--- title: "Israel" id: "14809" type: "employer-of-record" slug: "israel" published_at: "2025-08-11T12:00:15+00:00" modified_at: "2026-10-14T15:06:27+00:00" url: "https://topsourceworldwide.com/employer-of-record/israel/" markdown_url: "https://topsourceworldwide.com/employer-of-record/israel.md" taxonomy_continent: - "Asia" --- # 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. [Get Started](https://topsourceworldwide.com/contact-us/) ## 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. ### Licensed under the Manpower Contractors Law In Israel an EOR employs your hire as a manpower contractor, which needs a licence from the Ministry of Labour and a bank guarantee. 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. ### The nine-month rule and its IT exemption Outside IT, an employee can work for the same client for nine consecutive months, after which they become the client’s employee. The rule does not apply to roles in developing, maintaining and implementing computer systems, which covers most software and data hires. ### National Insurance and health tax The employer pays 4.51% National Insurance on pay up to ILS 7,703 a month and 7.6% above it, up to ILS 51,910. The employee pays 4.27% and 12.17%, health tax included. We report and pay both by the 15th. ### Pension and severance in one fund Every employee joins a pension fund: 6% of salary from the employee, 6.5% from the employer and 6% to 8.33% toward severance. At 8.33%, the fund can replace severance pay under Section 14 of the Severance Pay Law. ### Dismissals that hold up Israeli case law requires a hearing before dismissal, and notice runs from one day per month of service to a full month after the first year. Pregnant employees with six months’ service can only be dismissed with a permit from the Ministry. ## 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. [Talk to our Israel team](https://topsourceworldwide.com/contact-us/) ## 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 expert](/contact-us/) ##### Israel Annually Monthly | | British Pound | Israel | | --- | --- | --- | | Base Salary (per month) | | | | Employer Contributions | | | | Total Cost (Annual) | | | | Total Cost (Monthly) | | | Employer of Record services in [Learn more](#) Payroll Outsourcing in [Learn more](#) ## How EOR in Israel works: the process through TopSource Step 1 ### Check the role and the terms We confirm the role, the salary and the pension fund, and whether the job is an IT role outside the nine-month rule, and agree the plan with you before the hire starts. Step 2 ### Issue a written contract Your hire gets an Israeli employment contract and the written notice of terms the law requires, covering pay, working hours, pension, recuperation pay and notice. Step 3 ### Register and onboard We register your hire with National Insurance and the Tax Authority, open the pension fund with severance under Section 14 and set up commuting costs. Step 4 ### Run payroll every month Salaries, tax withholding, National Insurance and pension contributions are calculated and paid every month, with the report to National Insurance and the Tax Authority filed by the 15th. Step 5 ### Support the relationship day to day Your account manager and the employee have a direct line for leave, sick pay, reserve duty, notice and anything else that comes up. ## Know your Israel hiring costs before you commit Tell us the role and the salary. We’ll send back the full employer cost, with National Insurance, pension and severance, within one business day. [Get a Custom Employment Quote](https://topsourceworldwide.com/contact-us/) ## Employer Costs in Israel at a Glance 21.2% Statutory employer cost on ILS 20,000 a month 9 months Placement limit with one client outside IT roles ILS 6,443.85 Monthly minimum wage from April 2026 ## 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. #### National Insurance, health tax and income tax The employer pays National Insurance of 4.51% on the part of pay up to ILS 7,703 a month, 60% of the average wage, and 7.6% on pay above it, up to the 2026 maximum of ILS 51,910 a month. The employee pays 4.27% and 12.17% on the same bands, including health tax. Income tax is withheld monthly at progressive rates from 10% to 47%, with a 3% surtax on annual income above ILS 721,560, reduced by