Updated on: 2025/03/11 04:48 (UTC)
Overview
Among the many statutes governing the employment relationship in Israel are the Wage Protection Law, the Annual Leave Law and the Advance Notice for Dismissal and Regulation Law. The Basic Law: Human Dignity and Freedom and the Basic Law: Freedom of Occupation are also important underpinnings of Israeli labor law.
Hiring
Employment Contracts
A written employment contract is not specifically required for Israeli nationals. In the case of foreign employees, however, the employer must provide each worker with a written copy of the employment contract in a language that the employee understands. The contract should include:
- employer and employee’s names;
- job description;
- beginning date and length of the employment period;
- salary, payment dates and deductions;
- working hours and rest days;
- paid vacations, holidays and sick days and
- details of health insurance and housing.
Restrictions on Hiring
The Youth Work Act of 1953 generally prohibits employers from hiring any person under the age of 15. Employees under the age of 18 who work in a trade must register as apprentices. All workers under 18 are limited to working a 40-hour workweek and may not work at night.
Women may not work in any environment that could endanger their health. Special consideration is given to reproductive health.
Only licensed employers that hold valid employment permits from the Population and Immigration Authority in the Ministry of the Interior may employ foreign workers.
Recordkeeping
Employment documents, such as a registry of work hours and annual leave, generally should be kept for seven years.
Background Checks
Employers may request that job candidates provide information regarding their work history, certification of their academic and educational history or authorization to obtain a credit history, but only if such information would be relevant to job openings in question.
Private employers may not consider criminal histories in the hiring process, even with the candidate’s prior consent. Any employer that receives a copy of a criminal report and was not entitled to receive it by law is committing a felony.
Requiring job candidates to undergo medical examinations is allowed only if the tests are:
- relevant to the job opening in question;
- called for or allowed by the provisions of a law, a collective bargaining agreement or an employment contract and
- reasonable under the existing circumstances.
If medical tests are not relevant to the job, they are not allowed.
A medical certificate is required of foreign workers.
Noncompetition Agreements
Noncompetition clauses covering an employee’s work after termination have come under tough judicial scrutiny in Israel. The general rule is that a noncompetition clause after termination applies only if competition would directly affect the employer—for example, in situations involving trade secrets. These agreements are reviewed on a case-by-case basis.
Reference Citations
Employment Contracts: Notice to the Employee Law, 5762-2002, § 2 (Hebrew)
Restrictions on Hiring: Youth Employment Law, 1553-1953, §§ 2, 5-6 (Hebrew)
Recordkeeping: Hours of Work and Rest Law, 5711-1951, § 25; Annual Leave Law, 5711-1951, § 26
Immigration and Work Permits
In General
Only foreign workers with work visas may be employed.
Visas and Work Permits
Only licensed employers that hold valid employment permits from the Population and Immigration Authority (PIBA) in the Ministry of the Interior may employ foreign workers, and only foreign workers with B-1 work visas may be employed. Licensed employers must register their foreign workers’ employment according to the PIBA procedures for the relevant sector before the foreign employees begin work.
B-1 work visa: This is the visa used by someone who enters Israel for a limited period in order to work. It is given to experts, artists and others. Applications and fees are submitted to the Ministry of the Interior, which has sole discretion on approval.
The applicant will be interviewed and must provide:
- a verified certificate of good conduct,
- certification of medical examinations performed in clinics or hospitals recognized by the mission (the certification must show normal results in tests for tuberculosis, hepatitis and AIDS) and the results of blood tests,
- fingerprints and a photograph,
- a completed visa application, and
- two passport photos.
The worker must enter Israel within the time specified in the visa and must stay in the country no longer than the visa allows but may apply for an extension at one of the Ministry of the Interior’s population administration offices.
Work visas are normally valid for one year and extensions of up to one year each may be request, but the total stay cannot exceed five years. Foreign workers on B-1 visas must be paid at least double the national average salary.
B-1 short employment authorization (SEA): This work visa is valid for 45 days and cannot be extended. It is possible to divide the 45 days into a number of periods, although prior to each entry a new application must be submitted and approved.
B-1 short term employment process (STEP) visa: STEP visas allow foreign nationals to work in Israel for up to 90 days. Applicants for this visa must be experts in their field and present a college diploma or relevant certificate of vocational training.
