Hiring in Israel: Complete Guide 2027
Everything you need to know about hiring and managing employees in Israel
Overview
Israel has about 10 million people and one of the densest startup scenes anywhere, concentrated in Tel Aviv and Herzliya rather than in Jerusalem, the capital. Employer on-costs run 16 to 19% of gross: National Insurance at 3.55% on pay up to NIS 7,703 a month and 7.6% above it, plus 6.5% pension and 6% severance under the mandatory pension Extension Order. Tech employers add a 7.5% study fund. Income tax climbs from 10% to 47%, with a 3% surtax above roughly NIS 721,000 a year. The minimum wage is NIS 6,443.85 a month from 1 April 2026.
Currency
Primary Language
Payroll Tax
Pay Frequency
Overview
Employer Costs
Employer Social Contributions
Mandatory Benefits
EOR Service Fee
Total Additional Cost
Employee Deductions
Income Tax
Employee Social Contributions
Mandatory Employee Benefits
PAYROLL & SETUP
Setting Up Payroll in Israel
Israeli payroll is monthly, in shekels, and wages are late after the 9th of the following month under the Wage Protection Law. An employer needs a withholding file (tik nikuyim) at the Tax Authority, an employer file at the National Insurance Institute (Bituach Leumi), a pension fund and, in tech, a study fund (keren hishtalmut, 7.5% employer, 2.5% employee). Employer National Insurance in 2026 is 3.55% on the part of the wage up to NIS 7,703 a month and 7.6% above it, capped at NIS 51,910; the employee pays 0.4% and 7% plus 3.23% and 5.17% health insurance on the same bands. The Extension Order on mandatory pension adds 6.5% employer and 6% employee to the fund and 6% employer to the severance component. Income tax is withheld at 10% to 47% plus a 3% surtax; the Tax Authority's monthly booklet carries the thresholds. Minimum wage: NIS 6,443.85 a month from 1 April 2026. The EOR files form 102 monthly and issues form 106 each year.
Key Labor Laws &
Requirements
Employment Contracts
- Written terms due within 30 days (Notice to Employee Law)
- English contracts common, Hebrew prevails in court
- Probation is contractual, usually 3 to 6 months
Leave & Time Off
- 12 to 28 working days of annual leave by tenure
- Sick leave 1.5 days a month: day 1 unpaid, days 2 and 3 at 50%
- Maternity 26 weeks, 15 paid by the National Insurance Institute
Termination Rules
- Notice: 1 day per month in year 1, then 1 month
- Hearing (shimua) required before any dismissal
- Severance 1 month per year unless section 14 applies
COMPLIANCE
Manpower Contractor Licensing and Dismissal Rules in Israel
An EOR that places staff with a client is a manpower contractor under the Employment of Employees by Manpower Contractors Law, 1996, and needs a Ministry of Labour licence. Section 12A of that law makes the worker the client's employee after nine months, unless the provider employs under a service model. Ask which one applies. Dismissal needs a hearing (shimua) with the reasons given in advance, then notice under the Prior Notice Law: one day per month of service in the first year, one month after a year. Severance is one month's salary per year of service under the Severance Pay Law, replaced by the monthly deposits when the contract applies section 14. Probation has no statutory length; it is whatever the contract says.
Key Challenges
- Manpower-contractor licence and the nine-month cap under section 12A
- Employer on-cost of 16 to 19%, plus a 7.5% study fund expected in tech
- A hearing (shimua) is required before any dismissal
- Hebrew prevails in court even when the contract is in English
- Recuperation pay, travel allowance and car leasing come on top of base salary
Country Highlights
Advantages
- Deep engineering talent in cybersecurity, AI and semiconductors
- English contracts and payslips are standard in tech
- Onboarding through an EOR in 2 to 5 days
- Probation is contractual, not statutory
- Section 14 turns severance into a monthly deposit, with no year-end liability
Popular Industries & Roles
Technology
Avg. Salary: ₪300k-₪520k
Software engineers in Tel Aviv and Herzliya are among the best paid outside the US; equity and a study fund are expected in the offer
Cybersecurity
Avg. Salary: ₪340k-₪600k
Israel exports cybersecurity: Unit 8200 alumni and the Beersheba cyber park set the market for senior security engineers
Life Sciences & Medtech
Avg. Salary: ₪240k-₪420k
Medtech and pharma cluster around Haifa, Rehovot and the Weizmann Institute; clinical and regulatory roles pay below software
Top 3 Providers in Israel
Based on our analysis of pricing, compliance record, service quality, and customer reviews
CWS Israel
- Israel EOR market leader at $599/month
- PwC-verified; 8-week guarantee
- 24/7 human support; zero setup fees
- KellyOCG, Randstad, Multiplier clients
EORIL
- Israel EOR from $399/month
- No setup fee, no termination fee
- Car leasing and visa administration
- 24-hour onboarding, 2-hour contracts
Deel
- EOR in 130+ countries; owned entities in 120+
- Contractor and EOR in one platform
- 300+ integrations including Slack, Workday
- AI-powered compliance automation
Frequently asked questions
Hiring in Israel through an EOR, in short.
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How much does an employer pay on top of salary in Israel?
Employer contributions in Israel come to 3.55–7.6%; the largest mandatory line is Pension + severance 12.5%. With the other statutory benefits and a typical EOR fee, budget ~25–35% on top of gross salary.
What does an EOR charge per employee in Israel?
Published EOR fees in Israel run $500–900/mo per employee per month, with any setup fee negotiated separately. The fee is flat, so it weighs less as the salary rises.
What does an employee in Israel pay in tax and contributions?
Income tax is 10–50% progressive and employee social contributions are 3.6–12.2% (6% pension), both withheld by the employer on every pay run.
How long does it take to hire through an EOR in Israel?
2-5 Days once the employee's documents are in. The contract is issued by the EOR's local entity and payroll runs on the local cycle (Monthly).
Which EOR providers rank best in Israel?
CWS Israel, EORIL and Deel hold the first three places in our ranking for hiring in Israel. The full top 10, with the questions to put to each provider before signing, is here: Top 10 EOR providers in Israel.
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