Hiring in Israel

Israel does not have a single unified labor code. Instead, employment law draws on multiple statutes including the Hours of Work and Rest Law (1951), Annual Leave Law (1951), Severance Pay Law (1963), Prior Notice Law (2001), and the Male and Female Workers Equal Pay Law (1996). Collective agreements and Extension Orders issued by the Minister of Economy play a major role, often extending sector-level terms to entire industries. The standard workweek is 42 hours (five days of 8.6 hours), though many workplaces operate on a 5-day, 9-hour schedule with Friday off. Employment contracts are not required to be in writing by statute, but providing a written notice of employment terms within 30 days of the start date is mandatory.

Termination requires advance written notice under the Prior Notice Law. For monthly-salaried employees, the notice period scales with tenure: 1 day per month of service during the first 6 months, then 2.5 days per additional month, reaching a maximum of 30 days after 1 year. Severance pay under the Severance Pay Law of 1963 equals one month of salary for each year of employment. However, the vast majority of employers operate under Section 14 of the Severance Pay Law, which shifts the obligation to ongoing pension contributions. Under Section 14, the employer contributes at least 8.33%% of salary monthly into a pension or severance fund, and those accumulated contributions replace the lump-sum severance obligation at termination. This arrangement protects employers from large payouts and gives employees portable savings.

Annual leave under the Annual Leave Law starts at 12 working days per year for the first 4 years of employment, rising to 14 days in years 5-6, 16 days in year 7, 21 days in year 8, and increasing further with seniority beyond that. Israel observes 9 paid public holidays per year, all tied to the Jewish calendar (Rosh Hashana gets 2 days, Yom Kippur, Sukkot, Simchat Torah, Passover gets 2 days, Shavuot, and Independence Day). Non-Jewish employees can substitute holidays from their own religious calendar. Employees who work on rest days or holidays earn 150%% of their regular wage.

Payroll costs for employers include contributions to Bituach Leumi (National Insurance Institute) at approximately 7.60%% of gross salary (combining national insurance and health insurance levies on the employer side). Pension enrollment is mandatory for all employees from their start date. Under the Mandatory Pension Insurance Extension Order, the employer contributes 6.5%% of salary toward the pension savings component, 6.5%% toward severance (which counts toward the Section 14 obligation), and the employee contributes 6%%. On top of pension, employers must fund disability insurance at roughly 0.5%% of salary. Income tax withholding follows a progressive scale ranging from 10%% on the first bracket up to 50%% on income exceeding roughly 698,280 NIS per year (2024 rates).

Israeli employees are entitled to recuperation pay (d'mei havra'a), a statutory annual payment that increases with tenure. After the first year of employment, employees receive 5 days of recuperation pay, rising to 6 days after 2-3 years, 7 days after 4-10 years, and up to 10 days after 20+ years. The daily rate is set by Extension Order and stands at 418 NIS per day (private sector, 2024). Overtime pay is regulated at 125%% for the first 2 hours beyond the standard daily limit and 150%% for each hour after that. Weekly overtime (beyond 42 hours) follows the same tiered premium structure.

Maternity leave runs 26 weeks total, with the first 15 weeks paid through a maternity allowance from the National Insurance Institute (Bituach Leumi). The allowance covers full salary up to a capped daily amount. Fathers receive 5 days of paid paternity leave after the birth. An additional option allows the mother to transfer part of her paid leave to the father if she returns to work early (minimum 6 weeks postpartum). Employers cannot terminate a pregnant employee or a new mother during leave and for 60 days after returning to work. Israel also provides paid sick leave that accrues at 1.5 days per month of employment, up to a maximum of 90 accumulated days.