Employment laws in Israel

Employment laws in Israel are designed to protect both employers and employees in the workplace. Governed by a combination of statutes, collective agreements, and court rulings, labor laws in Israel cover a wide range of matters, from employment contracts and minimum wage to termination procedures and severance pay. 

Whether you want to understand employee rights in Israel or ensure labor law compliance in Israel, you have to navigate the employment laws in Israel for fair, lawful, and productive working relationships. 

Payoneer Workforce Management, a trusted EOR service, helps navigate the employment laws and assists with labor law compliance, payroll management, taxation, and more in Israel. 

Key employment laws in Israel

Israel has various labor legislations and statutes, and the system is heavily regulated by the National Labor Court, extension orders, and more. 

Mentioned below are some of the key employment laws in Israel:

• The Hours of Work and Rest Law, 5711-1951: This is the foundational Israeli statute regulating rest days, working hours, and overtime. 
• The Annual Leave Law, 5711-1951: This law guarantees that all employees are entitled to paid annual vacation. The leave duration depends on the seniority of employment. 
• The Employment of Women Law, 5714-1954: This statute protects women’s rights during maternity, pregnancy, and parenthood. It minimizes career damage due to absences. 
• The Employment (Equal Opportunities) Law, 5748-1988: This is one of the cornerstones of labor laws in Israel. It prohibits discrimination in employment terms, hiring, promotion, and training, based on sex, religion, nationality, race, and more. 
• The Prevention of Sexual Harassment Law, 5758-1998: It is evident from the name of the law that it prohibits sexual harassment to protect liberty, human dignity, and privacy, while promoting gender equality at the same time.  

Contract employment laws in Israel

The National Labor Law Profile contains all the details about employment contracts in Israel. As per the law profile, the employment contract can be in verbal format or in writing. The employment contract must contain all the essential contract terms and conditions.  

Types of contract

There are mainly two types of employment contracts in Israel. They are:

• Indefinite term contracts: When an employment contract does not specify a fixed period of duration, it is considered an indefinite term contract. However, this contract can be terminated by notice of either party. 
• Definite or fixed-term contracts: As the name suggests, fixed-term contracts are for a specified time duration, typically for 12 months. At the end of this period, the contractual relationship terminates. In certain cases, such contracts can be renewed. 

Essential contract terms

Here are some of the important contract terms in employment contracts in Israel:

• Full details of the employer and employee
• Job description including role and responsibilities
• Probation period 
• Working hours and overtime
• Salary/wages 
• Additional bonuses, allowances, etc. 
• Leave entitlements
• Social benefits 
• Notice period
• Termination

Minimum wage in Israel

• The average minimum wage in Israel is 13, 316 ILS. 
• The payout currency in the country is ILS.
• Foreign expats earn a minimum of two times the average wage. Their new minimum base salary is 26, 632 ILS per month. 

Working hours in Israel

The working hours in Israel are 42 hours per week. 

• As per overtime laws in Israel, employees can work a maximum of 16 additional hours per week. 
• Overtime in Israel is paid for weekdays, weekends, night hours, and public holidays. 
• The overtime is compensated at 250% of the employee’s normal salary. The breakdown is 150% of the working hours and an additional 100% as holiday pay. 

Mandatory benefits

Employee rights in Israel are quite strong, and employees are entitled to various mandatory benefits in the country.  Read on to know the details.

Termination

If there are valid grounds for termination, employers can terminate employees as per the termination laws in Israel. In case the termination is without valid grounds, it is considered unfair dismissal. 

Such dismissals invite legal consequences for the employer, along with fines and penalties. As termination scenarios vary, each termination case must be handled differently. 

Types of termination scenarios

Terminations take place in the following scenarios in Israel:

• Mutual termination agreement between the employee and the employer
• Resignation by the employee
• Termination during the probationary period
• Termination by the employer due to absence without leave, misconduct, performance issues, and more. 

Notice period in Israel

Employees have to serve a notice period in Israel before termination. 

• Notice period during probation period in Israel
  If termination is during the notice period, employees have to serve a notice period of 1 day per month, up to 6 months. 
• Notice period after probation period 
  However, if the employee termination is after the probation period, the notice period varies depending on the employment tenure. 

Severance payable

Employees are entitled to severance pay in Israel. 

8.33% of the employee’s salary is added per month and accumulated in a government-mandated fund. The accumulated amount is redeemed at the end of employment. 

Navigate employment laws in Israel with trusted support

Employers must be extremely careful about labor law compliance in Israel. Non-compliance calls for legal hassles, including penalties and fines. Understanding the employment laws in Israel is mandatory for employees and employers alike in the country. 

It might be difficult to navigate the complex labor laws in Israel. Payoneer Workforce Management offers an EOR that helps navigate these laws seamlessly. Along with the laws, the EOR service also extends support for employee onboarding and termination, taxation, payroll management, leave tracking, and more. 

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