditions, including compensation, working hours, and social benefits, within 30 days of an employee’s start date.

Employment contracts cannot override statutory rights, collective bargaining agreements, or expansion orders. Any clauses contradicting legal provisions, such as including overtime in base salaries or resetting seniority with ownership changes, are illegal and unenforceable.

 Download a free employment contract for Israel through Native Teams.

Oral, written or electronic employment contracts

In Israel, while employment contracts can be oral or written, employers must provide new hires with a written notification of key employment terms within 30 days of starting, according to Section 1 of the Law on Notification to Employees and Job Candidates (Working Conditions and Screening and Hiring Procedures) of 2002. This ensures transparency and clarity. Written updates are required for any changes to these terms.

Although verbal agreements can establish employment contracts, written documentation is crucial for legal compliance and protecting the rights of both parties. Since 2002, the law mandates written employment details, especially for foreign workers, in a language they understand.

Cases like Risko Ltd. v. Belli highlight the importance of honouring oral agreements within written contracts and conducting fair termination procedures, emphasising the necessity of written documentation for ensuring fair treatment and legal protection.

Working hours

The standard workweek runs from Sunday to Thursday, totalling 42 hours. A five-day workweek means 8.4 hours per day, while a six-day workweek involves eight hours daily from Sunday to Thursday and three hours on Friday.

Overtime is any work beyond these regular hours. Although generally restricted by the Hours of Work and Rest Law, a permit from the Labour Ministry allows for limited overtime: up to four hours per day and 12 hours per week for six-day workers and up to four hours per day and 15 hours per week for five-day workers.

Employees must have at least eight hours between workdays; otherwise, the days are considered one, entitling the employee to overtime pay. Work during the weekly rest period is usually prohibited, but if authorised, employees must be compensated at 150% of their regular rate and given alternative rest hours.

Employers must keep records of employees’ work and rest hours. Failure to provide the required rest can result in fines or legal action. Special provisions apply to certain industries, such as waiters, security workers, and foreign workers in the nursing industry, and permits can be issued for specific events or circumstances, such as football matches.

Breaks and night work

Under Israeli labour law, employees are entitled to regular breaks tailored to the length of their workday and the nature of their jobs. A continuous weekly rest period of at least 36 hours is guaranteed, typically aligned with an employee’s religious preferences. Additionally, employees must receive a rest period of at least 45 minutes for workdays exceeding six hours, including an uninterrupted break of no less than 30 minutes.

Break eligibility and regulations

• General breaks: All employees have the right to essential breaks, such as restroom visits and religious prayers, which should be accommodated within the work schedule.
• Regular breaks: Manual labourers working six hours or more daily are entitled to breaks. Non-manual workers receive breaks if their workday extends beyond eight hours in a six-day week or nine hours in a five-day week.
• Compensation for breaks: Breaks that require employees to remain on-site are considered paid working hours.
• Mandatory rest: Employees must be granted a continuous weekly rest period of at least 36 hours, coinciding with their religious rest day.

Practical guidelines

• Restroom and prayer breaks: Breaks for restroom use or religious practices should be reasonable and respect employees’ religious needs. Restroom breaks are paid, but prayer time may be unpaid unless otherwise agreed.
• Meal breaks: For workdays exceeding six hours, a 45-minute break with a minimum continuous interval of 30 minutes is mandated for meals and rest.

Special provisions

The Minister of Economy may authorise deviations from standard break regulations based on work procedures or employee welfare considerations. Certain sectors, like cleaning or hospitality, may have additional break provisions to ensure adequate rest and facilities.

Enforcement and compliance

Employers must adhere to these guidelines, clearly communicate break schedules, and maintain records to prevent disputes. Employees can seek redress through labour law enforcement or the Regional Labour Court if their break rights are violated, ensuring compliance and fair treatment in the workplace.

Annual leave

Employees’ entitlement to annual leave is determined by their length of service and the number of days worked each month.

