Israel, officially known as the State of Israel, is an Asian country bordered by Lebanon, Syria, Jordan, Egypt, and the Mediterranean Sea. It has a workforce of 4.32 million people (2025) and a GDP of 550.91 billion US dollars (2025). 

With a highly developed free-market economy, Israel has a resilient economy with strong growth over the years primarily based in the technology, manufacturing, and financial sectors. The Gaza War is significantly affecting the economy of Israel, largely due to the cost of military spending, the decline in public spending, and the general disruption to businesses.

Employee benefits in Israel are crucial to providing workers with protection from exploitation and the right to benefits such as a national minimum wage and annual leave allowance.

This help guide will provide employers with the information needed to employ in Israel with ease, ensuring that all mandatory employee benefits are provided. We’ll also discuss supplementary benefits employers should consider, plus information on how Remote People can help hire in Israel.

Israeli Labor Law

Labor laws in Israel dictate the minimum requirements employers must provide to their employees to ensure a safe, fair working environment.

Employment law in Israel is largely informed by the following laws/acts:

It is strongly recommended that employers seek advice from legal professionals specializing in Israeli employment law before proceeding with employee contracts. This is to ensure that all mandatory employee benefits are strictly adhered to.

  • Hours of Work and Rest Law of 1951
  • Annual Leave Law of 1951
  • Employment of Women Law of 1954
  • Severance Pay Law 1963
  • Sick Leave Law of 1976
  • Minimum Wage Law of 1987
  • National Insurance Law of 1995

Mandatory Employee Benefits in Israel

The below sections explain each mandatory employee benefit in detail, giving you the tools you need to offer your employees their entitled benefits.

Social Security Contributions

Israel operates under the National Insurance Institute (NII), a government body that collects national insurance contributions from residents and employers to fund relevant services.

The body works under the idea that money is transferred from economically well-off groups to those that need it most.

All Israeli workers aged over 18 must be covered with the NII and pay national and health insurance contributions.

National insurance and health tax rates in Israel are payable as follows:

National Insurance Contributions

Income Per MonthEmployee ContributionEmployer Contribution
Up to 7,522 ILS4.27%4.51%
Above 7,522 (up to 50,695 ILS)12.16%7.6%

Health Tax Contributions

Income Per MonthEmployee ContributionEmployer Contribution
Up to 7,522 ILS3.23%0%
Above 7,522 ILS5.17%0%

Annual Paid Leave

Employees in Israel are entitled to 2 weeks of annual leave during the first 4 years of their employment.

After 4 years, the number of holiday days increases – this is dependent on sector and employer.

Employees are also entitled to 9 paid holiday days that can be used for religious holidays, provided that these days do not fall on rest days. 

If a worker carries out work on a religious holiday day, they are entitled to payment at the rate of 150% of their daily wage in addition to holiday payment (250% in total).

Working Hours

The typical working week in Israel must not exceed 42 hours. Regular working hours are typically as follows:

  • 8 hours per day if employed 6 days a week
  • 9 hours a day if employed 5 days a week
  • 7 hours of night work between 10 pm and 6 am
  • 7 hours on the day before the weekly rest day or the day before a holiday day

The maximum hours listed above do not typically apply to employees in the following occupations:

  • Healthcare
  • Police
  • Prisons
  • Seafaring
  • Air crew
  • Management
  • Nursing (within employer’s home)
  • Agriculture

National Minimum Wage

Workers in Israel are entitled to a minimum wage. The minimum wages as of April 2025 are detailed in the table below:

Time Worked Wage
Daily Wage (5 Days a Week)NIS 288.35
Daily Wage (6 Days a Week)NIS 249.90
Hourly Wage (186 Hours Worked)NIS 33.58
Hourly Wage (182 Hours Worked)NIS 34.32
Monthly WageNIS 6,247.67

Overtime Pay

Hours that exceed a typical 42-hour week count as overtime hours and should be paid accordingly.

It is prohibited to issue overtime except by permit from the Ministry of Labor, Welfare, and Social Affairs or under special circumstances.

Rules around overtime hours include:

  • A workday must not exceed 12 hours in total (including overtime)
  • Employees must not perform more than 16 hours of overtime per week
  • Employees working night shifts must not exceed 58 hours per week (including overtime)

Overtime hours should be paid at 125% of their regular salary for the first two additional hours of overtime on a workday and 150% of their regular salary for any hours thereafter.

Public Holiday Leave

Israel observes 9 public holidays, all of which are Hebrew national holidays.

