Israeli employment law is built on protective statutes such as the Annual Leave Law, the Sick Pay Law, the Severance Pay Law and the Women's Work Law, supplemented by nationwide extension orders on pensions and working hours. Here is what employers need to know about leave, pay, tax and ending employment.
Leave rights are set by statute and grow with seniority. Collective agreements and extension orders in some sectors provide more.
Counted under the Annual Leave Law, which works out at about 12 working days on a five-day week. It rises from the sixth year.
Accrues for each full month worked, up to a maximum of 90 days.
Up to 7 weeks can be taken before the expected birth. It is 15 weeks for employees with less than 12 months' service with the employer.
| Year of employment | Leave days |
|---|---|
| Years 1 to 5 | 16 |
| Year 6 | 18 |
| Year 7 | 21 |
| Year 8 onwards | 1 extra day a year, up to 28 |
The first day of sick leave is unpaid, the second and third days are paid at 50%, and from the fourth day the employee receives full sick pay, as long as they have accrued enough days. A medical certificate is required.
Employers may not employ a woman during her birth and parenting leave. National Insurance pays a maternity allowance to eligible employees in place of salary for part of the leave, and the other parent can share part of the leave in certain circumstances. There is no separate statutory paternity leave.
Set up each Israeli leave type in IceHrm with its own accrual, carry forward and approval rules, such as monthly sick leave accrual and annual leave that grows with seniority. Employees see their live balance before they apply, and managers see who is away on a shared calendar. Leave management →
The Minimum Wage Law links the monthly minimum wage to 47.5% of the national average wage. It is updated every April and applies to employees aged 18 and over, with lower rates for young workers.
For a full-time employee, from 1 April 2026. Part-time employees are entitled to a pro-rata amount.
Under the extension order in force since April 2018, usually spread over five days with one shorter day.
At least 125% of regular pay for the first 2 overtime hours in a day and 150% for each hour after that.
Capture attendance and overtime in IceHrm and feed the hours straight into payroll, so the 125% and 150% overtime tiers are applied to what was actually worked. Time & attendance →
Israel taxes employment income at progressive rates. Brackets are set monthly and indexed for inflation. Employers withhold tax each month, applying the employee's tax credit points, which are claimed on Form 101.
| Annual taxable income | Rate |
|---|---|
| Up to ₪84,120 | 10% |
| ₪84,121 – ₪120,720 | 14% |
| ₪120,721 – ₪228,000 | 20% |
| ₪228,001 – ₪301,200 | 31% |
| ₪301,201 – ₪560,280 | 35% |
| ₪560,281 – ₪721,560 | 47% |
| Over ₪721,560 | 50% |
Employers pay National Insurance contributions and withhold the employee's National Insurance and health insurance tax. A reduced rate applies to the first part of monthly pay, and contributions stop at a monthly ceiling.
| Contribution | Up to ₪7,703 | ₪7,703 – ₪51,910 |
|---|---|---|
| Employer National Insurance | 4.51% | 7.6% |
| Employee National Insurance | 1.04% | 7% |
| Employee health insurance tax | 3.23% | 5.17% |
Under the general pension extension order, every employer must enrol employees in a pension plan and contribute to it, with the employee also contributing through payroll. The employer's contribution has a pension component and a severance component, which can count towards severance pay.
Build Israeli pay the way you already structure it, with your own salary components, deductions and formula columns, such as National Insurance and pension contribution columns. Want to know how well IceHrm handles payroll calculations for Israel? Contact us or see Payroll →
Before dismissing an employee, the employer must hold a hearing: tell the employee the reasons in advance and give them a real opportunity to respond. Notice must be given in writing. Pregnant employees, employees on or just back from parental leave, and employees in fertility treatment have special protection and can only be dismissed with a permit from the Ministry.
| Length of employment | Notice |
|---|---|
| First 6 months | 1 day per month worked |
| Months 7 to 12 | 6 days + 2.5 days per month after month 6 |
| After 1 year | 1 month |
An employee dismissed after at least one year of continuous service is entitled to severance pay of one month's salary for each year of service, pro rata for part years (two weeks' pay per year for hourly-paid employees). Employer contributions to the severance component of a pension fund can replace severance pay in whole or in part where a Section 14 arrangement applies. In some cases resignation is treated as dismissal for severance purposes, for example after a significant worsening of conditions.
Final pay must include any unused annual leave. Accrued sick days are not paid out.
Statutory rest days follow the Hebrew calendar, so their Gregorian dates move each year. Employees of other faiths are entitled to rest on the holidays of their own religion instead.
Under extension orders, employees with at least 3 months' service are generally paid for holidays that fall on a working day. Holiday eves are often shorter working days by custom or agreement.
Leave groups give each group of employees its own holiday calendar, so you can load each year's Hebrew calendar dates once and set up separate calendars for employees who observe other holidays. Holiday calendars →
Under the Notice to Employee (Terms of Employment) Law, employers must give each new employee written notice of their main terms of employment within 30 days of starting, and notify changes in writing.
There is no statutory probation period; it is agreed in the contract or collective agreement, and the hearing requirement still applies to dismissals during probation. Fixed-term contracts are permitted, but repeated renewals can give rise to rights similar to those of permanent employees.
Send terms of employment notices for e-signing, store them and Form 101 on the employee's record, and use onboarding task lists so pension enrolment and registrations happen on time. Documents & e-signing →
This guide is general information to help you plan HR processes, not legal, tax or financial advice. Employment law and rates change regularly and awards, enterprise agreements and state rules may give employees more than the minimums shown here. Always confirm current requirements with the official sources or a qualified adviser.
Configure leave types, accrual rules and public holidays for Israel, keep employee records and contracts in one place, and run payroll with your own salary components. Want to know how IceHrm handles payroll calculations for Israel? Talk to us.
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