Israel Employment Law & Compliance Guide for Employers

Israel compliance reference

Key employment laws in Israel: what employers need to know

Israeli employment is governed by a set of separate statutes rather than one labour code: the Hours of Work and Rest Law, Annual Leave Law, Severance Pay Law, Minimum Wage Law and National Insurance Law, plus nationwide extension orders. Foreign employers are most often surprised by the mandatory pension (with a Section 14 severance arrangement) and by recuperation pay, which add cost on top of salary. This page summarises the core employer rules for 2026, each linked to an official or authoritative source.

Israel employment rules at a glance

Israel employment rules for employers at a glance (reviewed October 2026)
Topic	What the rule is	Official source
Minimum wage	NIS 6,443.85 a month for full-time employees aged 18+ from 1 April 2026 (NIS 35.40 an hour on a 182-hour month; NIS 297.40 a day in a 5-day week). Previous rate: NIS 6,247.67 from 1 April 2025.	National Insurance Institute (Bituach Leumi) – minimum wage table
Standard working hours	42 hours a week in the private sector. In a 5-day week a full day is 8.6 hours (7.6 hours on one shortened day). Total daily work, including overtime, may not exceed 12 hours.	Kol-Zchut rights portal – overtime (Hours of Work and Rest Law)
Overtime pay	125% of the hourly wage for the first 2 overtime hours a day, 150% from the third hour. Overtime on the weekly rest day or a holiday: 175%, then 200%. Overtime is capped at 16 hours a week. Managers and positions of special trust are excluded.	Kol-Zchut rights portal – overtime pay
Paid annual leave	12 working days a year in a 5-day week for years 1–5 of service, rising to 14 days in year 6 and gradually to 20 days from year 12 (Annual Leave Law). Leave should include at least 7 consecutive days if split.	Kol-Zchut rights portal – annual leave table (5-day week)
Public holidays	9 paid holiday days a year (Jewish holidays and Independence Day). Monthly-paid staff keep full salary; hourly and daily staff earn holiday pay after 3 months' service. Non-Jewish employees may choose their own religion's holidays instead.	Kol-Zchut rights portal – holiday pay
Sick leave	Accrues at 1.5 days per month (18 a year), up to 90 days. Day 1 is unpaid, days 2–3 are paid at 50% and day 4 onward at 100%, paid by the employer against a medical certificate.	Kol-Zchut rights portal – sick pay
Maternity and parental leave	26 weeks of maternity leave after 12 months with the employer. Bituach Leumi pays maternity allowance for 15 weeks (8 weeks with a shorter contribution record), capped at NIS 1,752.33 a day in 2026. Fathers may take part of the leave.	Bituach Leumi – maternity allowance period of entitlement
Probation period	No statutory probation period. Parties may agree one in the contract. During the first year notice is shorter (1 day per month for the first 6 months) and statutory severance is not yet due.	Kol-Zchut rights portal – advance notice of dismissal
Notice period	Monthly-paid staff: 1 day per month for the first 6 months, then 2.5 days per extra month, and one month after one year. Hourly and daily staff reach one month after 3 years. Notice is counted in calendar days.	Kol-Zchut rights portal – advance notice of dismissal
Severance pay	One month's last salary per year of service after one year, on dismissal. Monthly severance deposits of 8.33% to a pension fund under Section 14 replace the lump sum; if only 6% is deposited, the employer pays the 2.33% shortfall.	Kol-Zchut rights portal – Section 14 of the Severance Pay Law
Employer social contributions	National Insurance 4.51% on pay up to NIS 7,703 a month and 7.6% above, capped at NIS 51,910 (2026). Mandatory pension adds 6.5% plus 6–8.33% for severance. Typical total: about 17–22% of gross.	Bituach Leumi – 2026 rates for salaried employees
Employee social contributions	National Insurance plus health tax: 4.27% on pay up to NIS 7,703 a month and 12.17% above, up to NIS 51,910 (2026). Mandatory pension: 6% of salary withheld.	Bituach Leumi – 2026 rates for salaried employees
Income tax on salaries	Employer withholds monthly. 2026 rates: 10% to 47%, plus 3% surtax above NIS 721,560 a year. The 20% band now runs to NIS 19,000 a month and the 31% band to NIS 25,100. Residents get 2.25 credit points (about NIS 242 each a month).	Kol-Zchut rights portal – income tax brackets 2026
Mandatory bonuses and 13th-month pay	No 13th-month salary. Recuperation pay (dmei havraa) is mandatory after one year: 5–10 days a year by seniority at NIS 451.50 a day in the private sector under the extension order published 18 August 2026.	Shibolet & Co. – 2026 private-sector recuperation pay rate
Work permits for foreign nationals	The Israeli employer (or a local representative of a foreign company) applies to the Population and Immigration Authority for an expert permit; the worker then gets a B/1 work visa. Experts generally must earn at least twice the average wage. Fee: NIS 1,420.	Gov.il – Apply for a permit to employ an expert foreign worker
Employment contract requirements	Written notice of key terms (duties, pay, hours, weekly rest day, social benefits) within 30 days of starting work; a signed contract with the same details is enough. Changes need notice within 30 days. No registration required.	Kol-Zchut rights portal – notice of employment terms