In addition, employees are entitled to paid annual leave, the duration of which varies based on factors such as their tenure with the employer and the number of working days per week.

This entitlement is mandated by labour law and structured as follows:

• First five years of service: Employees receive 16 calendar days of paid annual leave annually.
• Sixth year of service: Entitlement increases to 18 calendar days per year.
• Seventh year of service: Entitlement increases to 21 calendar days per year.
• The eighth year of service onwards: Employees earn an additional calendar day of annual leave for each subsequent year, accumulating up to a maximum of 28 calendar days per annum.

Accrual and utilisation of annual leave

Accrual of vacation days and carryover of unused days to the next year are at the employer’s discretion. Case law dictates that employers must consistently enforce accrual limits and facilitate annual leave utilisation to cancel an employee’s accrued leave entitlement.

Employer inaction on leave accrual may imply consent to annual leave accumulation.

Key considerations:

1. Eligibility for hourly or daily wage employees: Employees paid on an hourly or daily basis qualify for vacation days if they work at least 75 days for the same employer within a specified period. If employed for shorter durations, they do not qualify for vacation days but are entitled to an additional payment of at least 4% of their wages.
2. Exclusions from vacation days: Certain days, such as reserve service days, strike or shutdown days (excluding civil servants), maternity leave, notice periods for layoffs or resignations, sick leave, bereavement days, statutory holidays, and days off as per collective agreements or workplace practices, are not counted as vacation days.
3. Vacation scheduling: Employers determine vacation timings, but employees can request leave according to their preferences, which employers must consider reasonably. Employees can independently select specific days off as per legal provisions.
4. Carryover and accumulation: Typically, vacation days should be used within the accrual year but can be carried over with employer consent. Employers’ failure to schedule vacations may imply consent to carry over unused days.
5. Employer responsibilities: Employers must allow employees to take accrued vacation days, maintain a vacation register documenting taken and remaining days, and ensure correct payment during vacations.
6. Vacation pay: Employees receive their regular salary during vacations. If a vacation coincides with a public holiday, employees receive their usual pay unless their employment terms state otherwise. Redemption of vacation days: Upon termination, employees can redeem unused vacation days accrued in the year of termination and the preceding three years.

Public holidays

In Israel, employees are entitled to paid leave on official public holidays. However, employers may require employees to work on these holidays. In such cases, employees are granted a compensatory day off and receive regular pay for the holiday worked.

Wages and contributions

Wage payment is a crucial aspect of every employment contract, governed by labour laws and contractual agreements. Wages encompass all compensation employees receive for their services, including cash payments and non-monetary benefits. The concept of “wage” under labour law covers various payment frequencies, such as yearly, monthly, weekly, daily, hourly, or piecework rates, excluding additional allowances.

Allowances are supplementary payments stipulated in employment contracts, such as housing, travel, education, social, and entertainment allowances. In contrast, “additional payments” refer to discretionary bonuses, commissions, or one-off payments agreed upon by employers and employees, separate from regular wages or allowances.

Labour laws mandate several regulations concerning wage payments, including monthly payment requirements for employees on annual or monthly wages, full wage or salary entitlements for pregnant employees during maternity leave, reimbursement of travel expenses at set rates, employer contributions to employee pension funds based on wages, and contributions to the Israeli National Insurance Institute for national and medical insurance. Additionally, the law establishes a minimum wage periodically adjusted to reflect economic conditions.

To calculate the salary and taxes in Israel, click here.

Sick leave

Full-time employees in Israel accrue sick leave at a rate of 1.5 days per month, amounting to a total of 18 days annually, capped at 90 days. These days are intended to cover periods of illness preventing the employee from working.

Payment during sick leave varies:

• The first day of absence is unpaid.
• Days two and three entitle employees to 50% of their regular salary.
• From the fourth day onwards, full pay is provided for the duration of the absence.

Sick leave can be used not only for the employee’s illness but also for caring for sick family members, including children, spouses, and parents, acknowledging family caregiving responsibilities.

