Key Takeaways

  1. Israel offers a highly skilled, multilingual workforce and a supportive environment for innovation, making it an attractive destination for international hiring.
  2. Employers must comply with Israeli labour laws, including written employment contracts, social contributions, and non-discriminatory hiring practices.
  3. Businesses can hire through a local entity, an Employer of Record, or independent contractors, each with distinct compliance and operational implications.
  4. A structured recruitment and onboarding process tailored to Israeli workplace culture helps companies attract, retain, and integrate top local talent.

Israel offers businesses a strong economy with strong digital infrastructure and a thriving innovation scene. With a population of over 9 million and one of the highest rates of tech startups per capita in the world, Israel has become a global hub for talent in fields such as cybersecurity, artificial intelligence, and life sciences.

According to the Israeli Central Bureau of Statistics, Israel had a low unemployment rate among persons aged 15 and over of around 3.3% in early 2024, showing a strong labor market.

This guide explores how foreign companies can successfully hire employees in Israel. It covers each essential step in the hiring process, such as understanding local laws, choosing the right hiring model, registering with authorities, and onboarding employees.

Why Expand Your Business to Israel

Israel offers significant advantages for companies looking to expand. Its economy is modern, resilient, and backed by strong institutions.

Investors are drawn by its supportive business environment, which includes tax incentives for foreign-owned enterprises, well-developed infrastructure, and access to international markets through multiple free trade agreements.

The country also ranks high in global innovation indices, driven by its strong startup ecosystem and strong R&D culture. The Israeli workforce is highly educated, multilingual, and experienced in global business practices.

Many professionals speak fluent English and have international exposure, which makes collaboration easier for foreign companies. There is also a steady pipeline of skilled graduates from institutions like the Technion and Hebrew University.

In addition to talent, Israel’s regulatory framework generally supports enterprise growth, although companies must follow local compliance rules carefully. These combined factors make Israel a strategic location for international hiring and investment.

Israel’s tech-forward mindset and global outlook make it particularly attractive to startups and companies in emerging industries. Government incentives for innovation and entrepreneurship help reduce the barriers to entry for foreign investors.

Additionally, Israel’s time zone overlaps conveniently with both Europe and Asia, which supports cross-border operations. These factors have created a mature environment for international business, where companies can scale quickly with the right support.

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Step 1: Define Your Hiring Needs

Before entering the Israeli market, companies need to clarify the scope and goals of their recruitment. This includes identifying the number of employees required, the specific skills needed, and the employment types they will use, be it full-time, part-time, or project-based. Employers should consider how roles will fit into their broader business operations and whether they need in-market support teams or remote staff.

It is also important to evaluate how business goals align with hiring timelines. For example, some sectors in Israel may have seasonal hiring patterns or require longer lead times due to talent shortages in specialised fields. Understanding these factors early on helps avoid delays and allows companies to build a steady pipeline of candidates.

Step 2: Understand Compliance Requirements

Employment in Israel is governed by a legal framework designed to protect employee rights and ensure fair working conditions. The primary statutes include the Hours of Work and Rest Law, which regulates daily and weekly working hours; the Annual Leave Law, which stipulates minimum holiday entitlements; and the Severance Pay Law, which ensures compensation for dismissed employees.

All employers must follow these laws, regardless of whether they are local or foreign entities operating in Israel. Employers must also provide a written employment agreement that outlines key terms and conditions.

Additionally, companies must issue a separate statement of employment terms within 30 days of the employee’s start date. Beyond contracts and leave entitlements, businesses must ensure compliance with Israel’s broader labor regulations.

For instance, employers are required to make regular contributions to the National Insurance Institute (Bituach Leumi), which funds social benefits like pensions, healthcare, and unemployment. Companies are also prohibited from discriminatory hiring practices and must offer equal opportunities regardless of religion, gender, or ethnicity.

Familiarising yourself with these rules is essential to building a compliant and sustainable business presence.

Step 3: Choose Your Hiring Method

Companies can hire employees in Israel using three main approaches. Each method comes with different responsibilities and legal implications.

Establishing a Legal Entity

Creating a legal entity, such as a private limited company, gives foreign businesses direct control over operations and hiring. This route suits companies planning long-term market presence.

However, it involves registration with the Israeli Registrar of Companies, opening a local bank account, and complying with tax and reporting obligations. Employers must also manage payroll, social security, and HR processes themselves. While this offers autonomy, it can be resource-intensive and time-consuming.

This method is ideal for companies with long-term investment plans and the resources to manage local compliance. A local entity provides credibility in the eyes of Israeli candidates and business partners, which can be an advantage when competing for talent.

It also allows full control over the employee experience, which can improve retention. However, employers must be prepared to handle administrative burdens, including financial audits and statutory filings.

Using an Employer of Record (EOR)

An EOR company in Israel acts as the legal employer on behalf of a foreign company. The EOR manages employment contracts, payroll, benefits, and tax withholdings, ensuring full compliance with Israeli labor laws. This option allows companies to hire locally without setting up a subsidiary.