The STEP visa is valid for a single entry only, which means the employer must apply for a return visa if the foreign worker needs to depart and re-enter Israel.
STEP visa holders must be paid at least the minimum wage.
Post-Entry Requirements
Foreign workers must be employed in full-time positions. They may not work for other employers, even during holidays or after hours. Anyone found working for another employer risks deportation, and the employer may face fines or criminal charges.
Foreign workers are not required to obtain permission from their employers before leaving or changing employers, but they must give notice of their plans to the employer, PIBA and their registered recruitment agency or manpower company. Unemployed foreign workers have a maximum of 90 days to find and register for alternate employment with a licensed employer in the sector listed on the worker’s B-1 visa. Any worker who does not find employment within 90 days must leave Israel or be subject to detention and deportation.
A foreign worker in Israel is entitled to the same working conditions as an Israeli employee. Employers must give foreign workers a written employment contract, private health insurance and proper housing.
Penalties
An employer can be fined 5,000 shekels or more (and in some cases face criminal charges) for each of the following violations:
- failing to pay a foreign worker the minimum wage,
- deducting more than the amount permitted from a worker’s pay or
- failing to provide a written employment contract, health insurance, housing, detailed wage slip or prior notice of dismissal.
Foreign workers who feel they have been unfairly or illegally treated can file a complaint with the Branch for the Enforcement of Labor Laws or with the foreign workers’ rights ombudsman in the Ministry of Industry, Trade and Labor. An employee may not be dismissed or otherwise penalized for filing a claim with the ministry.
Forms
Visa application form.
Reference Citations
Visas and Work Permits: Entry Into Israel Law, 5712-1952, §§ 2-6
Nondiscrimination
In General
Employers may not discriminate in hiring, employment conditions, promotions, professional training, dismissal, severance pay, or retirement benefits based on race, religion, sex, family status, pregnancy, fertility treatment, national origin, sexual orientation, age, disability, or political opinion or party affiliation.
Disability Discrimination
Under the Equal Rights for People With Disabilities Law of 1998, employers may not discriminate against physically or mentally disabled persons who are capable of performing the tasks required by their jobs. Short of an unreasonable burden on the employer, accommodations involving the workplace, equipment, job requirements and hours of work must be made for persons with disabilities.
Gender Discrimination
The Equal Pay Act of 1996 states that men and women must receive equal pay and benefits for equal work with the same employer.
Under the Prevention of Sexual Harassment Law of 1998 and related provisions in the Equal Opportunities Act, all forms of physical and verbal sexual harassment are forbidden in the workplace, as is retaliation for bringing a sexual harassment complaint. The law specifies various behaviors that constitute sexual harassment in the workplace, including:
- physical assaults of a sexual nature;
- repeated unwanted sexual propositions;
- repeated unwanted sexual comments;
- degrading comments involving gender or sexual orientation;
- repeated sexual propositions or sexual comments by supervisors, even if the other person has not demonstrated that the behavior is unwanted and
- negative consequences—involving hiring, employment conditions, promotions, professional training, dismissal, severance pay or retirement benefits—faced by a person as a result of sexual harassment or as a result of bringing a sexual harassment complaint.
Employers are required to take steps to prevent sexual harassment, to set up procedures for the reporting and investigation of complaints and to provide redress for victims. In addition, employers with more than 25 employees must establish and publish rules on the handling of sexual harassment in the workplace.
Individuals found guilty of sexual harassment can face up to four years in prison, as well as fines. Employers that don’t take the required steps to prevent sexual harassment or deal with complaints also face fines.
Under the Employment of Women Law of 1954, women may not be dismissed during pregnancy or for any reason related to pregnancy.
Gender Pay Reporting: Effective June 1, 2022, employers with more than 518 employees must annually:
- prepare an internal report detailing average pay gaps between men and women within each group of employees in the company;
- publish a similar report on their website in a manner that keeps employees’ personal information confidential; and
- give each employee an individual report about gender wage gaps within their department in the company.
Reference Citations
Nondiscrimination: Equal Opportunities Law, 5748-1988, § 2
Gender Discrimination: Male and Female Equal Pay Law, 5756-1996, §§ 2-9
Employee Privacy
Employee Data
Employers requesting personal information from employees must include a notice informing the employee:
- whether there is a legal duty to provide the information or whether a response is voluntary and subject to that person’s consent;
- the purpose of the information request; and
- to whom the information will be given.