This overview provides general information, not legal advice. Rules can differ by collective agreement, region, sector and the employee’s circumstances — check the current official text before acting. Last reviewed: October 2026 by NNRoad Compliance Team.

Employer obligations in Israel, topic by topic

Filter by primary service relevance

Employment contracts

Does an Israeli employment contract have to be in writing, and is there a probation period?

The employer must give written notice of the main terms within 30 days of the start date. Israeli law sets no statutory probation period, but notice is shorter and severance is not yet due during the first year.

Primary: EOR

Also: Payroll

Also: Expat

Working time

What are the legal working hours and overtime rates in Israel?

The private-sector working week is 42 hours, with 8.6-hour days in a 5-day week. Overtime is paid at 125% for the first two hours a day and 150% after that, with a cap of 16 overtime hours a week.

Primary: EOR

Also: Payroll

Pay and minimum wage

What is the minimum wage in Israel in 2026, and which extra payments are mandatory?

From 1 April 2026 the adult minimum wage is NIS 6,443.85 a month (NIS 35.40 an hour). Employers must also pay recuperation pay after one year and reimburse commuting costs.

Primary: Payroll

Also: EOR

Leave and holidays

How much annual leave, sick leave and maternity leave must an Israeli employer give?

Employees on a 5-day week get 12 working days of annual leave, rising to 20 with seniority, plus about 9 paid holidays. Sick leave accrues at 1.5 days a month, and maternity leave is 26 weeks.

Primary: EOR

Also: Payroll

Social security and payroll tax

What does an employee cost in Israel on top of gross salary?

Employer National Insurance is 4.51% up to NIS 7,703 a month and 7.6% above, capped at NIS 51,910. Mandatory pension adds 12.5–14.83%, so on-costs usually total about 17–22% of gross salary.

Primary: Payroll

Also: EOR

Also: Expat

Termination

How much notice and severance does an employer owe when dismissing an employee in Israel?

After one year, notice is one month and severance is one month’s last salary per year of service. Under a Section 14 arrangement, 8.33% monthly pension deposits replace the severance lump sum.

Primary: EOR

Also: Payroll

Hiring foreign nationals

How can a company hire a foreign expert in Israel?

The employer applies to the Population and Immigration Authority for a permit to employ a foreign expert, and the worker then receives a B/1 work visa. Experts generally must earn at least twice the average Israeli wage.

Primary: Expat employment

Also: EOR

Contractors vs employees

Is it risky to engage independent contractors instead of employees in Israel?

Yes, if the contractor works like an employee. Israeli labour courts look at the real relationship, and a reclassified contractor can claim pension, severance, leave and recuperation pay retroactively.

