Employee benefitsin Israel

Every Israeli resident is covered by national health insurance under the National Health Insurance Law and receives care through one of four health funds (kupot holim), which provide a statutory basket of medical services, hospital treatment and medicines. Employees do not need an employer health plan to be insured.

The system is financed partly by a health tax that the employer withholds from salary. In 2026 the employee pays 3.23% on monthly earnings up to ILS 7,703 and 5.17% on earnings above that, up to the ILS 51,910 monthly ceiling. Employers pay no health tax on top of salary. Self-employed residents pay the same health-tax rates on their business income.

Health funds also sell optional supplementary plans to their members, and many people buy commercial health insurance for treatment outside the statutory basket, such as surgery abroad or medicines not in the basket.

Israeli employers, especially in technology, spend a dedicated welfare (revacha) budget on staff events, team trips, happy hours and gifts. In a 2023 survey of Israeli start-ups, the annual welfare budget per Israeli employee, including gifts and holidays, was below USD 1,000 at 17% of companies, USD 1,000-1,500 at 28%, USD 1,500-2,000 at 38% and above USD 2,000 at 17%. Most companies ran a company trip once a year (64%) and a monthly or weekly happy hour.

Individual fitness or wellness allowances are less established, and no survey measures them. Benefits paid to individuals are generally taxable; shared events are treated differently.

Private health insurance in Israel tops up national health insurance and the health funds' own supplementary plans, covering items such as surgery in Israel or abroad with a choice of surgeon, transplants, medicines outside the statutory basket, serious-illness lump sums and sometimes dental care. Employers offer it through group policies, which insurers can issue to groups of at least 50 people; group premiums are lower than individual ones and joining requires little or no medical underwriting.

Practice varies: some employers pay the premium, while in many group schemes the employee pays a discounted premium through payroll and can add family members. Joining cannot be made a condition of employment. A 2021 survey by a benefits provider found that 51% of employees received private health insurance through work, while 74% wanted it. Employer-paid premiums are a taxable benefit. When an employee leaves, most group policies allow conversion to an individual policy with the same insurer without new underwriting.

Some Israeli employers fund mental-health support such as access to therapists, digital counselling platforms or workshops, a provision that expanded during the pandemic and the 2023-2026 security crises. A benefits provider reported in 2022 that the share of client companies offering mental-health support rose by 55% during the pandemic, but no survey measures how many employers now offer it.

Employees are insured against work accidents and occupational disease through the National Insurance Institute; there is no separate private workers' compensation policy to buy. An employee unable to work after a recognised work injury receives an injury allowance of 75% of insured earnings in the three months before the injury, for up to 13 weeks (91 days), capped at ILS 1,314.25 a day in 2026. Free medical treatment for the injury is provided, and a lasting disability can lead to a work-disability pension or grant set by a medical committee.

The employer pays the regular wage for the day of the injury. If the absence lasts more than 12 days, the Institute pays from the day after the injury and recovers the first 12 days of allowance from the employer; shorter absences are paid from the third day, with the first two days treated as sick leave. The cost of cover is part of the employer's National Insurance contributions. Self-employed people registered with the Institute are covered, excluding the first 12 days.

Employers and employees both pay National Insurance contributions to Israel's National Insurance Institute (Bituach Leumi), the public social-security agency that pays old-age, maternity, unemployment, work-injury, disability and reserve-duty benefits.

From 1 January 2026, for residents aged 18 to retirement age, the employer pays 4.51% of monthly salary up to ILS 7,703 (60% of the national average wage) and 7.6% on salary above that. The employee pays 1.04% and 7% on the same bands, plus the separate health tax of 3.23% and 5.17%. Contributions stop at the maximum insurable income of ILS 51,910 a month. Combined employer and employee charges therefore total 8.78% on the reduced band and 19.77% on the full band.

Different rates apply to controlling shareholders, employees over retirement age, workers under 18 and non-residents, who are insured for fewer branches. The employer withholds the employee share and remits both shares monthly.

