Israel at a Glance

At a Glance

Population: 9.75 million

Weather: Mediterranean climate with hot, dry summers (30°C to 35°C / 86°F to 95°F) and mild, wet winters (10°C to 15°C / 50°F to 59°F).

Capital: Jerusalem

Currency: Israeli New Shekel (ILS) ₪

Time Zone: Israel Standard Time (IST)

Official Languages: Hebrew & Arabic

Founded: May 14, 1948

Religion:

73% Jewish ✡

21% Muslim ☪ and

6% – Other

Government: Parliamentary democracy

Area: 21,640 sq km

Culture in Israel

Cultural Fusion

Israel’s culture is a beautiful tapestry woven from a rich diversity of traditions contributed by people from around the world, reflecting the vibrant mosaic of its society.

Architecture: Arab influences shine through in architectural designs, blending seamlessly with modern structures.
Music: Israel’s music scene is vibrant, reflecting a fusion of traditional Jewish, Middle Eastern, and Western influences.
Cuisine: Israeli cuisine is a delightful mix of flavours influenced by Eastern European, Mediterranean, and Middle Eastern culinary traditions.

Language Symphony

The official languages of Israel are Hebrew and Arabic. However, the linguistic diversity goes beyond these two:

Hebrew: The unifying language of Israel, spoken by the majority.
Arabic: A significant language spoken by the Arab population.
Russian: Widely spoken due to a considerable Russian-speaking community.
Amharic: Spoken by Ethiopian Jewish immigrants.
English: Once an official language, English is still widely spoken and understood.

Cultural Calendar

Israel follows the Hebrew calendar, with Saturday (the Sabbath) as the day of rest. This rich cultural calendar includes a variety of religious and national holidays, each with its unique customs and traditions.

Public Holidays

Israel has 8 paid public holidays each year. These holidays begin at sunset on the preceding day and vary on the Gregorian calendar because they follow the Jewish lunar calendar. Before these holidays, workplaces often close early, allowing people to prepare and take part in the celebrations. These holidays bring communities together to celebrate their cultural heritage and traditions.

Passover (Pesach) – April 23rd and 29th 2024
Independence Day (Yom Ha’atzmaut) – May 14th 2024
Shavu’ot – June 12th 2024
Jewish New Year (Rosh Hashanah) – October 3rd + 4th 2024
Yom Kippur – October 12th 2024
Sukkot – October 17th + October 24th 2024

Other holidays are observed in Israel, however, they are not paid for as public holidays:

Tu B’Shvat – January 25th 2024
Purim – March 24th 2024
Yom Hasho’a (Remembrance Day for Holocaust) – May 7th 2024
Yom Hazikaron (Remembrance day) – May 14th 2024
Hannukah – December 26th 2024

Did You Know?

Floating in Style: Israel is home to the lowest point on Earth, the Dead Sea, known for its high salt concentration. It’s so salty that you can effortlessly float on its surface. Grab a book and let yourself drift!

Beach Paradise: Despite being a relatively small country, Israel boasts a stunning 137 miles (220 km) of Mediterranean coastline. The beautiful beaches are perfect for sunbathing and water sports.

Technicolor Desert: The Negev Desert in southern Israel is home to the stunning Ramon Crater, a unique geological formation that showcases a colourful palette of rock layers.

World Record Dates: Israel’s kibbutzim (collective communities) produce some of the world’s most sought-after dates. The Medjool dates, often called “king of dates,” are exceptionally sweet and juicy.

Innovation Hub: Israel is often referred to as the “Startup Nation.” It has the highest number of startups per capita globally, making it a hub for innovation and entrepreneurship.

Unicorn Central: Israel is also home to an impressive 98 Unicorns, private companies valued at over $1 billion each. These business giants contribute to Israel’s reputation as a global business and innovation powerhouse.

Israeli Labour Law

A Comprehensive Framework

Israel’s employment landscape is governed by a comprehensive legal framework, ensuring fairness and protection for all workers. Israeli employment law applies to all workers in the country, regardless of nationality. It sets minimum requirements to ensure fairness and protection for everyone.

At CWS Israel, we navigate the intricacies of Israeli labour law to empower employers and employees alike. Whether you’re seeking guidance on contracts, compliance, or any employment-related matter, we’re here to help.

Basic Laws

At the heart of Israeli labour law are the Basic Laws, constitutional rights established by the Israeli Parliament in 1992. They form the bedrock of employment regulations, ensuring fundamental freedoms for all.

Statutory Rights

In addition to the Basic Laws, statutory rights and regulations further define the rights and obligations of employers and employees. These cover various aspects of employment, from working hours to leave entitlements.

Collective Agreements

Collective agreements and their extensions are crucial in Israeli employment law. They stem from talks between employers and employee representatives, shaping employment rights.

Individual Labour Contracts

Individual employment contracts are essential for setting the terms and conditions of work. They create a detailed framework for the employer-employee relationship.