Employee consent must be informed, yet can be either express or implied.
Employees have the right to inspect, personally or through an authorized representative, information about them kept in any database. The employer must enable access in Hebrew, English, or Arabic, at the request of the data subject. If employees inspecting their personal information find it incomplete, incorrect, out of date, or unclear, they may request that employer amend or delete the information.
Employee Monitoring and Surveillance
Under guidelines issued in 2017, surveillance cameras may be used in the workplace to protect security, property, and the systems used to manage sensitive personal information. They may also be used as a tool to oversee employees and the quality of service they provide to customers. Even in permitted uses, however, cameras may only be installed after the employer has formulated a clear policy and detailed the goals, manner, and extent of the system’s use with the employees or their representatives and communicated the information to the employees.
After installing the cameras, surveillance footage cannot be used for any purpose other than those determined by the plan. Employers may not use cameras in private areas such as bathrooms, changing rooms, and rest areas. Installing a camera at an employee’s workstation is permitted only with the employee’s consent and in cases in which the benefit to the employer significantly outweighs the loss of the employee’s privacy.
Informed, explicit, freely-given, and written (to the extent possible) consent of the employee is a basic condition for monitoring and accessing employee’s privacy. The employer has to obtain the employee’s consent before monitoring is carried out. The consent has to be based on complete disclosure and transparency by the employer, after providing all required information to the attention of the employee.
Israeli courts have extended the scope of information for which there is a right to privacy under the law. Violators face criminal, civil, and administrative sanctions. Israeli Law imposes a requirement of transparency regarding the identity of owners and managers and the type of information they collect and store.
Remote Workers: Israel’s Privacy Protection Authority (PPA) has published guidance to assist employers with complying with privacy protection laws when monitoring employees working remotely. The guidance explains the laws and legal requirements governing the surveillance of employees’ performance while working from home. The PPA advises employers to avoid surveillance measures that create a high degree of privacy infringement, such as using the webcam and microphone on the company’s laptop to photograph and record employees and their surroundings.
Reference Citations
Employee Data: Privacy Protection Law, 5741-1981, § 11-14;
Employee Monitoring and Surveillance: Basic Law: Human Dignity and Liberty, 5752-1992 §§ 1a, 7; Privacy Protection Law, 5741-1981, § 1; The Use of Surveillance Cameras in the Workplace and in the Context of Work Relations, 2017 (Hebrew)
Compensation
Hours of Work
The regular workweek, which typically runs from Sunday to Thursday, is 42 hours long . In workplaces that work five days a week, the number of hours per day are 8.6 hours for 4 days, and 7.6 hours for the remaining day. The Ministry of Industry, Trade and Labor must approve any schedule that involves longer hours.
A break of no less than eight hours must divide one working day from the next. Additionally, most employees must be given a weekly rest period of at least 36 consecutive hours, which for Jewish workers must include the Sabbath—sundown Friday to sundown Saturday—and for non-Jewish workers must include Friday, Saturday or Sunday, whichever is the standard day of rest for that worker’s religion.
Night shifts cannot exceed 7 hours and must be limited to no more than seven nights in total every two weeks.
Minimum Wage
Effective Apr. 1, 2024, Israel’s standard monthly minimum wage is 5,880.02 shekels, up from 5,571.75 shekels. The increased minimum wage also applies to nonresident (foreign) workers.
Overtime
Any working hours in excess of the regular daily hours and/or in excess of the regular weekly hours are considered overtime. Employers must pay 125 percent of the worker’s normal wages for the first two hours of overtime in a day and 150 percent for any hours thereafter. Those who work on a holiday or Saturday are entitled to 150 percent of their normal pay and a vacation day.
Employees working a six-day week cannot be employed for more than four hours of overtime per day and 12 hours of overtime per week. Employees working a five-day week cannot be employed for more than four hours of overtime per day and 15 hours of overtime per week.
Wage Payment
Compensation must be paid in full by cash or check at the place of employment or by deposit into an employee-authorized bank account. No other form of payment is permissible unless a collective agreement allows it. Monthly salaries must be paid at the end of each month. Salaries calculated on an hourly, daily or weekly basis must be paid every two weeks unless otherwise specified in a collective agreement or employment contract.
Among the permissible deductions from wage payments are those for income taxes, union or agency fees, disciplinary fines under a collective agreement and any other deductions agreed to by an employee.
