Israel Employment Guide
Israel Employment Guide
Israel is in the Middle East, bordering Jordan, Syria (east), the Mediterranean (west), Egypt, the Red Sea (south). It has ~9.5 million people; Hebrew and Arabic are official, and Jerusalem is the capital. Its highly developed economy leads globally in tech, finance, defense and agricultural technology, with key service and export-oriented manufacturing sectors. Labor laws (per Israeli Labor Law) protect wages, hours, leave and social security. Standard workweek: 42 hours (overtime needs extra pay or time off). Salaries are usually monthly (avg. ILS 11,000 pre-tax). Laws cover paid leave and protect contract/temp workers, balancing employer-employee interests for a fair, flexible labor market.
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Currency
Israeli New Shekel (ILS)
Capital
Jerusalem
Official language
Hebrew and Arabic
Salary Cycle
Monthly
Our Employment Guide in Israel
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Understanding Israel's Minimum Wage Regulations
In Israel, the statutory minimum wage is set at 5,500 Israeli New Shekels (ILS) per month. This baseline ensures a fundamental level of income protection for all employees.
Personal Income Tax Structure
Israel employs a progressive income tax system, with rates ranging from 10% to 50%. An individual's final tax liability is influenced by factors such as marital status and the number of dependents. It is crucial to consult the most recent tax brackets, as these are subject to annual adjustments. For reference, the 2021 tax brackets were structured as follows:
| Annual Taxable Income (ILS) | Tax Rate (%) |
|---|---|
| Up to 81,480 | 10% |
| 81,481 - 116,760 | 14% |
| 116,761 - 187,440 | 20% |
| 187,441 - 260,520 | 31% |
| 260,521 - 542,160 | 35% |
| 542,161 - 698,280 | 47% |
| Over 698,281 | 50% |
Employer Payroll Costs and Contributions
When budgeting for a new hire in Israel, companies should anticipate additional payroll costs typically amounting to 18.38% to 22.43% of the employee's gross salary. These mandatory contributions include:
- Severance Pay: 8.33%
- Pension Fund: 6.50%
- National Insurance: 7.60%*
- Pension Agency Fees: 0.6% of the premium
Furthermore, employers are required to pay a seniority allowance. This cost is calculated as 418 ILS multiplied by a factor based on the employee's tenure:
- 1 year of seniority: Factor of 5
- 2-3 years of seniority: Factor of 6
- 4-10 years of seniority: Factor of 7
*The National Insurance rate is 3.55% for monthly earnings up to 7,522 ILS. For earnings above this threshold, the rate is 7.60%, capped at a maximum assessable wage of 49,030 ILS.
These figures are estimates for general guidance. For a precise calculation tailored to a specific employment agreement, consulting with a global HR partner like SailGlobal is highly recommended.
Overtime Regulations and Standard Working Hours
The standard Israeli workweek runs from Sunday to Thursday, with a typical workday lasting 8.4 hours. The legal maximum for a standard workweek is 42 hours.
Overtime compensation is mandatory for hourly employees. For salaried staff, overtime is generally considered included in their fixed pay. Legally, an employee can work a maximum of 12 overtime hours per day and 16 per week. Compensation for overtime is set at 125% of the hourly wage for the first two hours and increases to 150% for each subsequent hour.
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