What do you need to know to hire in Israel?
The National Insurance Institute, not the employer, pays the maternity allowance during the 26 weeks of birth and parenthood leave. Severance runs at 1 month's salary for each year worked, and the 2026 tax brackets widened the 20% band up to NIS 19,000 a month. Each guide below takes one layer.
· Israel guide
How does Teamed handle Israeli hiring for you?
Teamed becomes your legal employer of record in Israel for from $599 per employee per month, with zero FX mark-up in any currency.
Payroll, contracts, and the full Israeli employment law stack run on one platform.
Real HR and legal experts manage every Israeli hire, from the first offer letter to the final settlement. An actual person, not a chatbot or a pooled queue, handles your Israeli team alongside EOR, contractor onboarding, and entity payroll on one platform. There is no setup fee and no exit fee. Employer cost passes through at cost, itemised on every invoice.
An Israeli contractor who converts to employment keeps their record, and that same employee can graduate from EOR to your own Israeli entity without re-onboarding. Run the Crossover Calculator to see the month the model flips. EOR is the right model for a first Israeli hire, until it isn't.
- Israel pays the maternity allowance from the state, not the employer. The National Insurance Institute (Bituach Leumi) funds the allowance for 15 weeks of the 26 weeks birth and parenthood period for a parent who meets the contribution test. The employer does not pay wages during that paid stretch. Most EOR guides describe maternity pay as an employer cost and miss this.
- There is no statutory probation period in Israel. No law sets a trial window. Notice and severance accrue from the first month of work, so a quick exit still carries notice. The termination guide sets out how notice scales in year one.
- The first sick day is unpaid. Sick pay is 0% on day one, 50% on days two and three, then 100% from day four. Days accrue at 1.5 days per full month up to 90 days. The benefits guide gives the full picture.
Hiring in Israel adds employer National Insurance and health insurance of 7.6% on monthly pay above NIS 7,703. Below that the employer rate is 4.51%. Contributions stop at a monthly ceiling of ILS 51,910/month.
Payroll runs monthly. The wage is due at the end of the month it covers. Wages unpaid by 9 days after that count as delayed wages and trigger penalties. The minimum wage is ILS 6,443.85/month from 1 April 2026.
Teamed runs Israeli payroll, contracts, and compliance through a vetted partner entity in Israel.
This page is the map. Each guide below is the detail.
Zero FX. No setup fees. 48-hour onboarding. The price your finance team can forecast against without an asterisk.
How much does it cost to hire an employee in Israel in 2026?
Plan on salary plus employer National Insurance and health insurance.
The full employer rate is 7.6% on monthly pay above NIS 7,703, falling to 4.51% on pay below that. Contributions stop at ILS 51,910/month.
The employer pays National Insurance and health insurance to the National Insurance Institute. The rate is 4.51% on the part of monthly pay up to NIS 7,703, and 7.6% on pay above that, up to a ceiling of ILS 51,910/month. Mandatory pension contributions sit on top under a national extension order. Teamed's Israel fee sits inside the total cost envelope, not outside it.
Teamed's Israel price is a starting rate, with zero FX in any currency pairing. No setup fees. No exit fees. Salaries, taxes, and benefits passed through at cost on every invoice.
The full breakdown, with worked examples at current rates, is in the cost guide.
Do you need an Israeli entity to hire employees in Israel?
No. An Employer of Record runs Israeli payroll and contracts from day one.
Your own Israeli entity becomes cheaper than EOR once headcount in the country grows, depending on salary.
Registering an Israeli company means incorporation at the Registrar of Companies, a tax file with the Israel Tax Authority, a deductions file for payroll, and registration with the National Insurance Institute. Setup takes weeks and comes with ongoing monthly filings and reporting. An Employer of Record is faster and cheaper at low headcount. Teamed runs Israeli payroll, contracts, and compliance from day one.
The crossover point depends on Israeli salary levels and your local accounting costs. For most professional-services teams it lands once you hold a steady group of employees in the country. The EOR vs entity guide runs those numbers.
Most EOR providers will not tell you when you have crossed it. We do, and we help you move. You progress from contractor to EOR to your own Israeli entity on one platform under Teamed's Graduation Model, with tenure preserved.
What changed in Israeli employment law recently?
The 2026 income tax brackets widened. The 20% band now runs up to NIS 19,000 a month.
The minimum wage rose to ILS 6,443.85/month from 1 April 2026.
Amendment 288 to the Income Tax Ordinance widened the middle brackets for 2026, retroactive to 1 January 2026. The 20% band now reaches NIS 19,000 a month, and the 31% band starts above that. Top earned income is taxed at 50%, which includes a 3% surtax on the highest pay. The minimum wage rose to ILS 6,443.85/month from 1 April 2026, or ILS 35.40/hour on a 182-hour month.
National Insurance figures for 2026 are set by the Institute's Employers Circular 1522, effective 1 January 2026. The contribution ceiling is ILS 51,910/month. The compliance and tax guides cover each current rate in detail.
What benefits must you provide Israeli employees in 2026?
The floor is 16 days gross days of annual leave in the first five years, rising with seniority.
Birth and parenthood leave is 26 weeks, with the state funding the allowance for 15 weeks of it.
