Hire in Israel
State of Israel — 9.8 million population, $54,660 GDP per capita. Everything you need to know about employment law, tax, compliance and hiring in Israel.
Capital
Jerusalem (disputed)
Currency
Israeli New Shekel (ILS)
Languages
Hebrew, Arabic
Time zones
UTC+2 (IST) / UTC+3 (IDT)
Hiring overview
- Typical time to hire
- 1-2 weeks for contractor, 2-4 weeks for full-time
- Entity requirement
- Israeli Hevra Baam (Ltd company). Registration at Registrar of Companies. Very fast (~1-2 weeks).
- EOR available
- Yes — from $399/employee/month through a Corpshore entity
- Contractor of record
- Yes — from $39/worker/month
Employment law
- Standard workweek
- 42 hours (reduced from 43 in 2018)
- Maximum weekly hours
- 42 hours
- Minimum annual leave
- 12-28 days depending on tenure (starting at 12 for years 1-4)
- Public holidays
- 9 per year
- Maternity leave
- 26 weeks (15 paid at full salary via National Insurance, cap applies)
- Paternity leave
- 5 days at birth + option to share maternity leave
- Notice period
- 1 day per month of service (first 6 months), then 2.5 days per month (up to 1 month after 1 year).
- Severance
- 1 month salary per year of service. Since 2008, Section 14 arrangement: employer contributes monthly to severance fund.
- Probation
- 6 months typical (contractual)
- Overtime rules
- 25% premium (first 2 hours), 50% premium (subsequent). Friday/holiday: 50% premium.
Tax overview
- Income tax range
- 10% to 50% (plus 3% high-income surcharge above ILS 698k)
- Corporate tax
- 23%
- Social contributions
- National Insurance: ~3.5% employee + ~3.5% employer (up to ceiling). Health tax: ~3.1% employee.
- VAT / GST
- 17% (standard)
- Tax year
- Calendar year
- Treaty network
- Over 55 tax treaties
Compliance landscape
- Worker classification
- Labour courts apply a multi-factor test. Presumption of employment where there is personal service and integration. Misclassification can result in back-pay and benefits.
- Data protection
- Protection of Privacy Law (1981, amended). Privacy Protection Authority enforces. GDPR-like amendments under consideration.
- Right to work
- Work visa (B/1) required for foreign workers. Quotas apply for certain sectors.
- Non-compete
- Courts enforce narrowly. Must be limited in time, geography, and scope. Reasonableness is strictly assessed.
- Collective bargaining
- Histadrut (General Organization of Workers) is the dominant union federation. Collective agreements (heskem kibbutzi) cover major sectors.
Payment rails
Masav handles domestic automated clearing. Shva for card payments. ILS is freely convertible. Israel has a advanced fintech ecosystem.
Key considerations for hiring
- Israel (Startup Nation) has the highest venture capital investment per capita globally
- Mandatory military service (2-3 years) delays workforce entry but builds technical skills (Unit 8200 alumni drive cybersecurity industry)
- Section 14 severance reform shifted from lump-sum to monthly pension contributions
- Extremely competitive tech talent market; Israeli engineers among the highest-paid outside the US
Business and cultural context: Israel
Business culture
Direct, informal, and chutzpah-driven. Flat hierarchies in tech. Israelis value bold ideas and rapid execution. First names universal. Debate is expected and valued.
Key industries
Talent pool strengths
Historical context
Israel's 'Startup Nation' moniker reflects having the most startups per capita globally and the highest R&D spending as % of GDP (~5.4%). The ecosystem's roots lie in military technology units (especially Unit 8200, the signals intelligence unit that alumni describe as a tech accelerator), immigration-driven diversity, and a culture that rewards risk-taking and questioning authority.
Ready to hire in Israel?
Use our EOR service from $399/month and we handle employment law, payroll, tax and compliance in Israel for you.