The public holidays in Israel are:

  • April 13 (date varies): Passover (Day 1) 
  • April 19 (date varies): Passover (Day 7)
  • May 1 (date varies): Yom HaAtzmaut
  • June 2 (date varies): Shavuot
  • September 23 (date varies): Rosh Hashana
  • September 24 (date varies): Rosh Hashana (Day 2)
  • October 2 (date varies): Yom Kippur
  • October 7 (date varies): Sukkot (Day 1)
  • October 14 (date varies): Shemini Atzeret / Simchat Torah

Sick Leave

If an employee in Israel is absent from work due to sickness, they are entitled to sick pay. The total entitlement of sick pay is a maximum cumulative period of one and a half days for each full month of service with the same employer, up to a maximum of 90 days.

Employees are not entitled to sick pay for the first day of absence. The second and third days of absence are paid at half pay, and full pay is paid from the fourth day onward.

Employers cannot dismiss employees absent from work due to sickness unless:

  • Notice of dismissal was given before the employment commenced sick leave
  • In circumstances where the employer has ceased operations, been made bankrupt, or had liquidation orders provided

Maternity Leave

Maternity leave for workers in Israel differs depending on the years of service worked by the employee.

Employees who have worked for the same employer for less than 12 months are entitled to partial maternity leave, comprising 15 weeks. This is usually taken 7 weeks before birth and 8 weeks after birth.

Employees who have worked for the same employer for over 12 months are entitled to full maternity leave of 26 weeks, 7 of which are taken before birth and 19 after birth.

Maternity leave can be extended in the following circumstances:

SituationAdditional Leave
In the event of twinsExtra 3 weeks
In the event of tripletsExtra 6 weeks
Hospitalization of mother after childbirthHospitalization period or up to 4 weeks
Hospitalization of baby after birthHospitalization period or up to 20 weeks

Paternity Leave

There is no statutory paternity leave that employees are entitled to in Israel. However, fathers are entitled to be absent from work from the beginning of their spouse’s labor for 6 calendar days.

The first day and final two days are remunerated as sick leave (no pay for first day and 50% of daily pay for final two days). The second, third, and fourth days are remunerated as annual leave at full pay.

If an employee has not accrued enough sick leave or annual leave to cover these periods, they are not entitled to this leave.

Pensions

Israel provides its residents with old-age insurance to ensure workers receive a monthly income when they reach retirement age.

The retirement age for men in Israel is 67. For women, Israel is gradually increasing the retirement age from 62 to 65 by 2032.

National insurance provides an income to pensioners over the age of 70. The monthly allowance can be between NIS 1,596 and NIS 2,488, depending on age and marital status.

Israel also has a pension plan for civil servants, which is public sector union-negotiated, and a private pension system in which employees and self-employed workers are legally required to enroll. 

As of 2017, private pensions require the following minimum salary contributions:

CategoryContribution
Employers6% toward Pitzuim (severance), 6.5% toward Tagmulim (pension)
Employees6% total
Self-Employed WorkersMinimum of NIS 500 per month

Severance Pay

Employees in Israel are entitled to severance pay if they are dismissed from their job in the following circumstances:

  • The employee was dismissed for reasons not related to employee misconduct
  • The employer has passed away
  • The employer has been declared bankrupt
  • Employee has passed away – in this case, the employee’s survivors are entitled to severance pay

The calculation of severance pay is calculated as one monthly salary for each year of service with the same employer. For example, if an employee has worked for the same employer for 10 years, they would receive 10 months salary as severance pay.

Part of a year of work would be calculated as a percentage of their monthly salary and added to the final severance amount. Employees must receive their severance pay on their last day of work or within 15 days thereafter.

Supplementary Employee Benefits in Israel

Employers should consider offering their employees in Israel supplementary benefits. 

These are benefits that employers aren’t legally obliged to provide, but may help to enhance job vacancies to potential employees and improve staff retention rates.

Examples of supplementary benefits include:

  • Performance bonuses
  • Enhanced pension opportunities
  • Employee discount schemes
  • Extended holiday allowance
  • Advanced training and development opportunities
  • Private medical/dental insurances
  • Expenses for travel, food, and accommodation

Optimize Employee Benefits with Remote People

Remote People can assist with simplifying employee benefits in Israel through our Employer of Record (EOR) services. We specialize in streamlining the hiring process by managing legal employment responsibilities—helping businesses stay compliant while reducing administrative and employment-related costs.

Contact us today to find an EOR provider that suits your business. These providers are highly experienced with the labor laws in Israel and understand the mandatory employee benefits that workers must receive, and they can assist your business in providing these.

We also specialise in hiring in Israel via our Israel recruitment services. Our team fully understands the Israeli recruitment space, as well as the local language and customs, which can make advertising jobs and liaising with potential candidates a far easier process.