Unused sick days cannot be converted into monetary compensation upon termination unless specified in an individual or collective employment agreement.

Parental and maternity leave

Maternity leave is granted to female employees who have worked continuously for the same employer or at the same workplace for at least 12 months. They are entitled to 26 weeks of maternity leave. Employees with less than 12 months of service receive 14 weeks of maternity leave.

During maternity leave, employers must not pay the employee’s salary but must continue pension contributions for part of the leave. Dismissal during pregnancy, maternity leave, or a specified post-maternity period is considered arbitrary and may result in compensation for the employee.

Maternity leave can be extended or shortened under certain conditions. Male employees may also be entitled to partial paternity leave if their spouse gives birth.

A maternity allowance supports parents of multiple births. It is paid over 20 months, depending on the children’s ages. The amount varies, with higher payments for more children and different age brackets.

Eligibility for the maternity allowance includes mothers of triplets or more, adoptive parents of three or more children simultaneously, and parents via surrogacy of three or more children born close together.

The application for maternity allowance is typically automatic through the hospital or requires direct filing with the National Insurance Institute for non-hospital births, adoptions, or surrogacy from abroad.

In addition, employees in Israel are entitled to paternity leave to support the care of their spouse’s newborn child. Paternity leave includes up to 5 calendar days off immediately after birth, with specific payment and leave duration provisions. Employees may also share maternity leave with their spouse under certain conditions, with protection against dismissal or employment changes during this period.

Termination of the employment relationship

Terminating employment can occur through various methods, depending on specific circumstances and reasons underlying the decision. These methods encompass termination by the employer with notice, termination without notice due to serious misconduct, resignation by the employee, and retirement.

1. Termination by the employer: Employers can terminate employees by providing advance notice as required by law, along with severance pay. In cases of severe misconduct, termination without notice may be justified under legal guidelines, ensuring compliance with procedural fairness.

Advance notice: Employers must give written notice before termination; duration depends on tenure and contract terms.

Severance pay: Employees are entitled to severance pay calculated from their final month’s salary and years of service.

Dismissal without notice: Grounds include breaches of contract or fiduciary duty, warranting immediate termination without severance pay.

2. Termination by the employee: Employees can resign at any time, providing requisite notice or payment in lieu. Special provisions apply if resignation stems from employer breaches or assaults.

Notice period: Employees must give written notice, and the duration varies by contract and tenure.

Immediate resignation: Allowed if an employer breaches the contract or assaults an employee, potentially entitling compensation akin to unfair dismissal.

Special provisions for new parents: Resignation within nine months of birth or adoption qualifies for severance pay, as does dismissal.

Retirement: Upon age 60, employees may retire with entitlement to end-of-service benefits, including severance pay.

Employees retiring are eligible for severance pay based on the final month’s salary and service tenure.

Ordinary dismissal by employer

Employers in Israel must hold a hearing before dismissing an employee under an indefinite-term contract, allowing them to present their case against the decision. Dismissal is considered “unfair” if it’s not based on work-related reasons. This includes arbitrary reasons such as retaliation against an employee for making a formal complaint to authorities or for asserting a legal claim, including terminating a pregnant employee.

The concept of “unfair dismissal” is not explicitly defined in labour laws but generally excludes dismissals related to misconduct, poor performance, redundancy, or legitimate business reasons, provided fair procedures are followed, including appropriate disciplinary processes for misconduct.

Disputes over terminations are handled by arbitration boards in each Governorate, which have jurisdiction over employment disputes.

All employees, regardless of the term, have the right to a hearing before significant changes to their employment terms, including transfer, change in role, salary reduction, or workplace relocation.

For employees of contractors, both the client and contractor must conduct a hearing before significant decisions, particularly regarding termination. Employees must be notified in advance and provided with the reasons and supporting documents for the decision.

During the hearing, employees must present their arguments and relevant documents. Claims not raised during the hearing cannot be used later to contest the dismissal. The employer must document the proceedings, including the employee’s responses, and provide a copy of the protocol for the employee to review and sign.