EORs provide a fast, cost-effective solution for businesses testing the market or running short-term projects. This model is particularly useful for companies that want to scale quickly without dealing with complex local regulations. By partnering with an EOR, employers can focus on business growth while the EOR handles employee onboarding, statutory benefits, and tax filings.

It also offers flexibility, allowing businesses to exit the market more easily if plans change. This can be valuable in industries where project timelines or client demands are fluid.

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Hiring Independent Contractors

Hiring independent contractors is another route, especially for short-term or highly specialised work. Contractors operate under commercial agreements rather than employment contracts, which reduces employer responsibilities.

However, Israeli authorities closely monitor contractor arrangements to prevent misclassification. If a contractor relationship mirrors that of an employee, employers may face reclassification risks and associated penalties.

To avoid these risks, companies must ensure that contractors operate with genuine independence. This means the contractor should control their working hours, use their equipment, and be paid on a project or milestone basis.

If a company treats a contractor like a regular employee by assigning fixed schedules or integrating them into core operations, it may trigger scrutiny from the Israeli Tax Authority or the National Insurance Institute.

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Step 4: Develop a Recruitment Strategy

Building a recruitment strategy involves setting clear timelines, identifying sourcing channels, and creating appealing job descriptions. In Israel, companies commonly advertise roles on local job boards such as AllJobs and Drushim, as well as on LinkedIn. Professional networking also plays a key role, particularly in the tech sector.

Startups and multinational companies often rely on personal referrals or attend career fairs at local universities to reach promising candidates. Job descriptions must be tailored to reflect the expectations of Israeli candidates. Israelis value transparency, so it helps to include information about the company culture, advancement opportunities, and any benefits that come with the role.

While salary ranges are not always required, mentioning them can increase interest. Employers should also keep job descriptions simple, avoiding jargon that might confuse applicants, especially when hiring for international teams. Recruitment efforts should also be backed by a consistent employer brand.

This includes a clear message about the company’s mission, values, and working environment. In a competitive market like Israel, where demand for skilled professionals is high, a strong employer brand helps attract top talent. Consistency across job listings, company websites, and social media channels builds trust and increases engagement with potential candidates.

Step 5: Conduct Interviews and Assessments

Israeli candidates expect a professional, efficient interview process. Employers typically begin with screening calls before progressing to in-depth interviews and technical assessments. Interviews may be conducted in Hebrew or English, depending on the role.

Hiring managers should prepare structured interview guides that cover technical skills, soft skills, and cultural alignment. It’s common for employers to include multiple interview rounds involving different team members.

In the tech sector, for example, candidates may complete take-home assignments, participate in coding challenges, or present case studies. In other sectors, behavioural interviews and situational questions help assess problem-solving abilities. Employers should communicate the process clearly and offer flexibility when scheduling, particularly when interviewing international candidates.

Cultural fit is also important. Israeli workplaces tend to be informal, and employees value openness and initiative. Interviewers should look for signs that candidates will thrive in a flat hierarchy where opinions are encouraged.

At the same time, companies must avoid bias and ensure fairness by standardising assessment criteria and providing equal opportunities to all applicants.

Step 6: Perform Background Checks

While background checks are permitted in Israel, they must respect privacy rights and comply with the Protection of Privacy Law. Employers can verify work history, education, and criminal records where relevant, but must obtain the candidate’s consent before collecting any personal information.

Credit checks are generally not used unless directly related to the job, such as financial roles. The scope of background checks should match the nature of the job. For example, a company hiring for a senior finance role may want to verify professional licences or ask for references from previous employers.

For technical positions, academic degrees and portfolio reviews may be more relevant. Employers must ensure that the process does not violate the candidate’s rights or introduce discrimination.

Step 7: Draft Employment Contracts

Israeli law requires written employment contracts that outline key terms, including job title, responsibilities, salary, working hours, probation period, leave entitlements, and termination procedures. Contracts must align with national labor laws and any relevant collective agreements. This protects both the employer and employee by setting clear expectations.

Contracts should be drafted in a language the employee understands. While Hebrew is the official language for legal documents, bilingual contracts are common when hiring non-Hebrew speakers. Employers must also issue a separate “notice of employment terms” within 30 days of the employee’s start date, confirming essential employment details.

This document is a legal requirement under Israeli labor law. Companies should seek guidance from local legal professionals to ensure that contracts comply with all statutory obligations. Mistakes or omissions in the contract can lead to legal disputes or financial penalties.

Customising contracts for different types of employees, such as full-time, part-time, or remote workers, ensures that the terms accurately reflect the working relationship and applicable regulations.

Step 8: Register with Authorities and Set Up Payroll

Before paying employees, companies must register with the Tax Authority and the National Insurance Institute. This ensures that all payroll, tax, and social security contributions are reported accurately and on time. Businesses must also open a local bank account to process salary payments and other financial obligations in shekels (NIS), the local currency.

Employers are responsible for withholding income tax and social contributions from employee wages, as well as making employer-side contributions. These include national insurance, pension fund deposits, and sometimes education or welfare levies, depending on the employment sector.