Every employer must enrol employees in a pension arrangement under the general extension order for comprehensive pension insurance. From the January 2017 salary the minimum total is 18.5% of salary: the employee contributes 6%, and the employer contributes 6.5% to the savings (tagmulim) component and 6% to the severance (pitzuyim) component.

Contributions are calculated on basic salary and fixed supplements, excluding overtime, up to the national average wage, unless the contract sets a higher base such as full salary. An employee who already has an active pension product when hired is entitled from the first day, with retroactive deposits due after three months or at the end of the tax year, whichever is earlier. A new saver becomes entitled after six months with the employer. The obligation applies to men from age 21 and women from age 20.

The employee chooses the product (pension fund, managers' insurance or provident fund) and the provider; otherwise the employer uses a default fund chosen by tender. Contributions continue on paid leave, sick pay and reserve-duty pay, and on the paid portion of maternity leave. Employees cannot waive the deduction.

Salaried employees who lose their job can claim unemployment benefit (dmei avtala) from the National Insurance Institute, funded through National Insurance contributions. To qualify, a claimant aged 20 to 67 must have worked as an employee for at least 12 of the 18 months before registering with the Employment Service, and must register and attend appointments.

The daily benefit is a sliding percentage of average insured earnings in the six months before unemployment, higher for lower earners and for claimants aged 28 and over, up to ILS 550.76 a day for the first 125 payment days and ILS 367.17 a day after that. The maximum number of benefit days depends on age and dependants, from 50 days for claimants under 25 with up to two dependants to 175 days for claimants aged 45 and over. Refusing suitable work reduces the entitlement. Self-employed people are generally not covered.

An employee dismissed after one year of continuous service is entitled to severance pay of one month's last salary for each year of employment, with a proportional amount for a partial final year. Hourly and daily-paid employees have their severance calculated under the law's separate wage rules. Resignation does not normally give a right to severance, except in circumstances the law treats as dismissal, such as resignation for certain health or family reasons.

In practice most severance is pre-funded. Under the mandatory pension order the employer deposits 6% of pensionable salary into the employee's pension fund each month, and Section 14 of the Severance Pay Law applies to that deposit automatically: the money belongs to the employee even after resignation, and it replaces about 72% of the statutory severance for the period covered. When an employee is dismissed, the employer pays the remaining difference, about 2.33% of salary per month of service. Employers can instead deposit the full 8.33%, with a written Section 14 notice, so that no top-up is owed on dismissal.

Severance is exempt from income tax up to ILS 13,750 per year of service in 2026. Payment is due with final pay.

A study fund (keren hishtalmut) is a tax-advantaged savings fund that most Israeli technology employers provide on top of the mandatory pension. The standard design is an employer contribution of 7.5% of salary and an employee contribution of 2.5%, deducted from net pay. In a 2023 survey of more than 40 Israeli start-ups, 83% provided a study fund and another 2% provided it to some staff; most contribute on salary up to the tax-free ceiling, and a minority contribute above it. It is not required by law for most employers, but collective agreements and extension orders make it mandatory in sectors such as teaching, security, cleaning and construction.

Employer contributions are tax-free on salary up to ILS 15,712 a month (ILS 188,544 a year) in 2026, which means a maximum tax-free employer deposit of about ILS 1,178 a month; contributions above the ceiling are taxed as income. The savings can be withdrawn tax-free for any purpose after six years, or after three years for studies or on reaching retirement age, and investment gains within the ceiling are exempt from capital-gains tax. Employers usually continue contributions during the paid portion of maternity leave.

Many employers, particularly in technology, improve on the mandatory pension in two ways: depositing the full 8.33% severance component (instead of 6%) with a Section 14 arrangement, so that the employee keeps all severance funds on leaving, and calculating contributions on full salary rather than the statutory base capped at the national average wage. Employees who join with an existing managers' insurance policy funded at 8.33% are generally entitled to have it maintained. Employer pension contributions are tax-favoured within ceilings, including an insured-salary ceiling of ILS 34,423 a month for the employer's 7.5% deposit in 2026.