If an employee owes an employer money, the employer can make deductions to repay the debt, but these may not total more than a quarter of the value of a paycheck. If it is the employee’s final paycheck upon termination, however, the employer may garnish 100 percent of wages if that is required to pay the debt.
Mandatory Bonuses
Israel’s labor code does not address mandatory bonuses.
Reference Citations
Hours of Work: Hours of Work and Rest Law, 5711-1951, §§ 2, 3, 7; Five-Day Working Week Extension Order (Hebrew); Working Day and Work Week
Minimum Wage: Ministry of Economy and Industry
Overtime: Hours of Work and Rest Law, 5711-1951, § 16
Wage Payment: Wage Protection Law, 5718-1958, §§ 2-6
Benefits
Vacation
Employers in Israel are required to grant employees between 13 and 21 days of paid vacation, the amount depending on workers’ length of service with the same employer. An employee must take at least seven consecutive days off in any given year but can carry over the remaining leave days into the next two years. Employees may not choose to take pay in lieu of leave, but upon termination they are compensated for any unused leave they have earned. Employees forfeit their right to be paid for leave if they work for pay for another employer during the leave period.
Holidays
Workers are entitled to nine paid holidays per year. These can be the Jewish religious holidays or, in the case of workers of other faiths, holidays related to those religions. While about 75 percent of Israelis are Jewish, there is a large Muslim population and a smaller number of Christians. Jewish holidays follow a lunar calendar, so the date of the observances varies each year. They are observed from sundown to sundown.
Of the Jewish religious holidays, only the first and last days of Sukkot are national holidays.
Employees are entitled to 150 percent pay and an optional vacation day if they work during a holiday.
Maternity Leave
Female employees who have worked at least one year for the same employer are entitled to 26 weeks of maternity leave. The first 15 weeks of maternity leave are paid by the National Insurance Institute. The rest of the leave is unpaid. Pregnant employees who have worked less than one year are entitled to 15 weeks of maternity leave only.
Up to seven weeks of maternity leave may be taken before the estimated due date. Maternity leave may be extended for such circumstances as multiple births or hospitalization of the new mother or the baby.
A birth grant also is paid within a month after the birth to help with some of the baby’s initial expenses. Parents who are eligible for the full amount of leave may share it with their spouses. Employees are also entitled to take unpaid leave following the conclusion of paid maternity leave for up to one year from the date of birth.
For the first four months after returning to work following maternity leave, mothers are entitled to a one-hour break during the workday with no reduction in pay.
After they have taken all paid leave, mothers are entitled to take up to 12 months of unpaid leave, the exact amount depending on length of service with the employer.
Terminating the employment of a pregnant employee is prohibited if the employee has worked for the employee for at least six months. Employers may not dismiss an employee on maternity leave or within 60 days after its conclusion.
Paternity Leave
Working fathers are eligible for six days of paid paternity leave following the birth of a child, including the day of the birth itself. Three of these days will come from the father’s sick leave and the remaining from his annual leave. If the father has no remaining vacation days, those days will be granted as unpaid leave.
A working father also can assume his wife’s leave starting one week after childbirth. The mother must declare in writing that she consents to waiving part of her maternity leave and that she is returning to work during the period in which she waives the leave.
After they have taken all paid leave, fathers are entitled to take up to 12 months of unpaid leave, the exact amount depending on length of service with the employer.
Sick Leave
Under the Sick Pay Law, employees who miss work due to illness are entitled to paid leave starting with their second day of absence. The maximum amount of paid leave depends on their length of service with their present employer. The benefit is 50 percent of an employee’s regular salary for the second and third days missed and 100 percent of regular salary after that. Employees accumulate 1 1 / 2 sick days per month of service with their employers (18 days per year) up to a maximum of 90 days.
Compensation for sick leave up to 90 days is borne by the employer. After 90 days the leave may be payable by an insurance company, disability insurance, pension fund or the National Insurance Institute depending on the circumstances.
Workers can use their accumulated sick leave to care for ill family members, up to six days a year to care for a spouse or parent, eight days (16 for a single parent) to care for a child under 16 years of age.
Other Leave
Adoption leave. Adoptive mothers are entitled to the same leave as natural-birth mothers.
Bereavement Leave. Employees who have worked for their employer for at least three months are entitled to up to seven days paid bereavement leave for the death of a parent, child, spouse, or sibling.