Modifying Employment Contracts

Statutory rights and mandatory benefits are included in every employment contract, and they take priority over conflicting terms. Changing existing contracts needs written consent from employees, highlighting the need for clear communication and compliance.

Interpretation by the National Labor Court

The National Labor Court is the principal judicial authority responsible for interpreting and developing labour and social security law in Israel. Their interpretations influence employment practices and legal decisions.

International Standards

Israel values international standards like ILO conventions and EU guidelines, even though they are not legally binding. These standards help align with global employment practices.

Work Hours and Overtime in Israel

The Workweek

In Israel, the standard workweek runs from Sunday through Thursday. However, non-Jewish individuals can choose Friday, Saturday, or Sunday as their main weekly holiday, ensuring inclusivity.

Limits

A working day consists of 8 hours in workplaces with a 6-day working week and 9 hours in those with a 5-day working week. The maximum weekly working duration is 42 hours, spread over six days.

Probationary Period

Israeli labour law doesn’t specify trial periods, but collective agreements often have them, lasting three to six months. Employers can extend trials fairly and justly under certain conditions.

Overtime in Israel

Hours exceeding the daily 8-hour limit and weekly 42-hour cap count as overtime. Overtime rates vary by situation. Employers must keep timesheets tracking work, rest, and overtime hours, ensuring compliance and transparency.

National Insurance in Israel

Contributions

In Israel, employers must make monthly National Insurance contributions, which include both their share and the portion deducted from employees’ wages, based on a percentage of each employee’s income.

Contribution Rates

The rates for National and Health Insurance payments are determined by several factors, including the individual’s earned income, unearned income, and employment status (e.g., employee, self-employed, student).

For Israeli Resident Employees: Employers typically contribute 3.45% of the employee’s gross salary. This contribution covers various aspects, including health insurance, unemployment benefits, and pensions.

For Non-Resident Employees: The employer’s contribution rates are different, amounting to approximately 0.59% on income up to a specific threshold (e.g., ILS 6,331) and 2.65% on income exceeding that threshold, up to a maximum (e.g., ILS 44,020). These payments primarily fund work-related accident coverage and some social benefits.

Pension Schemes in Israel

Provident Funds

Pension schemes in Israel are governed by the 2016 Supervision of Financial Services Regulations (Provident Funds). These regulations place the responsibility for management squarely on employers, with a focus on financial security and long-term planning.

Employer Responsibilities

Employers oversee employee pension plans, including data provision and payments to designated providers like insurance companies, pension funds, study funds, and provident funds. They also handle feedback and error reports to ensure accuracy.

Financial Obligations

Employers pay a monthly fee to a licensed pension firm, based on either 0.6% of the premium plus VAT or NIS 10.5 plus VAT, whichever is higher. This fee is offset by deducting it from employee management fees for their pension products.

Pension Operations Services

The pension operations vendor manages pension schemes by processing employee payments and payment data, ensuring the scheme runs smoothly.

Leave and Holidays

Maternity Leave: Female employees are entitled to up-to 26 weeks of leave (some paid and some unpaid – by the National Insurance Scheme). Female employees must take at least 15 weeks off.

Paternity Leave: Male employees are entitled to 7 days of leave after their child’s birth, alongside the female.

Sick Leave: Employees are entitled to sick leave, calculated at a rate of one and a half days for each month of employment, with a maximum accumulation of 90 days.

Compassionate Leave: Employees absent due to the death of a first-degree relative receive full pay for up to a second calendar day.

Army Service Leave: For employees with military service obligations, employers accommodate their military duties, ensuring that they can fulfill their responsibilities without impacting their employment. Employers are reimbursed for the time an employee spends in service.

Statutory Benefits in Israel

In addition to the standard compensation package, employees in Israel enjoy a range of statutory benefits that enhance their well-being and security.

Healthcare

All residents are part of one of Israel’s four official health organisations, called ‘Kupot Cholim.’ These organisations offer free primary medical care, funded through deductions from employees’ salaries, shared among the four health funds.

Disability Benefit

In the case of disability, employees are entitled to receive support through disability benefits, helping them cope with life’s challenges.

Employment Injury Compensation

This benefit provides financial assistance and Support during recovery and addresses work-related injuries.

Unemployment Benefit

During periods of unemployment, employees can access unemployment benefits, offering crucial financial assistance when it’s needed most.

Travel Allowance

To support transportation needs, employees may be entitled to public transportation or car allowances, making commuting more accessible.

The Israeli Education Fund

The ‘Keren Hishtalmut’ is a tax-advantaged savings plan for education and professional development. It’s not mandatory but is commonly offered and expected by employees as part of their remuneration package. This plan provides tax benefits, long-term savings, investment choices, and withdrawal options, making it a valuable tool for education financial planning.

Key Features

Tax Advantages

Contributions to the Israeli Education Fund offer tax advantages, making it an attractive choice for those investing in education while managing their finances.

Long-Term Savings

The fund promotes long-term financial discipline, helping individuals save for various educational goals, whether it’s higher education, vocational training, or professional development.