Every employee earns paid annual leave under the Annual Leave Law. The law counts leave in calendar days that include weekly rest days: 16 days a year for each of the first five years with the same employer, 18 days in year six, 21 days in year seven, then one extra day a year up to 28 days. For a five-day working week this converts to 12 working days in years one to five, 14 in year six, 15 in year seven and one more each year up to 20 working days from year twelve; a six-day week converts to 14 rising to 24 working days.

Leave is paid at the regular wage, in advance for leave of a week or more. Leave should be taken in the year it is earned, in one block; it can be split by agreement provided at least seven consecutive days are taken. With the employer's consent, an employee can carry the balance into the next two years. Under a 2026 extension order, employees who could not take leave because of a declared home-front emergency, reserve duty of at least 10 consecutive days or similar events may carry it over without consent. Public holidays, sick days, reserve duty and maternity leave are not deducted from the balance.

An employee accrues the full entitlement after working at least 200 days in the year, and a proportional amount otherwise; part-time employees earn the same number of days. On termination the employer must pay out unused leave for the final year and the three preceding years.

Employees earn 1.5 days of paid sick leave for each full month worked, or 18 days a year, and can accumulate up to 90 days. Unused days carry over from year to year but are not paid out when employment ends unless the contract says so. Part-time and hourly employees accrue a proportional amount.

The employer pays sick pay on a staged basis: nothing for the first day of absence, 50% of the daily wage for the second and third days, and 100% from the fourth day, with each paid day deducted from the balance. The employee must give the employer a medical certificate. Some collective agreements and employers pay full salary from the first day.

An employer may not dismiss an employee during paid sick absence. Paid sick days count as working days for annual leave, are subject to pension contributions and do not break continuity of employment.

Employees who observe mourning for a first-degree relative (parent, child, spouse or sibling) receive paid leave for the number of mourning days customary in their community, up to seven calendar days. The right comes from a general collective agreement extended to the private sector and usually requires three months' service; some sectors have no service requirement.

The employee receives the pay they would have earned, and mourning days are not deducted from annual leave even if they overlap with a holiday. Part-time employees are paid for the scheduled days they miss. Employers may ask for reasonable proof such as a death notice.

Employees called up for reserve duty in the Israel Defense Forces keep their job and receive reserve-duty compensation funded by the National Insurance Institute. For salaried employees the compensation equals gross earnings in the three months before service divided by 90, for each day of service, within a 2026 range of ILS 328.76 to ILS 1,730.33 a day, and it is normally paid through the employer's payroll.

An employer may not dismiss an employee, cut their job or reduce their pay because of reserve service. During service, and for 30 days afterwards when service lasted more than two consecutive days, dismissal requires approval from the Ministry of Defence employment committee; these periods also pause any notice period. Employees who served at least 60 days in a calendar year, including seven consecutive days, are protected for 60 days after service.

A 2026 extension order, in force from 1 January 2026, extends this protection and gives the spouse of a reservist extra paid absence days beyond existing law: 2 days when the reservist served 31 to 60 days in the year, 4 days for 61 to 90, 6 days for 91 to 120 and 8 days for 121 or more. Spouses can use these days for childcare, a child's or parent's illness and household needs during the call-up, in hours if needed, until 31 December. Employees affected by reserve duty or a declared emergency can also carry unused annual leave forward without the employer's consent.

Employees may charge absences for a close relative's illness to their own sick-leave balance, paid on the same staged basis as personal sick days. The annual limits are 8 days for a child under 16 (16 days for a single parent), 18 days for a child with special needs of any age (36 for a single parent), 90 days for a child under 18 with a malignant disease or on dialysis (110 for a single parent), 6 days for a spouse's illness (60 days if the spouse has a malignant disease), 7 days around a spouse's pregnancy and birth, and 6 days for a parent's illness. A parent of a child with disabilities is paid from the first day.

Where only one parent is absent for the same reason, that parent can use the full child allowance. Collective agreements and employment contracts may provide more.