Primary: Talent / contractors

Also: EOR

Mandatory pension and Section 14

How does mandatory pension work in Israel, and why does Section 14 matter?

Every employee must be insured in a pension plan: employer 6.5% plus 6–8.33% for severance, employee 6%. A Section 14 arrangement turns the severance deposits into the final severance payment.

Primary: Payroll

Also: EOR

Key employment laws in Israel and official sources

Hours of Work and Rest Law, 5711-1951 — Sets the working week, daily limits, overtime pay and the weekly rest period.
Annual Leave Law, 5711-1951 — Sets paid annual leave by seniority and how leave is taken and paid.
Severance Pay Law, 5723-1963 — Requires one month’s salary per year of service on dismissal and allows pension deposits to replace it under Section 14.
Minimum Wage Law, 5747-1987 — Sets the national monthly, daily and hourly minimum wage.
National Insurance Law [Consolidated Version], 5755-1995 — Sets employer and employee National Insurance and health contributions and benefits such as maternity allowance.
Notice to Employee and Job Candidate (Terms of Employment) Law, 5762-2002 — Requires written notice of key employment terms within 30 days of starting work.
Income Tax Ordinance [New Version] — Sets income tax rates, credit points and the employer’s monthly withholding duty.
Foreign Workers Law, 5751-1991 — Governs permits to employ foreign workers and the employer’s duties toward them.

FAQs: hiring employees in Israel

Can a foreign company hire employees in Israel without a local entity?

Yes. A foreign company can register directly as an employer with the Israel Tax Authority and Bituach Leumi, set up a subsidiary or branch, or use an Employer of Record that employs staff on its behalf. Whichever route you choose, Israeli labour law applies in full: mandatory pension, recuperation pay, notice and severance. Check permanent establishment tax risk before employing sales staff directly.

How much does an employee cost in Israel on top of gross salary?

Usually about 17–22% of gross salary. Employer National Insurance is 4.51% on pay up to NIS 7,703 a month and 7.6% above, capped at NIS 51,910 (2026). The mandatory pension adds 6.5% plus 6–8.33% for severance. On top of this come recuperation pay after the first year, commuting reimbursement and any voluntary benefits such as a study fund.

What is the minimum wage in Israel in 2026?

From 1 April 2026 the minimum wage for employees aged 18 and over is NIS 6,443.85 a month for full-time work. That equals NIS 35.40 an hour on a 182-hour month, or NIS 297.40 a day in a 5-day week. The previous rate, from 1 April 2025, was NIS 6,247.67. Lower rates apply to young workers.

How much notice and severance does an employer owe when dismissing an employee in Israel?

After one year of service, notice is one month and severance is one month’s last salary per year of service. In the first year notice is shorter and no statutory severance is due. If the employer deposited 8.33% monthly under a Section 14 arrangement, the pension fund balance replaces the severance payment. A pre-dismissal hearing is expected in every case.

Can a company hire a foreign national in Israel, and what permit is needed?

Yes, but the employer must first obtain a permit to employ a foreign expert from the Population and Immigration Authority. The worker then receives a B/1 work visa, valid for up to 63 months for long-term experts. Experts generally must earn at least twice the average Israeli wage or have skills lacking in Israel. The fee is NIS 1,420 per expert.

Is it risky to engage contractors instead of employees in Israel?

Yes, when the contractor works like an employee. Labour courts look at integration into the business, control and economic dependence, not the contract label. A reclassified contractor can claim pension contributions, severance, annual leave, recuperation pay and notice for the full period, and National Insurance may be reassessed. Use contractors only for genuine independent projects.

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Regulation Updates in Israel

Jul 2025: Israel Raises Minimum Wage by 6.25% in 2025

From April 1, 2025, Israel’s monthly minimum wage increases to ILS 6,247.67 (ILS 34.32/hour), strengthening income support for low-wage workers.

Update first published on NNRoad in Jul 2025. The current rules are summarised in the sections above.

Discover the latest employment and compliance updates in Israel — helping you stay ahead in a changing regulatory landscape.