Pensions and Social Security
The National Insurance Institute provides social security, including disability insurance, health insurance, long-term care, maternity benefits, unemployment insurance, child allowances and old-age and survivors’ pensions.
Employers, employees and the government contribute to the system. Some benefits are paid on an earnings-tested basis.
Workers’ Compensation
Employees who cannot work for at least 12 days because of a work-related injury or disease are entitled to an injury benefit of 75 percent of their regular wages for up to 13 weeks (91 days) plus medical care and rehabilitation. Workers receive benefits from the NII, but employers reimburse the institute for the benefits paid for the first 12 days.
Reference Citations
Vacation: Annual Leave Law, 5711-1951, §§ 2-10 (Hebrew); Amendment No. 15 to Annual Vacation Law, 2016
Maternity Leave: Employment of Women Law, 5714-1954, §§ 6, 9 (Hebrew)
Paternity Leave: Employment of Women Law, 5714-1954, § 6 (Hebrew)
Sick Leave: Sick Pay Law, 5736-1976, § 4
Pensions and Social Security: National Insurance Institute
Workers’ Compensation: National Insurance Institute, Disability
Labor Relations
In General
The right to organize has been established by the National Labor Court. Employers are not required by law to bargain with unions, but if they do, it must be in good faith.
Right to Organize
Employees register directly with the principal Israeli union—the Histadrut—or another independent national union. Members are categorized by industry and profession and bargain anonymously as part of the larger group. Other unions, which unlike the Histadrut have clear political and religious designations, exist but are not significant in the realm of labor relations. Smaller independent trade unions also exist based on profession, such as doctors, academic staff, teachers and journalists.
Employees may not belong to more than one union but this union need not be the representative union at their workplace. Union members may not be terminated based on their union activities; if they are, reinstatement is mandatory.
The right to organize is not explicitly mentioned in Israel’s Basic Laws, but the National Labor Court has stated that it is a basic right. Closed-shop unions are not allowed as they are seen as a threat to personal freedom, but unions are permitted to collect fees for membership.
To be recognized as legal unions in Israel, organizations must:
- bargain collectively,
- be free of employer influence and conflict of interest,
- be permanent,
- offer voluntary membership to employees,
- disseminate regulations,
- provide for democratic election of officials and
- represent employee concerns.
Unions are required to conduct investigations into allegations of misconduct by one employee against another.
Employment in Israel is divided into the private sector, the state sector and third-sector organizations. Employment conditions are set either by agreement between employers and employees or by employer regulation.
Collective regulation of employment conditions takes place at three levels:
- Agreement between the state and the Histadrut sets standards for minimum wages, cost-of-living adjustments, transportation allowances, vacation time, workweek changes, dismissal notices and resignation policies.
- Agreement between unions and industry-specific organizations set sectorwide terms for wages, employment conditions, disciplinary proceedings, pensions and social security.
- The third level is agreement between employers and local chapters of the Histadrut or any other relevant union.
If agreements between any of these levels conflict, the policy most benefiting the employees takes precedence.
Employers are not required by law to bargain with unions, but if they do, Israeli courts have stipulated that organizations must bargain in good faith, showing a genuine intention to negotiate and providing relevant information.
Collective agreements must fulfill several requirements to be considered valid. They must:
- be in writing;
- be registered with the Ministry of Industry, Trade and Labor;
- reflect the agreement between the employer and the employees’ representative and
- contain stipulations on the hiring and termination of employees, employment conditions and the rights and obligations of the parties to the agreement.
Collective agreements are binding on all employees included in the agreements. Employees may not waive rights granted in a collective agreement. Collective agreements stand until they are legally nullified or their terms run out. Cancellation or changes must usually be agreed to by the employer and the employees’ representatives.
An employer cannot cancel wage incentives previously stipulated by collective arrangement without offering the opportunity for negotiation first.
Works Councils
Israel’s labor laws do no address works councils.
Dispute Resolution
Labor disputes may be resolved by mediation, conciliation and arbitration under statute; by collective agreement or by other specific agreement.
In the nonunion sector, for the most part, there are no formal means of settling grievances or disputes except for discussions with the employer or filing a case in the Labor Court. Newer companies have established grievance procedures that allow workers to have limited rights to present their grievances to management.