After the hearing, the employer must promptly communicate their decision to the employee. If a hearing was not initially held, one can be convened later in good faith to reconsider the dismissal.

Employees dismissed without a proper hearing can seek redress in a labour court to challenge the dismissal or seek compensation. Non-attendance at the hearing does not imply consent to dismissal or convert the decision into a resignation.

Collective agreements may offer additional protections, requiring consultation with worker representatives before dismissals.

Dismissal does not sever the employment relationship until the effective date specified, and employees are entitled to wages until then unless directed otherwise by the employer.

Support services are available for employees affected by group dismissals, assisting with reintegration into the workforce.

Notice period and challenging the dismissal

Notice periods are typically limited to 30 calendar days, varying based on length of service and contract terms. During this period, employees are expected to continue their duties and may need to train their successor if required by the employer.

Employers can offer payment instead of notice for immediate termination, covering the salary and benefits the employee would have received during the notice period.

Rights and obligations of unemployed individuals

Under certain conditions, Israeli employees who are terminated, voluntarily leave their jobs, or are laid off might be eligible for unemployment benefits. These benefits offer financial support until new employment is found.

Unemployment benefits are based on prior earnings and specific conditions outlined on the National Insurance Institute’s website, which includes a benefits calculator.

To be eligible, individuals must:

• Be Israeli residents.
• Have worked at least 12 months within the 18 months before registering at the Employment Bureau or stopping work.
• Register with the Employment Bureau within three months of unemployment.
• Be between 20 and 67 years old, with some exceptions for younger individuals, such as discharged soldiers.

Benefits are calculated based on income from the last six months of employment, including concurrent jobs. Claimants must register with the Employment Bureau, preferably immediately after job termination, which can be done online for convenience. Continuous reporting to the Employment Bureau is required unless in approved training programs or earning less than the benefits.

Unemployment benefits are paid monthly around the 12th, based on the claimant’s reported availability and job search efforts. National holidays or personal circumstances like illness or bereavement may affect payment schedules or eligibility.

Severance pay

Employees who have worked continuously for the same employer or workplace for at least 12 months are entitled to severance pay upon termination. This applies to dismissals and resignations recognised as constructive dismissals. Severance pay is calculated by multiplying the employee’s last monthly salary by the number of years worked, including partial years.

Since 2008, Israeli law has mandated monthly employer contributions to an employee’s pension fund for severance pay. These contributions are deducted from the total severance pay owed. In some cases, employers may increase their contributions, which can cover the full severance pay obligation.

Three months after starting work, employees are entitled to pension contributions from their employer, which include 3% of the salary for severance pay and 6.5% (or up to 7.5% for disability insurance) for the pension component.

Additionally, 6% of the employee’s salary is deducted from their pension arrangement. These combined contributions ensure employees receive their full severance entitlement through their pension.

Employers forfeit the right to refund their contributions unless a legal judgment under the Severance Pay Law of 1963 denies the employee’s right to severance. If an employee withdraws pension funds outside of “entitling events” (death, disability, or retirement at 60 or older), the employer cannot claim a refund.

Probationary period

Upon initial hiring, employees undergo a six-month probationary period, during which either party can terminate the employment contract without notice. In Israel, probationary periods are legal, and employees retain their full entitlements during this time. For monthly employees, the minimum statutory written notice period varies: one day per month for the first six months, two and a half days per month thereafter, and one month’s notice for those employed for a year or more.

Intellectual property rights

Various legal provisions govern the relationship between an employee’s creations and the employer’s intellectual property rights in Israel. These laws generally attribute the ownership of intellectual creations made by employees to the employer, particularly when created during employment or using the employer’s resources.

Key legislations include:

• The Copyright Law of 1988 states that any work created by an employee during their employment belongs to the employer.
• The Patent Law of 1967 assigns inventions made by an employee during their duties to the employer.
• The Rights of Performers and Broadcasters Law of 1984 and the Cultivators’ Rights of Plant Varieties Law of 1973 both stipulate that performances or plant varieties created by an employee as part of their job are owned by the employer.
• The Designs Law of 2017 specifies that the employer owns any design made by an employee to fulfil their duties or use the employer’s resources.

