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Israel Employment Laws: Compliance and Hiring Guide

A solid presence of a local skilled workforce in various fields like cybersecurity, financial technology, semiconductors, aerospace, automotive, life sciences, and food technology makes Israel a thriving business destination with economic opportunities.

Israel is a sophisticated welfare state bordering the Mediterranean sea in the Middle East. The labor law in Israel is vociferous on maintaining workplace equality and extending employment rights to contractual employees and employees in irregular work relationships. 

Any entrepreneurs or international companies must comply with labor act rules in Israel and the Israeli employment rules to avoid legal disputes while hiring local talent.  

Some of the most relevant labor rights in Israel are 

  • minimum legal wage (approx. USD 1533 per month as on April 1, 2022)
  • a maximum of 42 hours of work per week
  • 10-24 working days of annual vacation leave 
  • 26 weeks of maternity leave in Israel for foreigners and citizens, including shared paternity leave

Continue reading this employment law in Israel guide to understand the essential labor laws and local employment practices regarding working hours, holiday & paid leave entitlements, statutory employer contributions, payroll tax obligations, minimum wages, data protection, employee privacy, etc. with recommended compliance strategies for employers.  

Applicability of the Act

Israeli labor & employment laws apply to all employment relationships and contracts concluded in the country, regardless of employee nationality. 

Under Israeli employment law, employers are subject to descending degrees of obligations if hired individuals are classified as employees, independent consultants, or service providers. 

Further, employers may act on their discretion to extend certain benefits like fixed working hours, minimum wage, or overtime regulations to independent contractors, service providers, or employees in positions of supervisory role (like managers, administrators, or trusted employees) under employment law in Israel. 

Employing non-Israeli nationals

Israeli labor law allows unrestricted hiring of foreign employees. Employers usually hire non-Israeli nationals who are eligible for B-1 permits

All labor act rules in Israel also apply to such employees. Even foreign employers, without a local business entity and hiring local talents, must ensure employment benefits under the act are adequately passed on.

Employers are responsible for withdrawing additional tax from the salary component of their foreign employees if they earn more than twice the average salary in Israel.

Employment Contract

Employment relationships in Israel are based on fixed-term for a particular task or indefinite-term contracts for full-time work.  

Further, Israeli employment rules eliminate statutory requirements of written employment contracts to simplify hiring. 

However, the labor law in Israel requires the employer to send a written notification containing certain information regarding key employment terms (e.g. the employee’s salary, working hours, the commencement date, and a description of the employee’s main duties) within 30 days of hire.  

Employment law in Israel requires employers to treat employees as regular employees, even on a probationary period (usually six months). 

Key Provisions of the Act

Various sources which regulate employment relations in Israel include 

  • Constitutional rights via basic law: Human Dignity and Freedom, the Basic Law: Freedom of Occupation
  • Statutory rights set out in statutes and regulations
  • Special protective rights from collective agreements and individual labor contracts
  • International obligations like ILO conventions and inspiration from the EU for data privacy standards. 

Together, they form Israeli labor laws or Israeli employment rules. 

Here are key provisions of the labor act rules in Israel as follows 

Working hours 

The standard working hours per Israeli labor law are 42 hours a week and 182 hours a month: 

  • Based on mutual agreement, it amounts to 8.6 hours a day for four days and 7.6 hours on one working day. 
  • Labor law in Israel obliges employers to offer at least a 36-hour continuous rest period per week. Therefore a six-day workweek is allowed. 
  • The usual days of rest per Israeli employment rules for Jews are Saturday, for Christians Sunday, and Muslims Friday. 
  • A five-day workweek is common among corporates in Israel. 

Israeli working hours law allows night work between 10 pm and 6 am: 

  • The employer must limit night working hours per Israeli labor law to seven hours per day (excluding overtime) 
  • The employer must assign employees night work for up to one week every two weeks. 

Holiday entitlements

  • Israeli employment law mentions paid public holidays for eight days of Jewish festivals and one day for Israeli independence day in a year. 
  • Holidays are declared based on the Jewish calendar; thus, the date varies yearly per the Gregorian calendar. 
  • Employers must offer flexibility to choose alternate holiday days for employees following other religions. 