Statutory annual leave is 16 days gross days for each of the first five years under the Annual Leave Law, then 18 days in the sixth year, 21 days in the seventh, and one extra day each year after that up to 28 days. There are 9 days festival rest days on top.
Birth and parenthood leave runs 26 weeks for a parent with at least a year of service, or 15 weeks below that. The National Insurance Institute pays the allowance for 15 weeks where the contribution test is met, or 8 weeks on the partial test. Sick pay starts at 0% on day one, then 50% on days two and three, then 100% from day four, accruing 1.5 days per month up to 90 days. The benefits guide covers each entitlement in full.
What are payroll taxes in Israel in 2026?
Employer National Insurance and health insurance is 7.6% on monthly pay above NIS 7,703.
Employees pay income tax on a rising scale from 10% up to 50% on the highest pay.
The employer pays National Insurance and health insurance at 4.51% on the lower band of monthly pay and 7.6% above NIS 7,703, up to the ceiling of ILS 51,910/month. Employees pay 4.27% on the lower band and 12.17% above it. The wage must be paid by the end of the month it covers under the Wage Protection Law.
Income tax is progressive. The first band is 10%, rising through 14%, 20%, 31%, 35%, and 47% to a top rate of 50% on monthly pay above NIS 60,131. Teamed runs all employee deductions and remittances. The tax and payroll guide sets out every band and threshold.
How do you terminate an employee in Israel?
After the first year, monthly-paid staff get 30 days written notice.
Severance is 1 month's salary for each year of service, owed after 1 continuous year.
Notice scales with service under the Advance Notice Law 5761-2001. In the first six months it is 1 day per month worked. After the first full year a monthly employee gets 30 days. An employer who skips notice pays the regular wage for the missed period instead.
Severance under the Severance Pay Law is 1 month's salary for each year of service, owed once an employee has worked 1 continuous year and is then dismissed. Many employers fund this in advance through a Section 14 pension arrangement. There is no statutory probation period, so notice and severance accrue from the start. The termination guide runs the full process.
What should you know before hiring in Israel?
Two things catch US buyers out. The first is that the state, not the employer, pays the maternity allowance.
The second is that there is no statutory probation, so a fast exit still carries notice and counts toward severance.
Maternity pay comes from the state, not your payroll. The National Insurance Institute funds the allowance for 15 weeks of the 26 weeks birth and parenthood period for a parent who meets the contribution test. You keep the role open, but you do not pay the wage during that paid stretch. This is the reverse of how many markets handle it.
There is no trial window to lean on. Israeli law sets no statutory probation. Notice accrues from the first month of work and severance starts counting from day one toward the 1-year mark. A quick exit still needs the right notice or pay in place. The hiring guide and the termination guide both cover safe process in detail.
Frequently asked questions
How much does it cost to hire an employee in Israel?
Plan on salary plus employer National Insurance and health insurance of 7.6% on monthly pay above NIS 7,703, falling to 4.51% below that. Contributions stop at a monthly ceiling of ILS 51,910/month. Mandatory pension sits on top. Teamed's Israel fee is one flat number per employee per month, with zero FX mark-up in any currency pairing. The cost breakdown guide has worked examples.
Can a US company hire in Israel without an entity?
Yes. An Employer of Record like Teamed runs Israeli payroll, contracts, and compliance through a vetted partner entity in Israel. You direct the work. Teamed becomes the legal employer of record. Setup takes 48 hours once terms are confirmed. Registering your own Israeli company takes weeks and requires a tax file, a payroll deductions file, and National Insurance Institute registration plus ongoing monthly filings.
What is the statutory notice period in Israel?
Notice scales with service under the Advance Notice Law 5761-2001. In the first six months it is 1 day per month worked. After the first full year a monthly-paid employee is entitled to 30 days written notice. An employer who dismisses without notice pays the regular wage for the missed period.
What is maternity leave in Israel?
Birth and parenthood leave is 26 weeks for a parent with at least 12 months of service, or 15 weeks below that. The National Insurance Institute pays the allowance for 15 weeks where the contribution test is met, or 8 weeks on the partial test. The employer does not pay the wage during the paid period.
What is statutory severance pay in Israel?
Severance is 1 month's salary for each year of service, owed once an employee has worked 1 continuous year and is then dismissed. Many employers pre-fund severance through a Section 14 pension arrangement. There is no statutory cap stated in the core law, and accrued leave is also paid out on termination.
What is the minimum annual leave for an Israeli employee?
Annual leave is 16 days gross days for each of the first five years under the Annual Leave Law, then 18 days in the sixth year, 21 days in the seventh, and one extra day each year after that up to 28 days. There are also 9 days festival rest days each year.
Israel runs a clear set of employment laws, but the practice surprises new employers. The maternity allowance comes from the National Insurance Institute, not your payroll. There is no probation period to lean on, so notice and severance count from day one. And severance of one month per year is usually pre-funded through a pension arrangement. None of these are hard rules once you know them. They are consistently costly when you do not.
Israel pays the maternity allowance from the state, runs no statutory probation, and owes one month of severance for each year worked.
Most of the cost surprises come from not reading those rules before the first hire.
Read the right Israel guide before that hire, not after the first claim.