Monthly payroll filings and end-of-year tax reports are also mandatory. Companies that miss deadlines or submit incorrect information can face penalties or audits from the authorities. To manage these complexities, many foreign companies use local payroll service providers or work through an EOR.

These partners handle day-to-day payroll processing, ensure accuracy, and keep up with legal changes. Regardless of the approach, it is essential to have a system in place for generating payslips, maintaining employee records, and ensuring payment deadlines are met. Employees expect prompt, transparent payroll operations, and any delays can damage morale.

Step 9: Onboard Your New Employees

Organizing an onboarding program helps new hires understand their role, company culture, and compliance obligations. Onboarding in Israel often includes orientation sessions, workplace training, and introductions to the team. Employers must also provide access to safety procedures and company policies following labor laws.

A thoughtful onboarding process supports engagement, productivity, and retention. The first few days should focus on making the employee feel welcome. Assigning a mentor or buddy can help ease the transition, especially for international hires unfamiliar with local customs or company practices.

Explaining the organisational structure, internal tools, and communication protocols from the beginning also helps avoid confusion. When onboarding remotely, employers should take extra care to foster team inclusion through regular video meetings and digital check-ins. Over the following weeks, regular performance discussions and feedback sessions help identify any issues early.

Companies should also encourage new employees to share their impressions and ask questions. Documenting the onboarding process and collecting feedback over time allows companies to improve their procedures and maintain a consistent experience for future hires. In a market like Israel, where employee engagement is highly valued, thoughtful onboarding goes a long way in establishing a strong employer-employee relationship.

Understanding the Israeli Employment Landscape

Israel’s labor market includes unique features that employers should understand to remain compliant and competitive.

Minimum Wage & Working Hours

The minimum wage in Israel is ILS 6,247.67 per month or ILS 34.32 per hour. Standard working hours are 42 per week, typically spread across five or six days. Overtime pay applies after eight hours per day or 42 hours per week and is regulated by law. Night shifts and weekend work have special compensation rules.

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Social Security and Employee Benefits

Both employers and employees contribute to the National Insurance Institute, which administers social security benefits such as pensions, unemployment benefits, and health insurance.

For Israeli resident employees, employers contribute 4.51% on the first ILS 7,522 of monthly income and 7.6% on the portion exceeding ILS 7,522 up to a maximum monthly income of ILS 50,695. Employees contribute 1.04% on the first ILS 7,522 and 7% on income above that threshold up to the same maximum.

For non-resident employees, the employer’s contribution rates are 0.75% on the first ILS 7,522 and 2.65% on income above that amount, while employees contribute 0.1% and 0.87%, respectively.

It’s important to note that non-resident employees generally do not receive retirement benefits from these contributions, but may be covered for work-related accidents.

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Tax Obligations

Employers are required to withhold income tax at progressive rates ranging from 10% to 50%, depending on the employee’s earnings. Companies must file monthly and annual tax reports and ensure compliance with Israel’s tax regulations.

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Leave Policies

Employees are entitled to annual leave, paid sick days, and public holidays. Annual leave ranges from 12 to 28 days, depending on seniority and collective agreements. Employees receive up to 30 paid sick days per year, starting with one day per illness and increasing thereafter.

Maternity leave, also referred to as “birth and parenting period,” entitles female employees to 15 weeks of paid leave, provided they have been employed for at least 10 out of the 14 months preceding the birth.

Fathers are entitled to paternity leave, which includes up to five days immediately following the birth of their child. Israel observes national holidays based on the Jewish calendar, which may vary each year.

Termination Rules

Termination in Israel must follow due process. Employers must provide written notice, ranging from a few days to one month, based on tenure, and may be required to hold a hearing before dismissal.

Severance pay applies to employees with at least one year of service, typically equal to one month’s salary per year of employment. Terminations that do not comply with procedure may result in legal claims.

Cultural Sensitivities

Israeli workplaces value direct communication, informality, and initiative. Hierarchies are relatively flat, and employees are encouraged to speak openly. Punctuality and fast decision-making are common.

Companies should also respect religious practices, including dietary restrictions and observance of Shabbat from Friday evening to Saturday evening. Foreign companies must know and respect these norms for effective collaboration with Israelis.

How to Hire Employees in Israel — Our Take

Hiring in Israel requires attention to detail, a good understanding of compliance rules, and a thoughtful approach to cultural integration. Each step plays a role in building a strong workforce, from choosing the right hiring model to drafting contracts and setting up payroll. Working with an experienced partner can simplify the process and help avoid costly errors.

Hiring in Israel doesn’t have to be complicated. With Remote People’s Employer of Record (EOR) services, you can onboard employees quickly, stay compliant with Israeli labor laws, and eliminate the administrative burden of setting up a local entity.

Whether you’re exploring the market or scaling your team, we provide a seamless, fully managed employment solution tailored to your goals. Let’s make hiring in Israel simple—get in touch with Remote People today.