Technology employers in Israel generally give more annual leave than the law's 12 working days for an employee in the first five years on a five-day week. In a 2022 survey of 35 Israeli start-ups, companies using a fixed allowance split roughly evenly between 15-18 and 19-22 days, about half of companies using seniority-based scales gave 19-22 days, and most companies setting allowances individually gave 15-18 days. The 2023 edition of the survey showed the same 15-22 day bands, with a minority offering unlimited leave.

Most of these companies cap the balance an employee can carry, commonly at 20 to 25 days, and either cancel days above the cap or encourage staff to use them.

Some Israeli employers improve on the statutory sick-pay stages (nothing for day one and half pay for days two and three) by paying full salary from the first day of illness, through a collective agreement or company policy. Technology employers also commonly relax documentation: in a 2023 survey of Israeli start-ups, 42% set no cap on sick days taken without a medical certificate, 27% allowed up to three days and 23% one day. The underlying 1.5-day monthly accrual and 90-day cap usually remain unchanged.

Israeli law does not provide wedding leave, but technology employers often give paid days off when an employee marries. In a 2022 survey of 35 Israeli start-ups, 53% gave three days to a week and 47% two days or fewer; the 2023 edition found a similar split. The leave is in addition to the statutory annual-leave balance where the policy says so.

A birth mother is entitled to 26 weeks of job-protected birth-and-parenthood leave if she has worked for at least 12 months for the same employer, or 15 weeks if she has worked less. She may start up to seven weeks before the expected birth. The employer does not pay salary during the leave.

Pay comes from the National Insurance Institute (Bituach Leumi) as a maternity allowance: 15 weeks if contributions were paid for 10 of the previous 14 months or 15 of the previous 22 months, or 8 weeks with 6 of the previous 14 months. The daily allowance equals the higher of average earnings over the three months before leave (divided by 90) or the six months before leave (divided by 180), capped at ILS 1,752.33 a day in 2026. The remaining weeks of a 26-week leave are unpaid but count towards seniority. The employer must keep paying pension contributions for the paid weeks.

Extensions apply for multiple births (three more paid weeks per additional baby, or two on the 8-week entitlement) and for hospitalisation of the mother or baby for 15 days or more. From 1 April 2026, a mother whose baby is recognised during the leave as having a complex disability can extend the leave by five weeks with allowance. Extensions together are capped at 20 weeks. A mother with 12 months' service may return after 15 weeks, and the leave can be shared with a partner after the first six weeks.

An employer needs a permit from the Ministry of Labour to dismiss a pregnant employee with six months' service, and may not dismiss an employee during the leave or for 60 days after it. After the leave, an employee may take further unpaid leave of up to a quarter of her service, within the first year after birth.

Israel has no separate paid paternity leave. A partner (of any gender) may be absent on the day of the birth, from the start of labour until 24 hours after the birth, charged to sick leave, and may then take up to five calendar days off without the employer's consent: the first three days are charged to annual leave at full pay, and days four and five to sick leave at 50% pay unless the workplace pays sick days in full.

The partner can also share the mother's birth-and-parenthood leave and receive the National Insurance maternity allowance instead of her. After the first six weeks, the partner can take the remaining leave while the mother returns to work, for at least seven consecutive days. Alternatively, the partner can take one week concurrently with the mother if she gives up one week of her allowance. To qualify for the allowance, the partner needs contributions for 10 of the previous 14 months or 15 of the previous 22 months; the 2026 cap is ILS 1,752.33 a day. The combined paid period cannot exceed the mother's own entitlement.

Beyond the paid maternity period, Israel has no separate paid parental leave. After birth-and-parenthood leave ends, an employee with the qualifying service may take unpaid leave of up to a quarter of the time worked for the employer, ending no later than one year after the birth. The employer cannot dismiss the employee during this unpaid leave or for 60 days after it without a Ministry of Labour permit.

The Women's Employment Law extends birth-and-parenthood leave and the same dismissal protection to adoptive parents and to intended parents in a surrogacy arrangement; they must notify the employer in writing within 14 days of receiving the child.