Leave schemes

Birth and parenting leaves [BPL]

  • Israeli employment law mandates paid maternity leave for pregnant women, women undergoing fertility treatment, and women who recently gave birth (or adopted children). 
  • The maternity leave period per labor code in Israel varies between 15 weeks to 26 weeks. 
  • Employers grant the mandated 26 weeks maternity leave period in Israel to female employees who have worked for at least 12 months for the same employer.
  • Employers can restrict the maternity leave period in Israel to 15 weeks for female employees who have worked less than 12 months for the same employer. 
  • There is no separate provision for paternity leave. 
  • Instead, the labor laws instruct employers to offer shared paternity leave in Israel which is up to six weeks and subject to the condition that the spouse has waived off their right to the remaining weeks. 

Annual leave (vacation)

  • Employers are obliged to grant paid vacation leaves per labor law in Israel.
  • Employees are entitled to vacation benefits based on their years of service 
  • New employees may be granted a minimum of 10 paid leaves per year  
  • Long-serving employees may be granted up to 24 paid annual leaves 
  • Employers can restrict employees from accumulating more than four years of annual leave.

Other leave

Sick leave 

  • Paid sick leave in Israel accrues one and a half days per month of employment. 
  • Israeli employment law allows employers to restrict employees from accruing more than 90 days of sick leaves. 

Caregiver leave 

  • Labor act rules in Israel require employers to grant up to eight days of paid leave to their employees for caregiving.  
  • Employers must allow employees to utilize up to 30 days of sick leave for their terminally ill children. 

Bereavement leave

  • Employers are obliged to offer up to seven days of paid leave to employees to attend the funeral of a first-degree relative (parent, child, spouse, or sibling).
  • Usually, employers extend these leave benefits to employees with at least three months of seniority. 

Military leave

  • The labor law in Israel mandates employers to grant paid leave to employees who are members of the Israeli reserve military forces to serve when called upon. 

Overtime compensation

  • Employers can ask employees to work up to 12 hours a day (or 16 hours of overtime per week). 
  • The labor act rules in Israel mandate an additional 125% hourly wage for the first two hours of overtime and an extra 50% per hour thereafter.
  • Employers shall ask employees to work on weekly rest or holiday and pay not less than 150 times the ordinary wage. 
  • The labor act rules in Israel mandate an additional 175% hourly wage for the first two hours of overtime and an extra 100% per hour thereafter.

Leave compensation

  • Labor regulations in Israel do not mandate employers to pay the employee’s salary during maternity leave. However, regular employer contributions towards pension insurance are mandatory during the maternity period.
  • Employment rules in Israel mandate sick pay compensation as follows
    1. No pay obligation for the first day of absence
    2. 50% of the expected salary for the second and third days of absence
    3. 100% of expected salary from the fourth day of absence onwards
    4. Employers may have to reimburse employees, who are paid hourly or daily, for nine public holidays.  
  • Upon termination of employment, the employer must compensate for annual leave not taken in the last four years.

Minimum wage

  • The employment law in Israel guides employers to set minimum salaries for employee categories other than Executives, Administrators, and Professionals.
  • As of April 2022, the minimum wage in Israel is NIS 5,400 per month, and the government has already announced an increase yearly until 2025 when it will hit NIS 6,000 (USD 1,912). 

Payroll tax & other obligations

Labor regulations in Israel have enforced certain obligations on employers to keep a record of payments during the year, taxes withheld, etc. 

Usually, it mandates to record and maintaining employees’ data like work hours, salary, insurance benefits, and bank details, and also requires

  • Employers maintain an employee declaration form regarding personal details (Form 101). It will be updated and signed if any changes occur.
  • Employers file 102 reports on social security contributions monthly. 
  • Employers submit Form 126 to the tax authorities electronically around March-May of the following tax year.
  • Employers provide annual statements (Form 106) to employees around March-April of the following tax year.

Employers calculate tax withholding obligations per Israeli labor law as follows 

  • Gross Salary (-) Standard Deductions (income tax and social taxes like pensions, medicare, disability, and severance) = Net Salary
  • Tax on salaried income is progressive and varies between 10 to 50%
  • Standard contribution from the employer’s side is 20.88% to 24.33% gross salary, whereas employee contribution is 9.5% to 16.78% 
  • The current Social Security tax rate stands at 3.55-7.60% for the employer and 0.4-7.00% for the employee.
  • The current rate for medicare is 2.50% for the employer and 3.10-5.00% for the employee.
  • Employer contribution to the pension fund is 6.50%, and employee is 6.00%.
  • Additionally, employers pay 8.33% as part of severance pay.


  • The standard employer practice under the employment rules in Israel includes base salary, overtime payment, withheld taxes, and bonuses in the employee payslip. 

