Payroll Services - General Terms
CWS Israel Ltd – Payroll Outsourcing Services
Overview & Purpose
These General Terms govern all CWS Israel Payroll Outsourcing Services. By engaging our services, you agree to these terms. Your specific engagement details will be outlined in your individual Service Order Form.
Welcome to CWS Israel Ltd. ("CWS Israel", "we", "us", or "our"). These General Terms ("Terms") govern the provision of our Payroll Outsourcing Services ("Services"). Our Services are designed for companies that have an established legal entity in Israel and require expert payroll management.
By engaging CWS Israel for Payroll Outsourcing Services, you ("Client", "you", or "your") agree to be bound by these Terms and any related Service Order Form. These documents form a legally binding agreement between you and CWS Israel.
It is crucial to understand that under this agreement, your company remains the legal employer of your employees in Israel. CWS Israel acts as a dedicated administrative partner, processing payroll and managing related compliance tasks on your behalf, but does not assume the role of Employer of Record (EOR).
Payroll Outsourcing vs Employer of Record (EOR)
Understanding the difference between Payroll Outsourcing and Employer of Record (EOR) is essential for compliance. This is not merely a commercial decision—using the wrong model can expose your company to labor law, tax, and misclassification risks.
Payroll Outsourcing
Suitable when you already have a legal entity in Israel and can act as the direct legal employer.
- Registered Israeli legal entity exists
- Employment contracts signed directly with employees
- Payments from your Israeli bank account
- You retain employer responsibilities
Employer of Record (EOR)
Appropriate when you cannot or do not wish to act as the legal employer in Israel.
- No Israeli legal entity in place
- Cannot run compliant payroll from abroad
- No Israeli bank account available
- Fast market entry or short-term hiring needed
| Area | Payroll Outsourcing | Employer of Record (EOR) |
|---|---|---|
| Legal Employer | Client's Israeli entity | CWS Israel |
| Entity Required | Yes | No |
| Salary & Statutory Payments | Paid by client entity | Paid by CWS Israel |
| Employer Liability | Client | CWS Israel |
| Compliance Responsibility | Client (with advisory support) | CWS Israel |
| Typical Use Case | Established entity, ongoing operations | Market entry, flexibility, risk transfer |
Need Guidance? CWS Israel's role is to advise clearly and transparently which model is appropriate in each case, based on your structure, payment flows, headcount, and operational reality. Many companies begin with an EOR model and later transition to payroll outsourcing once an Israeli entity is established—we support both models and ensure compliant, smooth transitions.
1. Definitions
To ensure clarity throughout this document, the following terms have specific meanings:
"Affiliate" means any entity that directly or indirectly controls, is controlled by, or is under common control with a party.
"Agreement" refers to these General Terms and any accompanying Service Order Form.
"Confidential Information" includes all non-public information disclosed by one party to the other, whether orally or in writing, that is designated as confidential or that reasonably should be understood to be confidential given the nature of the information and the circumstances of disclosure. This includes, but is not limited to, business plans, financial data, customer lists, and employee personal data.
"Employee" means an individual employed directly by the Client within Israel for whom CWS Israel provides Services under this Agreement.
"Intellectual Property Rights" means all patents, copyrights, trademarks, trade secrets, and other intellectual property rights.
"Payroll Data" means all information provided by the Client to CWS Israel for the purpose of processing payroll, including but not limited to employee names, salaries, working hours, bank details, and tax identification numbers.
"Service Order Form" means a document executed by both parties that outlines the specific Services to be provided, fees, and other relevant details.
"Services" refers to the payroll processing and related administrative services provided by CWS Israel as detailed in the Service Order Form.
2. Scope of Services
CWS Israel will provide the following Payroll Outsourcing Services:
- Payroll Calculation: Gross-to-net calculation of salaries, bonuses, commissions, and other compensation elements based on Payroll Data provided by the Client.
- Statutory Filings: Preparation and submission of routine statutory filings with Israeli authorities, including the Israeli Tax Authority and the National Insurance Institute (Bituach Leumi).
- Pension & Severance: Management of contributions to mandatory pension and severance funds as required by Israeli law.
- Payslip Distribution: Secure electronic distribution of payslips to Employees.
- Reporting: Provision of standard monthly payroll reports, including Gross-to-Net summaries, payroll variance reports, and General Ledger (GL) reports.
- Year-End Reporting: Preparation and submission of all required year-end statutory payroll reports.