Most Israeli employers rely on the statutory scheme, under which the National Insurance Institute pays the maternity allowance for up to 15 weeks and the employer pays no salary. In a 2023 survey of Israeli start-ups, 84% followed the law, 11% offered maternity terms up to six months and 5% more than six months. Enhancements typically take the form of paid or partly paid weeks after the allowance ends, continued benefits such as study-fund contributions during unpaid weeks, or flexible return arrangements.

Israeli law gives a partner five days around a birth, charged to their own annual and sick leave. Some technology employers add separate paid days off for new fathers and partners on top of these balances; a 2022 survey of Israeli start-ups found companies increasingly willing to give fathers more days, with some granting more than two weeks. The number of days and whether they are paid in full are set by company policy.

Israeli law does not require a 13th-month salary, Christmas bonus or other annual bonus. The statutory annual payment is recuperation pay (dmei havra'a), a fixed amount per recuperation day that rises with seniority and is paid after 12 months of service. Any additional annual bonus depends on the employment contract, a collective agreement or company policy.

Recuperation pay (dmei havra'a) is an annual cash payment that every employee receives once they complete 12 months with the same employer, paid retroactively from the first day of work. It is set by a general collective agreement extended to the whole private sector by an extension order (tzav harchava), a government order that applies an agreement to all employers in the economy.

The number of paid recuperation days rises with seniority: 5 days in the first year, 6 days in years two and three, 7 days in years four to ten, 8 days in years eleven to fifteen, 9 days in years sixteen to nineteen and 10 days from year twenty. Each day is worth ILS 451.50 in the private sector for the recuperation year 1 July 2025 to 30 June 2026, under an extension order published on 18 August 2026; the previous rate was ILS 418, so employers that paid the old rate owe the difference. Public-sector employees receive ILS 511.60 a day and more days. A full-time private-sector employee in years four to ten therefore receives ILS 3,160.50.

Part-time employees receive a pro rata amount based on their hours (weekly hours divided by 42). Employers usually pay it once a year, often between June and September, or in monthly instalments shown separately on the payslip. It is taxable and subject to National Insurance, but it is not pensionable and does not count towards severance.

Stock options are a core part of pay at Israeli technology companies. In a 2023 survey of Israeli start-ups, 71% had an employee stock option plan (ESOP) open to employees and another 7% offered one to some staff; quarterly vesting was the most common schedule, and in 2022 almost all plans vested over four years. Listed and late-stage companies also grant restricted share units (RSUs), shares delivered on vesting without an exercise price.

Most grants to Israeli employees use Section 102 of the Income Tax Ordinance. Under its capital-gains trustee route, options or shares are held by an approved Israeli trustee for at least 24 months from grant; the gain is then taxed at 25% on sale instead of as salary, and no National Insurance is due, although the employer cannot deduct the cost. Sales before 24 months are taxed as employment income. Section 102 covers employees and office holders who are not controlling shareholders; consultants and contractors are taxed under a different section.

Israeli employers traditionally give employees a gift or gift voucher twice a year, before Rosh Hashanah (the Jewish New Year, in September or October) and before Passover (in spring). In a 2023 survey of Israeli technology start-ups, the average gift was worth ILS 450 for each holiday, with most companies giving between ILS 400 and ILS 650; in 2022, 85% gave the same amount for both holidays. Many collective agreements also require a holiday gift.

Holiday gifts are taxable employment income for the employee, valued at the employer's cost and reported on the payslip. Many employers gross up the gift so the employee bears no tax.

Alongside holiday gifts, Israeli technology employers mark personal milestones with gifts. In a 2023 survey of Israeli start-ups, most companies that answered gave a welcome gift of ILS 100-200, birthday gifts under ILS 100, a wedding gift of ILS 800-1,200 (54%) and a gift of ILS 300-500 on the birth of a child (65%), and some gave a gift when an employee's child starts first grade. Gifts for personal events are exempt from tax up to a reasonable amount (ILS 240 in 2025); larger gifts are taxable income.

