HR Software for Israel
Leave Policy
Maternity Leave
Pregnant employees who have worked for the same employer for 12 months are entitled to 26 weeks of paid leave. Employees who have worked for the same employer or at the same workplace for less than 12 months are entitled to 15 weeks of paid vacation.
The employee is not entitled to a salary, but is entitled to a maternity allowance (maternity allowance) for part of the period, which is paid by the Social Insurance Institution based on the period for which social security contributions were paid.
- Employee who has paid social security contributions for 10 out of 14 months – maternity benefit of 15 weeks
- Employee who paid social security contributions for 15 of the 22 months – maternity benefit of 15 weeks
- Employee who paid social security contributions in 6 out of 14 months – maternity benefit of 8 weeks
The rate of maternity benefit depends on the employee’s gross salary, on the basis of which social security contributions are paid, up to a maximum of ILS 1,485.83 per day.
The employee is not entitled to any remuneration or maternity benefit for the remaining weeks of maternity leave.
You can use the leave module in IceHrm to manage maternity leave in Israel.
Paternity Leave
Employees who have worked for the same employer for 12 months are entitled to one month of paid paternity leave when the mother returns to work. Of the one month, one week must overlap with maternity leave and the remaining three weeks must be taken while the mother is back at work. The employee receives 100% of his salary during this period and social security is responsible for this remuneration.
Parental 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 is considered a waiting period. Sick leave is paid at varying rates and by the employer.
Employees can accrue up to 5 years of sick leave, for a total of 90 days.
| Day Number | Pay (% of base salary) | Payer |
|---|---|---|
| 1 | 0% | Employer |
| 2 – 3 | 50% | Employer |
| Over 4 days | 100% | Employer |
Pay & Tax
Minimum Wage Requirements
The minimum wage is ILS 5,500 per month.
Individual Income Tax
Individual income tax is between 10% and 50%. Income tax is calculated at progressive rates. Several additional factors can affect overall rates, such as marital status and number of children.
The tax rates change annually. These are the rates for 2021.
| Gross Annual Income (ILS) | Tax Rate (%) |
|---|---|
| Up to 81,480 | 10% |
| 81,481 – 116,760 | 14% |
| 116,761- 187,440 | 20% |
| 187,441- 260,520 | 31% |
| 260,521- 542,160 | 35% |
| 542,161- 698,280 | 47% |
| Above 698,281 | 50% |
Payroll Cost
The cost to the employer is generally estimated at 18.38% to 22.43% of the employee’s salary.
- Clearance – 8.33%
- Pension fund – 6.50%
- Bituah Leumi – 7.60%*
- Pension brokerage fee: 0.6% of premiums paid
There are annual costs for seniority gifts. The cost is NIS 418 multiplied by:
- 5 for employees with 1 year of service
- 6 for employees with 2 and 3 years of service
- 7 for employees with 4 to 10 years of service
3.55% for gross monthly salaries up to ILS 7,522. 7.60% for gross monthly salaries above 7,522 ILS, limited to a maximum salary for the contribution of 49,030 ILS
Overtime Pay & Maximum Hours
The standard working hours are 8.4 hours per day, 5 days a week. Standard working hours are Sunday to Thursday.
Standard working hours can be extended up to 42 hours per week.
Overtime pay is mandatory for hourly wage workers. For employees on a fixed salary, overtime pay is not mandatory as it is taken into account in their salary. Hours outside of normal working hours are considered overtime. Employees can work a maximum of 12 hours of overtime per day and 16 hours of overtime per week. For the first 2 hours of overtime, employees receive 125% of their hourly wage. For each additional hour, employees receive 150% of their hourly wage.
Termination
Termination Requirements
Dismissals must take into account complex rules and the regulations of the country in which an employee is employed. Off-boarding is always carried out by the employer with the main participants. It may include ad hoc fees as well as mandatory or recommended steps for specific termination cases.
Compliant terminations include:
- Voluntary by the employee
- Unilaterally by the employer for any reason, except:
1. Discrimination (based on age, parenthood, fertility treatments, race, gender, nationality, etc.)
2. Filing a complaint with a judicial authority against the employer or an employee of the employer for violations of the law in the workplace
3. If a worker is absent from work at the direction of security forces during an attack or other national emergency
4. For reasons specified in a collective agreement, employment contract or case law - By mutual agreement
- When the contract expires
Notice Period
The notice period in IceHrm employment contracts in Israel is:
| Length of Employment | Notice Period |
|---|---|
| During probation period | 1 day per month worked |
| After probation period | 30 days |
This is the standard in the high-tech sector in Israel.
If an employee is terminated, the employer must pay the salary for the notice period and any mandatory payments such as: Pay unused PTO. The employee continues to work during the notice period unless the employer waives this right. If the employer does not want the employee to continue working, they can put them on gardening leave after the hearing, but will still have to pay for the notice period.
Severance for Employees
In Israel, all employees are entitled to severance pay. The severance payment is 8.33% of salary for each year of employment. The amount paid is taken from the severance pay fund, into which the employer must pay every month.
In order to protect you from unforeseen financial risks arising from the termination of an employment relationship, IceHrm applies a severance pay provision to all employment contracts in this country.IceHrm has extensive expertise in managing litigation risk globally and our severance provision calculation is based on prevailing common law or statutory requirements and best local practices. If your employee resigns or is not entitled to severance pay, you will receive a refund of any unused amounts.
Statutory Time Off
Paid Time Off
Full-time employees are entitled to 12 days of paid time off per year for a 5-day week.
Part-time employees are entitled to the same amount as full-time employees (pro rata) or 70% of full-time wages.
PTO is credited monthly and is calculated by dividing base salary by 21.67 days per month and multiplying the value by 10 or 12 (depending on the employee’s workweek). The employer must ensure that employees take at least 7 days of PTO per year. Employees are entitled to annual leave after 3 months of work.
Public Holidays
9 holidays are celebrated in Israel:
- First Day of Passover
- Seventh Day of Passover
- Yom Ha’atzmaut
- Shavuot
- Rosh Hashanah
- Yom Kippur
- First day of Sukkot
- Shemini Atzeret
- Simchat Torah
Additional elections holidays may also apply.
Onboarding
Onboarding
Onboarding takes 2 business days after the customer signs the SOW.
Additional Info
Employment Contract Details
Contracts must be written in Hebrew or English and may be bilingual. They must be in writing and signed by both parties.
A contract must contain:
- Surname
- Start date
- Basic salary
- Promotion
- Holidays
- Sick days
- Pension
- Conditions for termination of employment
Probation Period
The typical probationary period is 3 months. If the person in question does not have an active pension fund, it can be six months. Probationary periods are permitted under Israeli law, but during such a period an employee is still considered a regular employee.