▶ Client Responsibilities
The Client acknowledges and agrees to:
- Remain the legal employer of all Employees.
- Provide accurate and complete Payroll Data to CWS Israel in a timely manner.
- Notify CWS Israel promptly of any changes to Employee status, including new hires, terminations, salary adjustments, and leave of absence.
- Ensure sufficient funds are available in its Israeli bank account for all salary payments and statutory remittances.
- Review and approve all payroll calculations and reports provided by CWS Israel before payments are executed.
3. Fees and Payment Terms
Fees: The Client agrees to pay the fees for the Services as specified in the Service Order Form.
Invoicing: CWS Israel will issue invoices on a monthly basis. All fees are exclusive of Value Added Tax (VAT), which will be added to the invoice at the prevailing rate (currently 18%).
Payment Terms: All invoices are due and payable within fourteen (14) days of the invoice date (NET 14).
Late Payments: A late payment fee of three percent (3%) of the outstanding invoice amount will be applied automatically if payment is not received within twenty-one (21) days of the invoice date.
4. Service Level Commitments
CWS Israel is committed to providing a best-in-class payroll service. Our service level commitments include:
- Payroll Accuracy: We strive for 100% accuracy in all payroll calculations, based on the Payroll Data provided by the Client.
- Timeliness: All routine payroll processing and statutory filings will be completed within the statutory deadlines, provided the Client has met its obligations under this Agreement.
- Response Time: We will acknowledge all payroll-related queries from the Client within four (4) business hours and will aim to resolve them within one (1) business day.
- Payslip Delivery: Electronic payslips will be delivered to Employees at least two (2) business days before the scheduled salary payment date.
5. Confidentiality and Data Protection
Confidentiality: Both parties agree to maintain the confidentiality of all Confidential Information and to not disclose it to any third party without the prior written consent of the other party, except as required by law.
Data Protection: CWS Israel will process all Payroll Data in accordance with the Israeli Privacy Protection Law and other applicable data protection regulations. We will implement and maintain appropriate technical and organizational measures to protect Payroll Data against unauthorized or unlawful processing and against accidental loss, destruction, or damage.
Data Retention: CWS Israel will retain all payroll records for a period of seven (7) years following the termination of this Agreement, in compliance with Israeli legal requirements.
6. Intellectual Property
CWS Israel retains all Intellectual Property Rights in its payroll processing platform, software, and all materials provided to the Client in connection with the Services. The Client is granted a non-exclusive, non-transferable license to use these materials solely for the purpose of receiving the Services.
The Client retains all rights to its Payroll Data.
7. Liability and Indemnification
Limitation of Liability: The total liability of CWS Israel to the Client for any and all claims arising out of or in connection with this Agreement, whether in contract, tort, or otherwise, will be limited to the total fees paid by the Client to CWS Israel in the twelve (12) months immediately preceding the event giving rise to the claim.
Indemnification: The Client agrees to indemnify and hold harmless CWS Israel from and against any and all claims, liabilities, damages, and expenses (including reasonable attorneys' fees) arising out of or in connection with any inaccuracies or omissions in the Payroll Data provided by the Client.
8. Termination
Termination for Convenience: Either party may terminate this Agreement for any reason by providing thirty (30) days' written notice to the other party.
Continuation of Services: The termination of this Agreement does not automatically terminate the provision of services required by Israeli law. CWS Israel will cooperate with the Client to ensure a smooth and compliant transition of services.
Return of Data: Upon termination of this Agreement, CWS Israel will provide the Client with a complete and secure copy of all Payroll Data.
9. Dispute Resolution
Governing Law: This Agreement will be governed by and construed in accordance with the laws of the State of Israel.
Arbitration: Any dispute, controversy, or claim arising out of or in connection with this Agreement will be settled by arbitration in Tel Aviv, Israel, in accordance with the rules of the Israeli Institute of Commercial Arbitration.
10. General Provisions
Entire Agreement: This Agreement, together with any Service Order Form, constitutes the entire agreement between the parties and supersedes all prior and contemporaneous agreements, proposals, or representations, written or oral, concerning its subject matter.
Amendment: No amendment or waiver of any provision of this Agreement will be effective unless in writing and signed by both parties.
Assignment: Neither party may assign any of its rights or obligations hereunder, whether by operation of law or otherwise, without the prior written consent of the other party.
Relationship of the Parties: The parties are independent contractors. This Agreement does not create a partnership, franchise, joint venture, agency, fiduciary, or employment relationship between the parties.