personal tax credit points. Withheld tax and contributions are reported and paid by the 15th of the following month. Our [Israeli payroll guide](https://topsourceworldwide.com/global-payroll/israel/) covers each item in detail. #### Pension, severance, recuperation pay and commuting Under the general pension extension order, every employee is insured in a pension fund, with 6% of salary from the employee and 6.5% from the employer, plus at least 6% toward severance. Employers that pay 8.33% can apply Section 14 of the Severance Pay Law, so the money in the fund replaces severance pay for the period it covers; otherwise severance is one month’s salary for each year of service, due on dismissal after the first year. After a year of service, employees also receive recuperation pay of ILS 451.50 a day in 2026, for five or more days a year depending on seniority, and employers reimburse commuting costs up to a daily cap. Many tech employers add a study fund (keren hishtalmut), commonly 7.5% from the employer and 2.5% from the employee, although it is not a general legal requirement. #### Manpower contractors: what makes an EOR legal in Israel Israeli law treats a company that employs staff to work for someone else as a manpower contractor. It needs a licence from the Ministry of Labour, which requires three years’ experience and a bank guarantee, and a company that contracts with an unlicensed contractor commits an offence, fined for each worker. Two rules then apply. The contractor’s employees are entitled to the working conditions, including any collective agreement, of comparable employees at the client. And an employee who works for the same client for more than nine consecutive months becomes the client’s employee, with the service counted; the Ministry can allow up to 15 months only in exceptional cases. Neither rule applies to roles in developing, maintaining and implementing computer systems, which covers most software, data and IT hires. Pregnant employees placed with a client for six months or more get extra protection: the client must not cause the contractor to dismiss them, and the law presumes it did unless shown otherwise. We employ your team through an Israeli employer licensed under the Manpower Contractors Law. #### Contracts, notice and dismissal Employees receive written notice of their terms of employment. Notice for a salaried employee is 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. Case law requires a hearing before any dismissal, where the employee can answer the reasons. Annual leave is 16 days in each of the first five years, counting weekly rest days, which is 12 working days on a five-day week, rising to 28 days with seniority. Sick pay starts on the second day of absence, at half pay on days two and three and full pay from day four, and accrues at 1.5 days a month up to 90. Maternity leave is 26 weeks for employees with a year’s service and 15 weeks for others. The full-time week is 42 hours, with overtime at 125% for the first two hours a day and 150% after that, and the minimum wage is ILS 6,443.85 a month from April 2026. ## 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: 1. Hiring developers, data or IT staff, whose roles the nine-month rule does not cover 2. Testing the Israeli market before registering a company 3. Building a first small team in Tel Aviv, Haifa or Jerusalem 4. Needing National Insurance, pension and severance running from the first month [Get a cost comparison](https://topsourceworldwide.com/contact-us/) ## 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. [EOR Services](https://topsourceworldwide.com/employer-of-record/) [Israel Payroll Services](https://topsourceworldwide.com/global-payroll/israel/) > “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.” Director of Research Operations, > “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.” Chief Human Resources Officer, > “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.” Senior Manager, Human Resources , ## 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](https://topsourceworldwide.com/hr-advisory/market-selection-advisory/) ##### Salary Benchmarking Identify and prioritize markets for growth based on talent, cost & regulations [Read more](https://topsourceworldwide.com/hr-advisory/salary-benchmarking/) ##### Global