Employer of Record in Israel
Employ in Israel without your own entity. We employ your team through an Israeli employer licensed under the Manpower Contractors Law, with National Insurance, pension, severance and payroll handled every month.
Why hire in Israel through an EOR
Israel’s workforce is strong in software, cyber security and life sciences, and its employment rules come from statute, extension orders and case law. Hiring there without an Israeli company means using a licensed employer: under the Manpower Contractors Law that is what an Employer of Record is, and it is what TopSource provides.
| Parameter | Statutory requirement | EOR management |
|---|---|---|
| Legal basis | A manpower contractor licensed by the Ministry of Labour | Your hire is employed by a licensed Israeli employer |
| National Insurance | Employer 4.51% up to ILS 7,703 a month and 7.6% up to ILS 51,910 | Reported and paid by the 15th of each month |
| Pension and severance | Employer 6.5% pension and 6% to 8.33% severance; employee 6% | Enrolled in a pension fund |
| Placement limit | Nine months with the same client, except in IT roles | Agreed with you before the hire starts |
| Notice | One day per month at first, one month after a year | Notice and the pre-dismissal hearing handled |
Figures for 2026, verified in October 2026.
Hire in Israel without setting up an entity
Israeli payroll combines National Insurance and health tax, a mandatory pension with a severance component, and payments set by extension orders, such as recuperation pay and commuting costs. Statutory employer contributions come to about 21% of gross salary on ILS 20,000 a month with severance funded at 8.33%, and withheld tax and National Insurance are reported and paid by the 15th of each month.
The structure matters as much as the payroll. Under the Employment of Employees by Manpower Contractors Law, an Employer of Record is a manpower contractor: it needs a licence from the Ministry of Labour, its employees are entitled to the same working conditions as comparable staff at the client, and after nine consecutive months with the same client they become the client’s employee. Neither rule applies to roles in developing, maintaining and implementing computer systems, which covers most software and IT hires.
We employ your team through an Israeli employer licensed under the Manpower Contractors Law. We issue a compliant contract, register your hire for National Insurance, tax and a pension fund, and run payroll every month, so you can hire in Israel without registering an Israeli company.
Calculate Your Employee Costs in Israel
Enter a gross annual salary to see the employer’s statutory cost in Israel for 2026: National Insurance at the reduced and full rates, 6.5% pension and 8.33% severance contributions. Recuperation pay and commuting costs come on top.
Employment Cost Calculator
*Indicative figures only and not definitive legal advice. Local regulations change frequently. Consult an expertIsrael
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| Employer Contributions | ||
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How EOR in Israel works: the process through TopSource
Employer Costs in Israel at a Glance
Employer Costs in Israel Explained
An Israeli employee costs about 21% on top of gross salary in statutory contributions when severance is funded at 8.33%. On ILS 20,000 a month, the employer pays ILS 1,282 in National Insurance, ILS 1,300 to the pension fund and ILS 1,666 toward severance, a total of ILS 24,248 a month before recuperation pay and commuting costs.
EOR or entity setup: which one fits your Israel plan?
Setting up an Israeli company means registering it with the Registrar of Companies, then opening employer files with the Tax Authority and National Insurance, registering for VAT and arranging pension funds and payroll of your own. An EOR makes sense while you test the market or hire a first small team, especially in IT roles, which the nine-month rule does not cover. Your own entity makes sense once headcount and permanence justify the overhead, and it is the usual route for long-term hires outside IT.
| Factor | TopSource Israel EOR | Your own Israeli entity |
|---|---|---|
| Speed to hire | Days, through a licensed Israeli employer | Weeks to register the company and open employer files |
| Placement length | No limit for IT roles; nine months for others | No limit |
| Payroll and pension | Run for you every month | Your own payroll, pension and filings |
| Best fit | 1-10 employees, market entry | Scaled, permanent operations |
Consider an EOR if you’re:
- Hiring developers, data or IT staff, whose roles the nine-month rule does not cover
- Testing the Israeli market before registering a company
- Building a first small team in Tel Aviv, Haifa or Jerusalem
- Needing National Insurance, pension and severance running from the first month
Why TopSource for Employing in Israel
TopSource for Employer of Record, global payroll or any other of our services represent a simpler, more reliable and transparent option.
We don’t hide fees or sneak price increases. We don’t lock you in for employees you don’t use. But we do give you a dedicated point of contact, available on the phone so you get answers fast, including on the questions Israel raises, from the nine-month rule and Section 14 severance to recuperation pay and reserve duty. We blend HR advisory with in-market expertise, and we stay flexible around the needs of your business.
“Their expertise and understanding of the unique hiring, payment, and human resource practices in each country has been nothing short of outstanding. Our Client Success Manager, has done just that … ensured our success. Her availability and willingness to engage on a personal level has made all the difference.”
“Excellent service, especially from our account manager who has gone above and beyond to help us use the platform effectively. Our manager, significantly simplifies my workload. It is like having your own TopSource HR representative on your team.”
“TopSource has been our go-to resource for international hiring. They are responsive, thorough, respectful and knowledgeable. The Client Success team has provided us with the utmost customer service, and the more we use TopSource, the more, it gives us access to more resources and knowledge.”
More than an Employer of Record.
Employer of Record services are only one way that we help you accelerate your global growth goals. From talent advisory to entity management, we give you the tools you need to research, enter and expand into your key markets.
Market Selection Advisory
Compare available talent, compensation, additional costs and regulations across different countries
Read more
Salary Benchmarking
Identify and prioritize markets for growth based on talent, cost & regulations
Read more
Global Skills Analysis
Map skill availability by region to align talent strategies with business goals..
Read more
Talent Acquisition
Find, hire & onboard the highly skilled team members you need in each locality.
Read more
Talent Strategy Optimization
Optimize your talent strategy to enable your organization to achieve it’s global ambitions.
Read more
Frequently asked questions
Yes. An EOR in Israel employs your hire as a manpower contractor, which needs a licence from the Ministry of Labour. A company that contracts with an unlicensed contractor commits an offence, fined for each worker. We employ your team through an Israeli employer licensed under the Manpower Contractors Law.
Under the Manpower Contractors Law, an employee who works for the same client for more than nine consecutive months becomes the client’s employee, and the Ministry can allow up to 15 months only in exceptional cases. The rule does not apply to roles in developing, maintaining and implementing computer systems, so most software and IT hires can stay with an EOR without a time limit.
About 21% on top of gross salary in statutory contributions. On ILS 20,000 a month, the employer pays ILS 1,282 in National Insurance, ILS 1,300 to the pension fund and ILS 1,666 toward severance, ILS 24,248 a month in total, before recuperation pay and commuting costs.
Employees dismissed after a year are owed one month’s salary for each year of service. Many employers pay 8.33% of salary into the employee’s pension fund under Section 14 of the Severance Pay Law, so the fund replaces the payment for the period it covers and the money stays with the employee.
For salaried employees, one day per month of service in the first six months, then six days plus two and a half days for each further month until the end of the first year, and one month after that. Israeli case law also requires a hearing before dismissal.
An EOR wins on speed and on cost of entry, with no company to register and no employer files to open. Your own entity wins on scale, and it is the usual route for long-term hires outside IT, where the nine-month rule applies. Many clients start with an EOR and move the team to their own entity once Israel is proven.
Hire Anywhere with Our EOR Services
We help you legally employ and pay talent across 164 countries—so you can scale faster.