Phantom shares and cash-settled share appreciation rights pay employees a cash amount linked to the value, or the increase in value, of the company's shares, sometimes with dividend equivalents, without transferring any ownership. They are typically used by companies that cannot issue shares to local staff, such as subsidiaries of foreign groups or privately held companies.

In Israel these awards fall outside the Section 102 regime. The payment is treated as a cash bonus and taxed as ordinary employment income at the employee's marginal rate, with National Insurance, when it is actually received. Share-settled appreciation rights, by contrast, can qualify for Section 102 treatment. Vesting, payout events and leaver terms are set entirely by the plan rules.

Employers must reimburse employees' travel to and from work under an economy-wide extension order, regardless of job size. The reimbursement is the cost of a discounted public-transport fare for each day the employee attends work, up to ILS 22.60 a day, or the cost of a monthly public-transport pass if that is cheaper. No receipts are needed. Employees living within about 500 metres of the workplace, or transported by the employer, are not entitled.

Nothing is due for days not worked at the workplace, including sick days, vacation and work-from-home days. The reimbursement is taxable and subject to National Insurance but is not part of the salary for severance or pension. A contract may pay more, and travel can be included in salary only by prior written agreement and if the remaining salary is at least the minimum wage.

Israeli technology employers almost universally subsidise meals through prepaid digital meal cards such as Cibus or 10bis, which employees use at restaurants, for delivery and in some supermarkets. In a 2023 survey of more than 40 Israeli start-ups, every company provided meal vouchers: 46% gave a monthly budget above ILS 900, 49% between ILS 650 and ILS 900, and 5% between ILS 400 and ILS 650. A meal-benefits provider reported an average high-tech food budget of about ILS 1,000 per employee a month at the start of 2024, with larger companies raising budgets fastest.

The benefit is usually loaded per working day. It is taxable employment income, and in 2023 about 41% of companies built the meal value into the employee's gross salary rather than paying it on top. Meal subsidies are less common outside the technology sector.

Hybrid work is the standard model at Israeli technology start-ups. Recruitment-firm data covering more than 1,000 Israeli start-ups, published in January 2025, showed that 88% allowed at least one work-from-home day a week, more than half used a model of two to three home days, 17% allowed three or more and 12% required full-time office work. Fully remote employment is less common for Israel-based roles.

Israeli law gives no general right to request remote work; arrangements are set by contract or company policy. Statutory travel reimbursement is not owed for days worked from home, and employers set any home-office or equipment support themselves.

Beyond the study fund, which employees can use to finance studies, Israeli technology employers fund professional learning through course platforms, conference attendance and training budgets. In a 2023 survey of Israeli start-ups, 34% provided a self-learning platform to all employees and 22% to some, and 66% of companies with a training budget set it below USD 200 per employee a year. Larger allowances for degrees or certifications are usually decided case by case.

Whether a worker is an employee or an independent contractor is a legal question decided by Israeli labour courts on the substance of the relationship, not by the label in the contract. Courts apply a mixed test centred on integration: whether the worker is part of the employer's organisation and core business, or runs an independent business that serves clients, bears its own costs and takes profit or loss. Other indicators include personal performance, supervision, fixed hours, place of work, ownership of tools and the length of the engagement. Invoicing or registering as self-employed does not by itself prevent employee status.

A contractor who is reclassified can claim all employment rights retroactively, including pension, severance, leave and recuperation pay, although the employer may offset amounts it paid above an equivalent employee's pay. Foreign companies engaging Israeli contractors long term therefore carry misclassification risk.

Israeli law does not require an employment contract to be in writing, and an oral agreement is binding. The employer must, however, give every new employee a written notice of the main employment terms within 30 days of the start of work (7 days for employees under 18), and notify any change within 30 days. A written contract that contains all the required details can serve as the notice.

