🇮🇱 Hiring in Israel

💡 Everything you need to know to hire and manage employees in Israel through Toku. Toku handles payroll processing, tax withholding, social contributions, and statutory compliance. This guide covers what you need to plan costs and manage your team.

At a Glance

Onboarding a New Hire

Plan for 5-7 business days between submitting a new hire and their start date. Toku completes the employee's payroll registration with the Israeli authorities at least 5 working days before their start date, so early submission keeps the start date on track.

Submit the new hire through the Toku platform for the employment agreement, statutory registrations and payroll setup. See Onboard Contributors as a Client Admin in Toku for the steps. Toku will confirm the expected onboarding timing for your hire.

Employer Costs

On top of gross salary, you pay the following employer contributions in Israel:

As a rule of thumb, total cost of employment is roughly 127-130% of gross salary, a little lower for salaries above the ₪15,712 monthly education fund cap. Employees are also entitled to annual recuperation pay (dmei havra'a), a fixed once-a-year payment based on a statutory daily rate (ILS 418 per day in the private sector) multiplied by 5-10 days depending on tenure.

Employees pay their own income tax (progressive rates from 10% to 50%), National Insurance (1.04% to 7.00%), health insurance (3.23% to 5.17%), a 6.0% pension contribution, and a 2.5% education fund contribution. These are withheld from gross salary, not charged on top. Toku calculates and remits all of the above.

Compensation & Payroll

Payroll in Israel is monthly. Toku runs one payroll per month, and employees receive a detailed payslip each cycle showing gross salary, deductions, and net pay. Salaries are paid in ILS by bank transfer.

The national minimum wage is ILS 6,443.85 per month (ILS 35.40 per hour) as of April 1, 2026, and is adjusted every April. There is no statutory 13th month salary in Israel. Recuperation pay is typically paid once a year between July and September.

Employment Contracts & Probation

• Toku issues a compliant local employment agreement for every hire, covering all terms Israeli law requires employers to confirm in writing.
• Employment can be indefinite or fixed-term. Indefinite contracts are the norm; repeated renewals of fixed-term contracts can convert the employee to indefinite status with full termination protections.
• Probation is set in the employment agreement. Israeli statute does not regulate probation periods, and 3-6 months is the common contractual range. Standard notice rules generally still apply during probation.

Working Hours

The standard working week is 42 hours, most often worked as a 5-day week with 8.6-hour days. Total daily hours including overtime may not exceed 12. Overtime is paid at 125% of base wage for the first 2 daily overtime hours and 150% after that, and work on the weekly rest day is paid at 150%. Employees are entitled to a weekly rest period of at least 36 consecutive hours. Managers and employees in high-trust roles whose hours cannot be supervised are exempt from the working hours rules.

Leave Entitlements

Reserve duty is strongly protected: employees cannot be terminated during reserve service or for 30 days afterward. From April 1, 2026, parents of a baby born with a complex disability are entitled to an additional 5 weeks of maternity or parental leave.

Public Holidays (2026)

Israel has 9 paid public holidays per year. Holidays follow the Hebrew calendar and begin at sundown the evening before; holiday eves commonly have shortened working hours.

Employees who work on a public holiday receive 250% of the daily wage in total. Non-Jewish employees may designate their own religious holidays in place of the Jewish holidays, in consultation with the employer.

Benefits

Israeli employees are generally covered by National Insurance and a health fund, and may be entitled to annual recuperation pay. Toku's standard package includes pension, an education fund (Keren Hishtalmut) and a Section 14 severance fund administered through its pension agent. Toku will confirm which contributions are required by law, the agreement or an applicable collective arrangement, and their cost for the hire. Optional international health insurance may also be available.

Benefits at a Glance

Pension, Education & Severance Funds

These contributions are required under Toku's Israeli employment arrangement and administered through Toku's pension agent, Agam Leaderim:

Section 14 applies, so the severance fund contributions replace end-of-service severance liability. Education fund contributions apply up to the tax-recognized salary ceiling, currently ₪15,712/month. Employees may choose their own pension fund or use the company-nominated agent; under Managers' Insurance, disability insurance applies and the maximum combined employer pension + disability contribution is 7.5%. Together, the employer's pension, education fund and severance contributions add roughly 22% on top of gross salary, before National Insurance.

Supplemental Health Insurance

Israeli employees can opt into Remote Health by SafetyWing, international private medical insurance usable in Israel and worldwide. Toku sponsors 100% of the employee premium, billed to you. For plan details, age-banded premiums and enrollment, see 🌍 Global Coverage: Remote Health by SafetyWing.

What You Need to Know About Benefits

• Pension enrollment happens during onboarding as required by law. If an employee doesn't submit their fund paperwork, a default fund is opened to keep them compliant.
• Health insurance is opt-in via the Remote Health enrollment form. SafetyWing contacts the employee within 5 business days, and coverage starts on the 1st or 15th of the month.
• Plan the full employer-side fund contributions (about 22% of salary, with the education fund capped) into every Israeli hire, plus the SafetyWing premium if the employee opts in. For the full employee-facing detail, see Israel Supplemental Health, Pension & Savings Benefits, which covers the Agam Leaderim pension and savings plan and SafetyWing international health coverage.

Common Extras

Other common extras in the Israeli market include private supplementary health insurance, travel allowance for commuting, meal vouchers, and mobile phone allowances. Toku can advise on how each of these affects your total cost.

Ending Employment

Israel does not recognize at-will employment: terminations require a legitimate reason and a mandatory pre-termination hearing (shimua) with written notice of the grounds and a genuine chance for the employee to respond. Certain groups, including pregnant employees and those on reserve duty, have added protections, so involve Toku early whenever you are considering a termination. For the process, see How to Terminate an Employee or Contractor.

Employees with at least one year of service are entitled to severance of one month's salary per year of employment. Under Toku's standard Section 14 arrangement, the 8.33% monthly severance fund contributions satisfy this obligation in full, and the accumulated funds transfer to the employee however the employment ends.

Annual Leave at Termination

This section describes statutory annual leave. Any additional contractual or company-provided leave above the statutory minimum may follow different carryover, expiry, or payout rules under the employee's agreement or applicable policy, subject to local law.

Statutory leave termination payout: Required. High exposure. Unused statutory vacation can be redeemable when employment ends.

Statutory carryover / look-back: The termination vacation calculation can look back through the current year plus the previous three years.

Admin responsibility: Maintain reliable vacation records by entitlement year, review balances annually, and actively encourage employees to use vacation rather than allowing balances to accumulate.

Important exceptions: Do not rely only on the current HRIS balance at termination. Toku should review the current year and prior three years of vacation records before final amounts are communicated.

See the Annual Leave / PTO Carryover & Termination Payout Guide for the cross-country framework.

Hiring Someone from Overseas?

Foreign nationals need a B/1 work visa, which is employer-specific and must be approved by the Population and Immigration Authority before the employee enters Israel. A streamlined B/1 Specialist route exists for highly skilled tech workers, with processing typically taking 2-8 weeks. Returning citizens and new immigrants under the Law of Return receive automatic residency and work rights and do not need sponsorship. Talk to Toku before extending an offer to a candidate who needs sponsorship.

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Last updated November 5, 2026 (onboarding link and benefits description only). Last verified October 2026. This guide is for general information and doesn't constitute legal or tax advice. Your Toku account manager can confirm specifics for your situation.