Diverse Investment Options

Investors have a range of options to choose from, allowing them to tailor their portfolios to their risk tolerance and financial goals.

Specific Withdrawal Conditions

The fund specifies clear withdrawal conditions, ensuring that the funds are used for educational expenses, keeping individuals on track with their learning goals.

For more information about Keren Hishtalmut (Education Fund) – read our blog post

Income Tax in Israel

Income tax in Israel depends on your residency status:

Residents pay taxes on global income, both in Israel and abroad. Tax rates vary by income. You can find out more information here:
Non-residents are taxed only on income earned within Israel, excluding foreign income.

Critical Aspects of Israeli Income Tax

Progressive Tax Rates: Tax rates in Israel vary based on income level. Higher incomes are subject to higher tax rates, with the highest rate for residents being 50%.
Surtax: A 3% surtax applies to income exceeding a certain threshold of 698,280 Israeli shekels (ILS) in January 2023.
Tax Credits and Deductions: Israel provides various tax credits and deductions to reduce overall tax liability. These include credits for children, housing, and more.
Capital Gains Tax: Capital gains tax applies to selling specific assets, such as real estate and securities. The rates depend on the type of asset and the duration of ownership.
Exemptions: Certain types of income, such as scholarships and pensions, may be exempt from taxation. Primary residences are generally exempt from capital gains tax.
Tax Year: The tax year in Israel typically follows the calendar year, from January 1st to December 31st.
Filing and Payment: Israeli residents must file an annual tax return, while non-residents may have tax withheld at the source.

Termination and Severance in Israel

In Israel, employment can be terminated through various means, including resignation, dismissal, retirement, death, or the expiration of a limited employment contract. Dismissal, however, typically leads to severance pay for the employee unless it’s for justifiable cause.

Notice Period

Both employers and employees must provide written notice before termination. The notice period varies based on the employee’s salary payment frequency:

For Salaried Workers:

Less than six months: One day’s notice per month worked.
Seven to 12 months: Six days’ notice plus 2.5 days for each month beyond six.
More than one year: One month’s notice.

Hourly workers have different terms, and we can guide you through these specific requirements.

Severance Pay

In Israel, severance pay is based on the employee’s last month’s salary and the number of years you’ve worked for the same employer. This rule applies if you’ve worked at least 12 months and leave due to specific conditions that qualify as constructive dismissal.

Hearing Process

Before making final decisions about termination and redundancies, Israeli labour law mandates a hearing process. This ensures employees have the opportunity to hear the reasons for their intended dismissal and express their opinions regarding it.

Properly conducting the hearing procedure is crucial, and our experts can guide you through this process to avoid complications and potential damages.

Israeli Immigration

Work Permits and Visas

Israel offers various types of permits and visas that allow foreign nationals to work in the country. These include temporary or permanent residence visas, as well as specific work-related visas like the B1, B4, or A1 visas. The choice of visa depends on individual circumstances and employment situations.

Duration and Renewal

Work permits and visas in Israel come with varying durations, some subject to renewal. For example, the B1 work visa is typically issued for a maximum period of one year and may be renewed annually if the necessary requirements are met. Renewal procedures and criteria should be closely followed to maintain legal work status.

Application Requirements

Applying for a work permit and visa involves several essential steps, including:

Recommendation from the Ministry of Interior.
Proof of valid medical insurance for the employee.
Confirmation of the employee’s salary is usually set at a specific threshold.
An employer’s commitment to ensuring the employee’s departure upon contract termination.
Submission of accurate personal data, including passport information, curriculum vitae (CV), and relevant diplomas.
An explanation from the Israeli employer or related parties regarding the need for the employee’s presence.
Completion of specific forms and affidavits as required.

Registration Fees

Registration fees for work permits and visas can vary, and it’s essential to check with the relevant authorities for the most up-to-date information. As of [current date], the fees for a work permit and B1 work visa application per principal applicant are approximately [current fee].

Legal Requirements

Creating a written employment contract with a foreign worker is mandatory in Israel. Foreign workers have the right to the same employment terms as Israeli employees, which includes receiving at least the minimum wage, coverage of transportation expenses, and convalescence pay.

Work Visa Categories

Work visas in Israel are granted based on various factors, including the professional field and the applicant’s income level. Categories may include:

Professionals in a specific field, such as expert researchers or senior managers at multinational companies.
Expert professionals whose wages exceed a certain threshold.

Duration of Stay

Once a foreign national obtains a working visa, they are considered non-permanent workers in Israel. Depending on the category, visas can be valid for up to 63 months, with potential renewals. Short-term working visas, valid for 45 days, are also available for temporary tasks.

Short-Term Visas

Short-term visas are for temporary tasks like consultations or inspections and are valid for 45 days. They’re usually given to foreign professionals from countries that don’t need a visa to enter Israel. Keep in mind that immigration rules can change, so it’s vital to check official Israeli government sources or get legal advice to stay compliant with current requirements.