The notice must state the identity of employer and employee, the start date and whether the employment is fixed-term or open-ended, the main duties and direct supervisor, total pay and pay dates, the basis of pay (monthly, hourly or piece rate), regular working hours and the weekly rest day, the social-benefit contributions made by employer and employee and the funds that receive them, and any applicable collective agreement. A contract may improve on but not reduce statutory rights. A labour court can award up to ILS 15,000 without proof of damage where an employer knowingly fails to give notice.

Salaries are paid monthly in Israeli new shekels (ILS). Wages for monthly-paid employees are due at the end of the month worked and become late if unpaid by the 9th of the following month, after which late-payment compensation accrues; employees cannot waive this. Hourly or daily-paid employees who work only part of a month are paid by the middle of the month unless the contract sets another date.

Employers must issue a payslip showing pay components, deductions and leave and sick-day balances, and must transfer pension and study-fund deposits within the statutory deadline, in practice about 30 days after the pay date. The tax year runs from January to December.

The national minimum wage for employees aged 18 and over is ILS 6,443.85 a month from 1 April 2026, up from ILS 6,247.67. The equivalent daily rate is ILS 297.40 on a five-day week or ILS 257.75 on a six-day week, and the hourly rate is ILS 35.40 based on a 182-hour month (ILS 34.64 on a 186-hour basis). Part-time employees are entitled to a proportional amount.

Some sectors have higher minimums under extension orders; from 1 April 2026 a full-time security guard must earn at least ILS 7,118.85 a month. An employer may not pay a base salary below the minimum wage on the basis that it includes recuperation pay or travel. Skilled and technology roles are typically paid well above the minimum.

The standard full-time working week is 42 hours under a 2018 extension order (the Hours of Work and Rest Law sets an outer limit of 45 hours and 8 hours a day). On a five-day week this means 8.6 hours on four days and 7.6 hours on the shortened day; hourly rates for monthly-paid staff are calculated on 182 hours a month.

Hours above the daily or weekly standard are overtime. The employer must pay at least 125% of the regular hourly wage for the first two overtime hours in a day and 150% for each hour after that; overtime cannot be offset against shorter days. With limited exceptions, total working time cannot exceed 12 hours a day and overtime cannot exceed 16 hours a week. A monthly salary cannot lawfully include unspecified overtime; a fixed 'global' overtime payment must at least equal the overtime actually worked.

Employees are entitled to at least 36 consecutive hours of weekly rest, including the Sabbath for Jewish employees or Friday, Saturday or Sunday for others. Work during weekly rest needs a ministerial permit and is paid at least 150%. Managers and roles requiring special personal trust are excluded from the hours and overtime rules. During the 2025-2026 security emergencies, the Ministry of Labour issued temporary permits for additional overtime.

Israeli law sets no statutory probation period or maximum length; any probation must be agreed in the employment contract or an applicable collective agreement. During probation the employee has the same rights as any other employee, including pay, overtime, leave accrual and sick pay.

Dismissal during or at the end of probation still requires a hearing in good faith and written notice under the Prior Notice Law: one day for each month worked in the first six months for a monthly-paid employee. Pension contributions start from the first day for an employee who already has a pension product, or after six months for a new saver. Severance and recuperation pay arise only after a full year.

Israel does not have at-will dismissal in practice. Labour-court case law requires an employer to hold a hearing before dismissal: the employee receives a written invitation stating the reasons and enough time to prepare, may respond in person and bring a representative, and the employer must genuinely consider the response before giving its decision in writing. Dismissal must be in good faith and not for a prohibited reason.

Some employees can be dismissed only with a government permit or not at all for a protected period: pregnant employees with six months' service, employees on birth-and-parenthood leave and for 60 days after it, employees undergoing fertility or IVF treatment and for 150 days after the related absence, and reservists during and after reserve duty. Dismissal is also barred for discriminatory reasons such as sex, age, pregnancy, parenthood, religion or nationality, for filing a complaint about workplace violations, and for absence on security-forces instructions during a declared emergency.

