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The individual income tax ranges from 10% to 50%. Income tax is calculated according to progressive rates. Multiple additional factors may impact overall rates such as the marital status and the number of children.

The tax rates change annually. These are the rates for 2021.

The employer cost is generally estimated at 18.38%-22.43% of the employee salary.

• Severance - 8.33%
• Pension Fund - 6.50%
• Bituah Leumi - 7.60%*
• Pension Agent Fee: 0.6% of the premiums paid      

Annual costs for seniority pay will apply. Costs are NIS 418 multiplied by:

• 5 for employees with 1 year of seniority
• 6 for employees with 2 and 3 years of seniority
• 7 for employees with 4 to 10 years of seniority

* 3.55% for gross monthly salaries up to ILS 7,522. 7.60% for gross monthly salaries over ILS 7,522, capped at a maximum salary for the contribution of ILS 49,030

These costs are provided as estimates and are intended solely for general informational purposes. To fully comprehend all associated costs and fees related to the terms of any employment agreement for this country, please contact our Sales team for a quote.

Standard working hours are 8.4 hours per day, 5 days a week. The standard workweek is from Sunday to Thursday.

The standard workweek can be extended up to 42 hours per week.

Overtime payment is mandatory for hourly-wage workers. Overtime payment is not mandatory for employees with a fixed salary as it is adjusted for in their salaries. Hours outside of standard work hours are considered overtime. Employees can work a maximum of 12 hours of overtime per day, 16 hours of overtime per week. For the first 2 hours of overtime, employees are paid 125% of their hourly wage. For every hour after that, employees are paid 150% of their hourly wage.

Pregnant employees, who have worked for 12 months for the same employer, are entitled to 26 weeks of paid leave. Employees who have worked for less than 12 months for the same employer or in the same place of employment are entitled to 15 weeks of paid leave.

The employee is not entitled to be paid a salary, but for some of the period, is entitled to be paid a Maternity Allowance (Maternity Pay) by the National Insurance Institute, based on the period for which national insurance taxes were paid.

• Employee who paid national insurance taxes for 10 out of the 14 months - Maternity allowance of 15 weeks
• Employee who paid national insurance taxes for 15 out of the 22 months - Maternity allowance of 15 weeks
• Employee who paid national insurance taxes for 6 out of the 14 months - Maternity allowance of 8 weeks

The maternity allowance rate is determined according to the employee's gross salary based on which National Insurance payments are made, up to the maximum amount of ILS 1,485.83 per day.

The employee is not entitled to any payment or maternity allowance for the remaining weeks of the maternity leave.

Employees are entitled to 1.5 days of paid sick leave per month, for up to 18 days. The first day is unpaid and considered as a qualifying period. The sick leave is paid at different rates and by the employer.

Employees can accrue sick leave up to 5 years, a total of 90 days.

Terminations must respect complex rules and the rules of an employee’s employment country. The off-boarding is always handled by the Employer with the primary stakeholders. It may include ad-hoc fees as well as required or recommended steps on specific termination cases.

Compliant terminations include:

• Voluntarily by the employee
• Unilaterally by the employer for any reason except:
  • Discrimination (based on age, parenthood, fertility treatments, race, sex, nationality, etc.)
  • Filing a complaint with a legal authority against his employer or an employee of the employer concerning violations of law at the workplace
  • When an employee is absent from work according to instructions of security forces during an attack or other national emergency
  • Reasons specified in a collective agreement, employment contract, or case law
• By mutual agreement
• By the expiration of the contract

The notice period in Deel employment agreements in Israel is:

This is the standard in the high-tech sector in Israel.
When an employee is terminated, the employer must pay the notice period salary and all mandatory payments such as unused PTO. The employee works during the notice period, unless the employer waives this right. If the employer doesn’t want the employee to keep working, he can release the worker on garden leave after the hearing, but must still pay for the notice period.

In Israel, all employees are entitled to severance pay. Severance pay is 8.33% of the salary for each year of employment. The amount paid is taken from the Severance fund that the employer must pay towards every month.

To protect you from unforeseen financial risks arising from terminations, Deel applies a Severance Accrual to all employment agreements in this country.  Deel has extensive expertise in managing litigation risk globally and our Severance Accrual calculation is based on the prevailing common-law or statutory entitlements and local best practices. In the event your employee resigns or is not entitled to severance, all unused amounts will be returned to you.

Full-time employees are entitled to 12 days of paid time off (PTO) a year for a 5 day work week.

Part-time employees are entitled to the same as full-time employees (pro-rata) or at 70% of full-time wages.

PTO accrues monthly and is calculated by dividing base pay by 21.67 days per month and multiplying the value, by 10 or 12 (based on employee workweek). The employer must make sure that employees use a minimum of 7 days of PTO per year. Employees are eligible for annual leave after 3 months of work.

Israel celebrates 9 public holidays:

1. First Day of Passover
2. Seventh Day of Passover
3. Yom Ha'atzmaut
4. Shavuot
5. Rosh Hashanah
6. Yom Kippur
7. First day of Sukkot
8. Shemini Atzeret
9. Simchat Torah

Additional elections holidays may also apply.

Contracts must be in Hebrew or English and can be bilingual. They must be in writing and signed by both parties.

A contract must include:

• Name
• Start date
• Base Salary
• Transportation
• Vacation Days
• Sick Days
• Pension
• Termination conditions