Expand your organization into Israel, even without an Israeli entity
Israel is a completely unique and fascinating country located on eastern edge of the Mediterranean Sea. This location connects it with the Middle East, Africa, and Europe. Its location, strong rich religious and cultural history, and highly developed economy make it one of the most diverse countries in the world and a great place to expand any business.
If you are planning an expansion into Israel for your business, you will need to be prepared to deal with the country’s complex business and employment laws. The official language of Hebrew is an obvious barrier, but the country also has its own unique and often confusing regulations that you will need to comply with in order to establish and grow your business there.
At New Horizons, we specialize in helping organizations of all kinds to build and grow their presence abroad, including in Israel. Our professional employer organization (Israel PEO), employer of record, and payroll services can offer you everything you need to start your Israeli expansion rapidly, efficiently, and compliantly.
As the only global PEO with an in-house recruitment team, we can also take care of the sourcing, hiring, and onboarding of your Israeli workforce, along with any associated HR and legal compliance work. Our tailored services can save you thousands in expansion costs.
How can our Israel PEO simplifies your expansion
New Horizons enables your business to expand its operations into Israel, without setting up a legal subsidiary.
Employment & Labor Laws in Israel
Employment contracts in Israel
While it is not legally required, we strongly recommend always producing written contracts of employment for all of your employees in Israel. These contracts should be written in Hebrew, use the Israeli shekel currency, and include details such as parental leave, vacation allowance, salary/wage, and other relevant details.
By partnering with our Israel PEO, New Horizons’ team of local experts can provide assistance for drafting strong employment contracts that are compliant with local regulations.
Working hours in Israel
The standard working week in Israel is Sunday to Thursday, as Jewish people do not work on Saturdays and businesses must apply for a permit to allow it.
The maximum number of working hours is 43, with no more than nine hours per day. Any hours worked in excess of these limits must be compensated at overtime rates, which are 25% extra for the first two hours and 50% extra for any more than two, or any work on the Sabbath (Saturday).
Public holidays in Israel
There are several public holidays celebrated in Israel. Most are affiliated with Judaism, so non-Jews will usually not celebrate them:
Asarah B’Tevet (Tenth of Tevet)
Fast of Esther, Purim Eve
Purim (Tel Aviv)
Shushan Purim (Jerusalem)
9 Apr-15 Apr
17th of Tammuz
Tisha B’Av Eve
Rosh Hashana Eve
Yom Kippur Eve
3 Oct-8 Oct
Sukkot (Day 7), Hoshanah Rabah
Shemini Atzeret / Simchat Torah
Aliyah Day School Observance
11 Dec-15 Dec
Hanukkah (Day 6) / Rosh Chodesh Tevet
17 Dec-18 Dec
Asarah B’Tevet (Tenth of Tevet)
Israel vacation leave
Workers in Israel are legally entitled to a certain amount of paid vacation leave each year. The number of days varies based on length of employment, but ranges from 10 days to 23 days. Some employers may choose to offer more days as part of their benefits packages.
Israel sick leave
Workers in Israel can accrue 1.5 days of sick leave for every month of employment. This is unpaid for the first day of absence, then paid at 50% of normal pay for days two and three, then paid at 100% of normal pay for the following days. Many employers choose to offer more generous sick leave but it is not legally required. After working with an employer for over a year, workers also qualify for a daily convalescence payment for a limited number of days.
Parental leave in Israel
Female employees who have worked for over six months with their employer can take seven weeks of leave at 100% of normal pay, and their position must be retained by the company. After ten months of employment, they are entitled to 14 weeks of leave, and seven weeks can be taken in advance of the birth.
Fathers can take eight days of leave (five paid by employer and three taken from vacation leave), after their child has been born.
Terminations and severance in Israel
When employees are dismissed without proper cause in Israel, they are generally entitled to severance pay.
For terminations, notice must be given. In the first six months of employment, only one day of notice is required. For at least six months of employment, six days plus two and a half days for every month after the sixth month is required. After one year of employment, 30 days of notice is required.
Employees can usually offer severance instead of notice if they wish.
Navigating employee terminations and handling severance packages can be complicated for companies expanding overseas for the first time. New Horizons’ Israel PEO can mitigate risk for foreign companies and provide guidance through this process.
Taxation in Israel
Employees and their employers in Israel must pay toward national insurance and health insurance funds. The contributions are 12% of salary for employees and 6.75% for employers.
Income tax is progressive in Israel, with rates ranging from 10% to 50% depending on income level.
As of 2020, the corporate tax rate in Israel is 23%.
Health coverage in Israel
In Israel, healthcare is universal and workers can choose between four different levels of insurance. Some also choose to pay for private insurance, so employers may want to offer private insurance as a benefit for employees.
Israel compensations & benefits
Compensation laws in Israel
As of Jan 2020, the minimum wage in Israel for someone working five days per week is 212 NIS per week. There is a higher rate of 244.62 NIS for people working six days per week.
Benefit management in Israel
Building and running a benefits system for your employees in Israel can be complicated if you are unfamiliar with the country, its laws, and its customs. If you want to manage the setup independently, you should expect it to take weeks and potentially delay your expansion process.
New Horizons can help you simplify this stage of your expansion by offering our tailored Israel PEO & benefit management outsourcing. We can provide expert advice on the best course of action and take care of your benefit setup and management, helping you focus solely on your Israel expansion.