EOR Service in Israel

Hire, Onboard and Pay Employees in Israel Quickly and Efficiently

Hiring in Israel at a glance

CURRENCY
Israeli Shekel (ILS)
working hours
42 hours per week.
public/bank holidays
9 days
capital
Jerusalem
language
Hebrew; Arabic
date format
DD/MM/YYYY
remote workers
1.2M
tax year
1 January- 31 December
minimum hourly salary
No minimum wage
CURRENCY
Israeli Shekel (ILS)
working hours
42 hours per week.
public/bank holidays
9 days
capital
Jerusalem
language
Hebrew; Arabic
date format
DD/MM/YYYY
tax year
1 January- 31 December
payroll frequency
Monthly
GDP
$0.00B(2022)

Employer of Record in Israel

If you're considering expanding your business in Isreal, you should consider partnering with an Employer of Record (EOR). An Israel EOR assumes all employment risks and responsibilities for your company to hire and expand in the country compliantly. This entails managing an employee’s payroll, taxes, and compliance with local labor laws. While your company retains control over day-to-day employee activities, an EOR assumes the role of the legal employer, and offloads administrative responsibilities off your shoulders. 

Why use Israel EOR?

Starting a business in Israel involves navigating specific regulations, legal frameworks, and cultural nuances unique to the country. While the process shares some common elements with other countries, there are many differences, too. Specific regulations govern the employment of temporary workers in Israel, including limitations on the duration of temporary employment and provisions for equal treatment of temporary and permanent workers. Israel has a strong tradition of trade unions, and workers have the right to form or join unions. Worker committees, which represent employees at the workplace, are also common. Israel has labor laws that protect workers' rights, including provisions for collective bargaining, working conditions, and minimum wage, while employment in the U.S. is generally "at-will," allowing employers to terminate employees for any reason. 

With such unique labor laws and regulations, it is important to seek expert help. Partner with an Israel Employer of Record (EOR) like Gloroots to onboard local talent in under a day. With a single partner to manage payroll taxes, your HR operations become less confused and more streamlined. The Israel EOR  will ensure full compliance with local employment obligations, and you can fully focus on core business functions and growth plans.

EOR Costs in Israel

Israel EOR services typically offer two pricing models: fixed and variable. Gloroots' Uruguay EOR adopts a transparent fixed fee, eliminating hidden charges and simplifying budget planning for employers. This contrasts with variable fee structures, which can complicate salary budgeting as costs increase with higher employee salaries. Choosing Gloroots ensures a straightforward and predictable approach to managing workforce expenses.

Key Metrics For Foreign Employers 

Israel is a high-income country ranking 25 in Insead’s Global Talent Competitiveness Index 2023. Israel has a reputation for being at the forefront of technological advancements. The country is a global leader in areas such as cybersecurity, biotechnology, and artificial intelligence, making it a great place for businesses to find talent.

The table below depicts key indicators from the Global Talent Competitiveness Report for employers wishing to hire from Israel.

Factors Global Ranking Interpretation
Rule of law 28 Indicates effectiveness of law enforcement
Labour-employer cooperation 30 Indicates positive labor-employee relationships
Reading Maths, and Science 38 Indicates average scores in OECD's survey of 15-year old students
University Ranking 36 Indicates average QS rankings
Labour productivity per employee 24 Indicates total output by the total labour input used to produce that output
Ease of finding skilled employees 3 Indicates findability of skilled talent
Workforce with tertiary education 31 Indicates % of workforce with PG degrees
Digital Skills n/a Indicates prevalence of advanced digital skills in the population

Source: The Global Talent Competitiveness Index 2023

Why work in Israel?

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Grow your team in Israel

Expand your team in Israel with Gloroots, leveraging the nation's vibrant tech ecosystem, innovative startups, and a highly skilled workforce. Israel is positioned at the crossroads of Europe, Asia, and Africa and provides a dynamic business environment. Whether entering technology, cybersecurity, biotech, or other sectors, Gloroots offers expertise in navigating cultural nuances, ensuring compliance, and overcoming recruitment challenges. With our support, you will achieve a seamless and successful expansion, allowing you to concentrate on building a strong presence and meeting your business objectives in the Israeli market.