Dismissal rules

  • The employment regulations in Israel prescribe employers to hold a hearing before the termination of employment.
  • Employers may also provide advanced written notice to employees when ending the employment relationship. 
  • Employee groups like pregnant staff (or those undergoing fertility treatment), employees on birth & parenting leave, and statutory unpaid leave are all protected from dismissal. 
  • Dismissal rules are the same for employees on a probationary period. However, the labor courts examine the reasons for their employment termination leniently. 

Data protection and employee privacy

Basic Law: Human Dignity and Freedom enforce the constitutional rights of employee privacy and data protection in Israel. 

Most human resources databases in workplaces generally include sensitive data. Employers must register the database according to the Protection of Privacy Law (maintained by the Israeli Registrar of Databases). 

Cross-border transfer of data from these databases is highly regulated. 

Employers must obtain written permission from employees to let a third-party process human resources databases containing personal information for background checks, remote work monitoring, etc. 

The National Labor courts have outlined what is permitted and prohibited regarding employee monitoring and surveillance in the workplace. The employer must not monitor personal employee email or other accounts even if accessed on workplace systems.  


Generally, the labor courts or parity committees established under Collective Bargain Agreements are empowered to resolve disputes between employer and employee. These award compensation or impose penalties on an employment relationship case-by-case basis. 

Some instances when penalties imposed on employers under the ambit of labor act rules in Israel 

  • Employees receive employment-related documents in an unknown language 
  • Failure to withhold necessary taxes or contributions towards social security funds
  • Paid annual holidays (vacation) merged with public holidays, weekly rest days, or any other leave entitlement 
  • Breaching employee privacy and data protection while workplace monitoring, etc. 

Compliance Strategies for Employers

The Enforcement Unit under the ministry of economy, state authorities, specific legislative authorities, and the courts are responsible for implementing labor laws in Israel. Entrepreneurs and global firms looking to hire and manage employees per the Israeli labor code will benefit from the below compliance strategies.

Developing in-house HR experts

  • Hiring Israeli labor law experts and forming a dedicated HR team simplifies employee recruitment, training, payroll obligations, tax withholding, etc. 
  • In-house HR personnel has the management confidence to oversee appraisals, reward management, and wage compensation and deal with organizational changes and local industrial relations on discretion. 
  • Data privacy and employee protection are given utmost importance under labor laws. Dedicated HR managers ensure you avoid legal liabilities while background checks or workplace monitoring. 

Running a one-person company and following a standard template

  • Small business owners or single-person companies can manage payroll tax & other obligations using simple HR accounting and financial tools.  
  • Standard templates for drafting employment documents like offer letters, employment records, and termination notices are readily available to ensure compliance with Israeli labor laws.  
  • You can buy such templates online from reputed legal services.   

Seeking professional help 

  • Any foreign company can hire local talent from Israel without registering a local business entity. 
  • Partnering with Employer-Of-Record (EOR) solution providers helps you hire and manage new and existing employees while staying compliant with labor act rules in Israel. 

How Can Multiplier Help?

Entrepreneurs and global companies are increasingly adopting modern SaaS-based solutions for labor law compliance while hiring and managing local talents.  

SaaS-based HR solutions like Multiplier offer automated employment contract generation, drafting multilingual contracts, or managing payroll obligations under labor law in Israel.  

From employers with a registered entity in Israel to global employers and entrepreneurs looking to hire talents from Israel without a local entity can choose Multiplier. 

At Multiplier, we provide PEO/EOR solutions and ensure 100% compliance for employers and international firms during the hiring process or during payroll management – taxes, social contributions, and more, per Israeli employment law.  

Further, the employment rule in Israel requires employers to share employment-related documents in a known language with employees. We offer multilingual contract services to avoid miscommunication between employees. 

Ultimately, our strength lies in a strong business presence in 150+ countries, including Israel ensuring 100% obligations-free and complaint expansion. 

Frequently Asked Questions

The labor courts in Israel look after employment disputes on a case-by-case basis. The decision is binding. The trend of current case law in Israeli labor courts is to address ongoing social problems and protect weak groups. Based on the jurisdiction of employers, employees may approach any one of the regional courts located in Tel Aviv, Jerusalem, Beersheva, and Nazareth. The National Labor Court in Jerusalem hears appeals against the decision of the regional labor law courts. 

Israel laws are strongly rooted in empowering the labor movements. Naturally, the employees enjoy the constitutional right to join a union ( including the right not to join a union). 

Yes, employers in Israel are liable for their employees’ acts or conduct during employment. For instance, even when a certain freelancer infringes upon the IPR of other businesses, the employer is still held liable. Vicarious liability is evoked under the Torts ordinance in such cases. 

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