Under the Prior Notice for Dismissal and Resignation Law, notice must be given in writing and runs in calendar days. A monthly-paid employee is entitled to one day for each month worked in the first six months; from the seventh month to the end of the first year, six days plus two and a half days for each further month; and one month after the first year. Hourly, daily or weekly-paid employees receive one day per month in the first year; 14 days plus one day per two months in the second year; 21 days plus one day per two months in the third year; and one month after three years.

The same periods apply when an employee resigns. The employer may release the employee from working the notice by paying regular salary for the period instead. An employer that gives no notice must pay that amount, and an employee who leaves without notice owes the employer the equivalent, which may be deducted from final pay. Annual leave cannot be forced on the employee during the notice period, and reserve-duty days and the protected period after service do not count towards it.

Final pay includes unused annual leave, any outstanding recuperation pay and severance where due, and the employer must give a written confirmation of the employment period.

Employers withhold income tax monthly under a progressive scale. For 2026 the annual bands on employment income are: 10% up to ILS 84,120; 14% to ILS 120,720; 20% to ILS 228,000; 31% to ILS 301,200; 35% to ILS 560,280; and 47% above that, with a 3% surtax on total income above ILS 721,560, making a top marginal rate of 50%. A further 2% surtax applies to income other than from work above the same threshold.

Tax is reduced by personal credit points (nekudot zikui), each worth ILS 242 a month in 2026: a resident receives 2.25 points and a resident woman 2.75, with more for children, new immigrants and certain graduates. Employees file Form 101 with the employer to claim credits. Non-residents pay the same rates without most credits.

On top of gross salary, an Israeli employer pays these statutory costs: National Insurance of 4.51% on monthly salary up to ILS 7,703 and 7.6% above it, up to ILS 51,910 (2026); pension contributions of 6.5% plus a 6% severance component on pensionable salary; and any severance top-up owed on dismissal. Employers also pay recuperation pay (5 to 10 days a year at ILS 451.50 a day in the private sector) and travel reimbursement of up to ILS 22.60 a working day. Employers pay no health tax on top of salary.

Common contractual costs add to this, notably the study fund (keren hishtalmut) at up to 7.5% of salary, a full 8.33% severance deposit instead of 6%, meal cards and holiday gifts. As an illustration, statutory on-costs for a mid-level employee earning above the National Insurance threshold are typically around 20% of salary before optional benefits, depending on the salary base used for pension.

Most non-cash benefits are taxable employment income for the employee, valued at the employer's cost and subject to income tax and National Insurance through payroll. This includes meal cards, holiday gifts and vouchers, employer-paid health insurance premiums and travel reimbursement. Gifts for personal events such as a wedding or birth are exempt up to a reasonable amount (ILS 240 in 2025). Many employers 'gross up' holiday gifts so the employee receives the full value net.

Retirement and savings contributions receive favourable treatment within ceilings. Employer pension contributions are not taxed as income within the statutory limits, and employer study-fund contributions are tax-free on salary up to ILS 15,712 a month (ILS 188,544 a year) in 2026, with contributions above that taxed as income. Employee equity granted under the Section 102 trustee capital-gains route is taxed at 25% on sale after a two-year holding period.

Israeli employment terms come from statute, case law and collective agreements. A distinctive feature is the extension order (tzav harchava): the Minister of Labour can extend a general collective agreement between the main employers' body and the Histadrut labour federation to every employer and employee in the economy or a sector, whether or not they are union members.

Economy-wide extension orders set several core benefits, including mandatory pension contributions, recuperation pay, travel reimbursement, paid bereavement leave, the 42-hour working week and, from 2026, extra protections for reservists and their spouses. Sector orders add higher minimum pay, leave or study-fund contributions in industries such as security, cleaning, construction and hospitality. Employers bound by a collective agreement must name the workers' organisation in the written notice of employment terms. Jewish employees have a legal right to rest on the Sabbath, and employees may not be dismissed for taking part in a lawful strike.

Israeli employment contracts commonly include a probation period of three months, and three to six months is the usual range; employers sometimes agree up to 12 months for senior roles. During probation the employee keeps full statutory rights, and dismissal still needs a hearing and statutory notice.