Risks of misclassification

In Israel, the challenge of "Misclassification of Workers" is addressed by Gloroots through precise compliance with labor laws, accurate worker classification, and seamless payroll management. As your partner, we ensure efficient adherence to regulations, fostering confidence in your business endeavors and promoting operational efficiency in the Israeli labor landscape.

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Avoid hefty penalties with Gloroots.

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Employing in Israel

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

Tax

Tax and Social Security contribution:

Employer Payroll Contribution 

Tax Rate
Social Security 3.55%
Social Security 7.60%
Severance Pay 8.33%
Pension Fund 6.50%
Total Employment Cost Up to 21.78%

Employee Payroll Contribution 

Tax Rate Description
Social Security 0.40% on the first 7,122 ILS
Social Security 7.00% on income between 7,122 ILS and 47,465 ILS
Health Insurance 3.10% on the first 7,122 ILS
Health Insurance 5.00% on income between 7,122 ILS and 47,465 ILS
Pension Fund 6.00%
Total Employee Cost Up to 21.1%

Employee Income tax

Rate Income
10% Up to 6,790 ILS monthly income
14.00% On income between 6,791 ILS-9,730 ILS monthly
20.00% On income between 9,731 ILS-15,620 ILS monthly
31.00% On income between 15,621 ILS-21,710 ILS monthly
35.00% On income between 21,711 ILS-45,180 ILS monthly
47.00% On income between 45,181 ILS-58,190 ILS monthly
50% 58,191 ILS and above

Separation

Termination 

In Israel, the standard termination process mandates that employers terminate an employee's contract in good faith, based on valid reasons, and in accordance with relevant laws, employment contracts, workplace norms, and collective bargaining agreements.

The termination procedure involves a hearing, where the employer must send a hearing invitation detailing the reasons for termination and scheduling it with ample time for the worker to prepare. The hearing is typically conducted by the worker's manager. During this process, the employee has a genuine opportunity to express their perspective on the intended termination. After the hearing, the employer should conscientiously consider the worker's arguments before making a decision.

The employer communicates the decision in writing, preferably through a termination letter provided to the worker in person approximately 48 hours after the hearing. In certain situations, before deciding on termination, employers are advised to explore whether offering the employee an alternative position is feasible, as per labor court decisions.

According to the Prior Notice Before Termination Law, employers are obligated to provide written notice before terminating employment. Alternatively, an employer may opt to pay the employee in lieu of notice, equivalent to the salary the employee would have received during the notice period.

Severance Pay

In Israel, employees who face dismissal are eligible for severance pay after completing one year of service. The calculation for severance pay involves multiplying one month's salary by the total years of employment, including partial years.

As part of the Section 14 Arrangement, employers are required to make monthly contributions equivalent to 8.33% of the employee's monthly salary towards the severance pay component. The accumulated amount is to be disbursed to the employee upon termination, even if the termination results from the employee resigning, provided the circumstances don't otherwise warrant severance pay under conditions without the Section 14 Arrangement.

Notice Period

In Israel, the notice period for an employee is determined by their length of service. If the employee has been in service for 0-6 months, one day's notice is needed for each month worked. For each month of service beyond the sixth month but within the first year, the employee accumulates 2.5 days of notice. After completing one year of service, a 30-day notice is required.

Probation period

Israeli law allows for probationary periods, during which the employee is regarded as a regular employee in all respects. The terms of the probationary period are outlined in the employment contract or a collective agreement.

Start Hiring in Israel today

Expanding your global workforce comes with a host of compliance challenges, from employment laws to data protection and diversity requirements. At Gloroots, we streamline this process with a unified platform. Our experts handle everything from employment contracts to on-time payments and compliant benefits. This way, you can concentrate on talent acquisition, while we ensure a stress-free global employment experience for both you and your employees. Connect with our experts today to kickstart your global hiring journey.

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