Skills Analysis Map skill availability by region to align talent strategies with business goals.. [Read more](https://topsourceworldwide.com/hr-advisory/global-skills-analysis/) ##### Talent Acquisition Find, hire & onboard the highly skilled team members you need in each locality. [Read more](https://topsourceworldwide.com/talent-acquisition/) ##### Talent Strategy Optimization Optimize your talent strategy to enable your organization to achieve it’s global ambitions. [Read more](https://topsourceworldwide.com/hr-advisory/talent-strategy-optimization/) ##### Global Benefits Review Benchmark your global benefits to boost employee retention. [Read more](https://topsourceworldwide.com/hr-advisory/global-benefits-review/) ## Frequently asked questions ### Is an Employer of Record legal in Israel? 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. ### What is the nine-month rule for EOR employees in Israel? 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. ### What does an employee in Israel cost? 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. ### How does severance pay work in Israel? 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. ### What notice period applies in Israel? 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. ### EOR or our own Israeli entity: which should we choose? 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. [Couldn’t find what you were looking for?](/contact-us/) ## Hire Anywhere with Our EOR Services We help you legally employ and pay talent across 164 countries—so you can scale faster. 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Euro](https://topsourceworldwide.com/employer-of-record/lithuania/) [Luxembourg Capital: Luxembourg City Currency: Euro](https://topsourceworldwide.com/employer-of-record/luxembourg/) [Madagascar Capital: Antananarivo Currency: Malagasy Ariary](https://topsourceworldwide.com/employer-of-record/madagascar/) [Malawi Capital: Lilongwe Currency: Malawian Kwacha](https://topsourceworldwide.com/employer-of-record/malawi/) [Malaysia Capital: Kuala Lumpur Currency: Ringgit](https://topsourceworldwide.com/employer-of-record/malaysia/) [Maldives Capital: Malé Currency: Rufiyaa](https://topsourceworldwide.com/employer-of-record/maldives/) [Mali Capital: Bamako Currency: West African CFA Franc](https://topsourceworldwide.com/employer-of-record/mali/) [Malta Capital: Valletta Currency: Euro](https://topsourceworldwide.com/employer-of-record/malta/) [Mauritania Capital: Nouakchott Currency: Mauritanian Ouguiya](https://topsourceworldwide.com/employer-of-record/mauritania/) [Mauritius Capital: Port Louis Currency: Mauritian Rupee](https://topsourceworldwide.com/employer-of-record/mauritius/) [Monaco Capital: Monaco City Currency: Euro](https://topsourceworldwide.com/employer-of-record/monaco/) [Mongolia Capital: Ulaanbaatar Currency: Tögrög](https://topsourceworldwide.com/employer-of-record/mongolia/) [Montenegro Capital: Podgorica Currency: Euro](https://topsourceworldwide.com/employer-of-record/montenegro/) [Morocco Capital: Rabat Currency: Moroccan Dirham](https://topsourceworldwide.com/employer-of-record/morocco/) [Mozambique Capital: Maputo Currency: Mozambican Metical](https://topsourceworldwide.com/employer-of-record/mozambique/) [Namibia Capital: Windhoek Currency: Namibian Dollar](https://topsourceworldwide.com/employer-of-record/namibia/) [Nepal Capital: Kathmandu Currency: Rupee](https://topsourceworldwide.com/employer-of-record/nepal/) [New Zealand Capital: Wellington Currency: Dollar](https://topsourceworldwide.com/employer-of-record/new-zealand/) [Nicaragua Capital: Managua Currency: Córdoba](https://topsourceworldwide.com/employer-of-record/nicaragua/) [Nigeria Capital: Abuja Currency: Nigerian Naira](https://topsourceworldwide.com/employer-of-record/nigeria/) [Norway Capital: Oslo Currency: Norwegian Krone](https://topsourceworldwide.com/employer-of-record/norway/) [Oman Capital: Muscat Currency: RIAL](https://topsourceworldwide.com/employer-of-record/oman/) [Pakistan Capital: Islamabad Currency: Pakistani Rupee](https://topsourceworldwide.com/employer-of-record/pakistan/) [Panama Capital: Panama City Currency: Balboa](https://topsourceworldwide.com/employer-of-record/panama/) [Papua New Guinea Capital: Port Moresby Currency: Papua New Guinean