Strikes and Lockouts
While work stoppages are not expressly mentioned in Israel’s basic laws, court rulings have effectively created a right to strike. In addition, the Collective Agreements Law acknowledges work stoppages by stipulating that workers’ participation in a strike does not constitute a breach of employment obligations or contractual compliance, and the Settlement of Labor Disputes Law specifies that parties to a labor dispute must give 15 days’ notice before a strike or a lockout. An employee’s right to picket is protected by the country’s laws on freedom of expression and demonstration.
Successorship Clauses
Israel’s labor laws do no address successorship clauses.
Reference Citations
Right to Organize: Collective Agreements Law, 5717-1957, §§ 1, 7
Dispute Resolution: Settlement of Labor Disputes Law, 5717-1957
Strikes and Lockouts: Settlement of Labor Disputes Law, 5717-1957, §§ 5a, 37b
Safety, Health and Security
In General
Most occupational safety and health regulations in Israel apply only to plants and factories where manual labor is performed, although collective agreements may extend the regulations beyond plants and factories and specify further safety requirements.
Workplace Safety and Health
Employers must provide their employees with necessary training to avoid accidents. All present risks must be disclosed to employees, including risk of disease and of accidents. Plants with more than 25 employees must appoint a committee in charge of safety issues consisting of both management and employees.
Occupational accidents, diseases contracted in the workplace and work-related deaths must be reported to a labor inspector.
Women may not work in any environment that could endanger their health. Special consideration is given to reproductive health.
The Ministry of Industry, Trade and Labor enforces these regulations.
Drug and Alcohol Use
Smoking is banned in all Israeli workplaces and most public places, though designated smoking areas may be established.
Reference Citations
Workplace Safety and Health: Work Safety Ordinance, 5730-1970; Labor Inspection and Organization Law, 5714-1954, § 10
Drug and Alcohol Use: Prevention of Smoking and Exposure to Smoking in Public Places Law, 1983, § 15
Termination
Termination by Employer
In Israel, there is no regulation prohibiting employers from terminating employees at any time for any reason, except when unlawful discrimination is involved. In terminating employees, however, employers must provide proper notice or compensation in lieu of notice. In addition, collective agreements and individual contracts can put limits on employers’ ability to terminate employees.
The decision not to renew a fixed-term contract does not constitute a termination unless the contract contains language that creates a legitimate expectation of continuity. In these cases, advance notice must be given of the intention not to continue a contract after its expiration and of the reasons for this, so an employee can challenge the action.
According to the Law on Resignation and Dismissal Notice of 2001, employers or employees seeking to terminate employment must give notice, the length of which depends on length of service with the employer.
If the worker is on a monthly salary, the following notice requirements apply:
- first six months of service: one day’s notice for each month of employment,
- the seventh month to the first year: six days’ notice plus 2 ½ days for each month worked during this period and
- after the first year: a month’s notice.
If the worker is paid more frequently than monthly, the following notice requirements apply:
- first year of service: one day’s notice for each month of employment,
- second year of service: 14 days’ notice plus one day for every two months worked during this period,
- third year of service: 21 days’ notice plus one day for every two months worked during this period and
- after three years: a month’s notice.
In lieu of providing notice, employers or employees can choose to pay a worker the regular salary for the notice period.
No notice is required in the case of a fundamental breach of contract.
Employers must inform employees of the reasons for dismissal to allow employees to challenge such decisions.
Employers must consult trade unions at the place of business prior to termination regardless of collective agreement stipulations. Without this consultation, the courts will order reinstatement.
Termination by Employee
Employees have the right to resign employment at any time unless contractually restricted from doing so, though proper notice or compensation in lieu of notice must be provided.
When termination occurs through mutual agreement and the worker is entitled to a pension, it is considered neither a dismissal nor a resignation.
Plant Closings and Mass Layoffs
Under the Employment Service Law employers are required to notify the Employment Service Bureau if more than 10 employees are terminated in the same month.
Payment on Termination
Under the Severance Pay Law of 1963, workers who have been with an employer for a full year and seasonal employees who have been with an employer for two seasons are entitled to severance pay if they are dismissed.
A worker on a fixed-term contract that is not renewed is due severance pay if he or she has enough service, but if the employer offers to renew the contract at least three months in advance of its expiration and the worker rejects the offer, the worker is considered to have resigned and no severance is due.