While these laws share a common principle, they differ in specifics. For example, the Copyright Law focuses on works created “for the purpose of and during” an employee’s duties, while the Rights of Performers and Plant Variety Rights emphasise creations made directly as part of the employee’s service.

Employee data privacy

Data privacy is legally protected, and handling or disclosing personal data without consent is a criminal offence. Individuals can take legal action for compensation or an injunction if their data privacy is violated. Although there’s no specific data protection legislation for employment, the penal code requires that the personal data of employees or applicants can only be collected and used with explicit consent.

Case law suggests employers should have a policy for monitoring system usage, acknowledging employment contracts, and defining privacy expectations. This policy should address email monitoring and inform employees about any monitoring of their email usage or computer activities.

The Protection of Privacy Law of 1981 mandates that any privacy infringement requires the individual’s informed consent, whether explicit or implied. Judicial decisions recommend that IT and monitoring policies be formally agreed upon by employees. For monitoring or probing personal communications via email, specific consent from employees may be required.

Remote working policy

Israel’s current labour laws do not adequately address the specifics of remote work. Key issues like defining work hours, rest periods, and compensation for remote workers are not explicitly covered, leading to potential discrepancies between remote and on-site work.

With the rise in remote work globally, Israel’s labour laws need updates to reflect these new work environments. Present regulations fail to define crucial aspects of remote employment, such as work hours, health and safety standards for home offices, and equitable treatment compared to office-based roles.

Health and safety at home

In Israel, providing adequate physical working conditions is a fundamental employee right rooted in the Basic Law: Human Dignity and Freedom. This law compels employers to uphold their employees’ dignity and welfare by maintaining a proper work environment.

Employers must ensure a safe and healthy work environment for remote workers, including proper ergonomic setups to prevent injuries. Guidance on creating an ergonomic home office setup that meets health and safety standards is essential.

The well-being of remote workers, both physical and mental, must be actively managed to address potential isolation and stress. Maintaining compliance with health and safety regulations in remote settings is challenging but crucial, requiring regular check-ins and assessments.

Specific guidelines and resources for remote workers should be developed to improve safety, along with regular training and updates on safe work practices tailored to remote environments.

What are the advantages of hiring employees from Israel vs other countries?

Hiring employees from Israel can benefit your business in several ways. Israelis are highly educated, especially in fields like technology and engineering, which means you’ll have access to a skilled workforce perfect for industries needing technical expertise. 

Israel is known worldwide for its innovation, so bringing on Israeli employees can give you access to cutting-edge technologies and top-notch entrepreneurial talent, especially in cybersecurity and biotech. Israelis also tend to have a strong work ethic and are dedicated to getting things done, which can bring a lot of motivation and productivity to your team. 

Plus, most Israelis speak English fluently, making communication a breeze, and Israel’s location makes it a great gateway to European and Middle Eastern markets. To top it off, the Israeli government offers various incentives and funding opportunities to help reduce costs and boost innovation in your company.

Why use Native Teams for hiring in Israel?

Native Teams lets you employ team members ‘like a local’ meaning you get all the benefits of a global team, wherever you are based. Here are the reasons why you should use Native Teams for hiring:

• No paperwork: We will handle all the necessary paperwork for you.
• Save on taxes: We help you handle your taxes.
• No company set up: You can expand your business using our company entitles.
• Online onboarding: We’re here to ensure your onboarding process is trouble-free.
• No accounting: We will handle all of your accounting needs, including invoicing, payroll, and more.
• Increase your profit: We assist you in growing your business and maximizing your profits.
• Compliance expertise: we can assist your company in navigating the regulatory environments and ensure you meet all relevant requirements.
• Local support: We can assist you in understanding and complying with the relevant local laws.