Kina](https://topsourceworldwide.com/employer-of-record/papua-new-guinea/) [Paraguay Capital: Asunción Currency: Guaraní](https://topsourceworldwide.com/employer-of-record/paraguay/) [Peru Capital: Lima Currency: Peruvian Sol](https://topsourceworldwide.com/employer-of-record/peru/) [Philippines Capital: Manila Currency: Peso](https://topsourceworldwide.com/employer-of-record/philippines/) [Portugal Capital: Lisbon Currency: Euro](https://topsourceworldwide.com/employer-of-record/portugal/) [Puerto Rico Capital: San Juan Currency: Dollar](https://topsourceworldwide.com/employer-of-record/puerto-rico/) [Qatar Capital: Doha Currency: Riyal](https://topsourceworldwide.com/employer-of-record/qatar/) [Romania Capital: Bucharest Currency: Romanian Leu](https://topsourceworldwide.com/employer-of-record/romania/) [Rwanda Capital: Kigali Currency: Rwandan Franc](https://topsourceworldwide.com/employer-of-record/rwanda/) [Saint Kitts & Nevis Capital: Basseterre Currency: Dollar](https://topsourceworldwide.com/employer-of-record/saint-kitts-nevis/) [Saint Lucia Capital: Castries Currency: Dollar](https://topsourceworldwide.com/employer-of-record/saint-lucia/) [Saint Vincent & the Grenadines Capital: Kingstown Currency: Dollar](https://topsourceworldwide.com/employer-of-record/saint-vincent-the-grenadines/) [Saipan Capital: Capitol Hill Currency: US Dollar](https://topsourceworldwide.com/employer-of-record/saipan/) [San Marino Capital: City of San Marino Currency: Euro](https://topsourceworldwide.com/employer-of-record/san-marino/) [Saudi Arabia Capital: Riyadh Currency: Riyal](https://topsourceworldwide.com/employer-of-record/saudi-arabia/) [Senegal Capital: Dakar Currency: West African CFA Franc](https://topsourceworldwide.com/employer-of-record/senegal/) [Serbia Capital: Belgrade Currency: Serbian Dinar](https://topsourceworldwide.com/employer-of-record/serbia/) [Seychelles Capital: Victoria Currency: Seychellois Rupee](https://topsourceworldwide.com/employer-of-record/seychelles/) [Slovakia Capital: Bratislava Currency: Euro](https://topsourceworldwide.com/employer-of-record/slovakia/) [Slovenia Capital: Ljubljana Currency: Euro](https://topsourceworldwide.com/employer-of-record/slovenia/) [Solomon Island Capital: Honiara Currency: Solomon Islands Dollar](https://topsourceworldwide.com/employer-of-record/solomon-island/) [South Korea Capital: Seoul Currency: Won](https://topsourceworldwide.com/employer-of-record/south-korea/) [South Sudan Capital: Juba Currency: South Sudanese Pound](https://topsourceworldwide.com/employer-of-record/south-sudan/) [Sri Lanka Capital: Colombo Currency: Rupee](https://topsourceworldwide.com/employer-of-record/sri-lanka/) [St-Maarten Capital: Philipsburg Currency: Caribbean Guilder](https://topsourceworldwide.com/employer-of-record/st-maarten/) [Sudan Capital: Khartoum Currency: Sudanese Pound](https://topsourceworldwide.com/employer-of-record/sudan/) [Suriname Capital: Paramaribo Currency: Surinamese Dollar](https://topsourceworldwide.com/employer-of-record/suriname/) [Sweden Capital: Stockholm Currency: Swedish Krona](https://topsourceworldwide.com/employer-of-record/sweden/) [Taiwan Capital: Taipei Currency: Dollar](https://topsourceworldwide.com/employer-of-record/taiwan/) [Thailand Capital: Bangkok Currency: Thai Baht](https://topsourceworldwide.com/employer-of-record/thailand/) [Trinidad & Tobago Capital: Port of Spain Currency: Trinidad and Tobago Dollar](https://topsourceworldwide.com/employer-of-record/trinidad-tobago/) [Tunisia Capital: Tunis Currency: Tunisian Dinar](https://topsourceworldwide.com/employer-of-record/tunisia/) [Uganda Capital: Kampala Currency: Ugandan Shilling](https://topsourceworldwide.com/employer-of-record/uganda/) [United Kingdom Capital: London Currency: Pound Sterling](https://topsourceworldwide.com/employer-of-record/united-kingdom/) [US Virgin Island Capital: Charlotte Amalie Currency: United States Dollar](https://topsourceworldwide.com/employer-of-record/us-virgin-island/) [Venezuela Capital: Caracas Currency: Venezuelan Bolívar](https://topsourceworldwide.com/employer-of-record/venezuela/) [Zambia Capital: Lusaka Currency: Zambian Kwacha](https://topsourceworldwide.com/employer-of-record/zambia/) [Zimbabwe Capital: Harare Currency: Zimbabwe Gold (ZiG)](https://topsourceworldwide.com/employer-of-record/zimbabwe/) Load more