The minimum amount of severance pay is one month’s wages per year of service with the employer. For partial years of service, severance is calculated on a pro rata basis.
Employees who resign are not entitled to severance pay unless the resignation is for justifiable reasons, as in the case of a worker who is ill or a member of whose family is ill, a mother within the first nine months after childbirth who wishes to stay home to take care of her child, a newly married person who is moving away to live at the spouse’s residence or an employee experiencing a significant deterioration in the conditions of employment.
Unemployment Insurance
To collect unemployment, a person who is out of work must satisfy the following requirements:
- be a resident or temporary resident of Israel,
- be age 20 to 67 (the minimum age is 18 in a narrow range of cases) and
- have been employed from 300 to 360 days out of the previous 540 with an employer that was making contributions on the worker’s behalf to the National Insurance Institute.
Workers who resign from their jobs without justifiable reasons—such as their health or that of a family member, significant deterioration of employment conditions or a change in the place of residence or the workplace—cannot begin to receive benefits for 90 days. Those who reject suitable offers of employment or job training also must wait 90 days and will have 30 days deducted from the maximum period of benefits.
Reference Citations
Termination by Employer: Law on Resignation and Dismissal Notice of 2001, §§ 2-4 (Hebrew)
Termination by Employee: Law on Resignation and Dismissal Notice of 2001, §§ 2-5 (Hebrew)
Plant Closings and Mass Layoffs: Employment Service Law, 5719-1959, § 37
Payment on Termination: Severance Pay Law, 5723-1963, §§ 1-3
Personal Taxes
Residency Requirements
An individual is considered an Israeli resident if his or her “center of life” is in Israel. The “center of life” test examines the connections the taxpayer has to Israel as well as the taxpayer’s subjective intention. As a general rule, to determine a person’s “center of life” the following criteria (among others) are considered:
- place of the individual’s permanent home,
- place of the individual’s and his or her family’s habitual abode,
- place of the individual’s employment,
- place of the individual’s economic interests and
- place where the individual is involved in social organizations.
Individuals are also considered resident if they stay in Israel during the relevant tax year for:
- 183 days or more or
- 30 days or more if they have stayed in Israel for a total of at least 425 days during the relevant tax year and the preceding two years.
Taxable Income
Israeli residents are subject to tax on their worldwide income minus allowable deductions. Nonresidents are subject to tax only on Israeli-sourced income.
Taxable income includes salaries, wages, severance pay, pensions, the value of certain benefits and other forms of remuneration.
Nontaxable income includes employer contributions to approved pension plans, retirement funds or education funds, severance pay up to a certain limit and compensation for death or injury.
Employers doing business in Israel must withhold taxes on wages earned by all workers.
Tax Rates
Israeli and foreign residents are subject to taxes at the same rates. Income tax rates are assessed on a progressive scale ranging from 10 percent to 50 percent
The income tax rate table is as follows:| Range of Annual Income (New Shekels) | Range of Monthly Income (New Shekels) | Income Tax Rate |
|---|---|---|
| Up to 75,720 | Up to 6,310 | 10 percent |
| More than 75,720 and up to 108,600 | More than 6,310 and up to 9,050 | 14 percent |
| More than 108,600 and up to 174,360 | More than 9,051 and up to 14,530 | 20 percent |
| More than 174,360 and up to 242,400 | More than 14,530 and up to 20,201 | 31 percent |
| More than 242,400 and up to 504,360 | More than 20,201 and up to 42,030 | 35 percent |
| More than 504,360 and up to 649,560 | More than 42,030 and up to 54,130 | 47 percent |
| More than 649,560 | More than 54,130 | 50 percent |
Israel levies two social taxes on every resident—national insurance and health insurance. Employers are responsible for withholding taxes from employees and making additional payments. Both insurance taxes are paid to and managed by the National Insurance Institute (NII). Generally, all individuals are subject to national insurance taxes, while Israeli residents, but not nonresidents, are subject to health insurance taxes.
Reference Citations
Residency Requirements: Income Tax Ordinance, 5721-1961, § 1
Web References
Law and Regulation
Annual Leave Law
Employment of Women Law
Employment Service Law
Equal Opportunities Law
Law on Resignation and Dismissal Notice
Male and Female Equal Pay Law
Minimum Wage Law
Severance Pay Law
Sick Pay Act
Wage Protection Law
Work Safety Ordinance