COUNTRY GUIDE
A short guide to building a dedicated offshore team in Israel
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Jerusalem
Hebrew
9.311 million
(GMT+3)
250,000
Israeli New Shekel (ILS)
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US$6.81bn in 2023
$15.76 billion
Jerusalem
Hebrew
9.311 million
(GMT+3)
250,000
Israeli New Shekel (ILS)
US$6.81bn in 2023
$15.76 billion
Located in the Middle East, Israel has earned the nickname 'The Startup Nation' due to its thriving tech scene. With over 6,000 active startups and a dominant presence in industrial high-tech and entrepreneurship, the country excels in innovation, boasting the highest number of startups per capita globally.
Israel also ranks #2 in the world for R&D expenditure per capita, reflecting its strong research capabilities. Known for its expertise in cybersecurity, Israel is also witnessing the emergence of flourishing sectors like Fintech, AI, and automation.
Israel's workforce is highly educated and skilled, with a high percentage of engineers, scientists, and university degree holders. The tech industry is well-supported by early-stage funds, with a significant portion of venture capital funding going to Israel.
Payroll Cycle
The payroll cycle in Israel occurs on a monthly basis.
Employer Taxes
Employers in Israel are subject to specific tax and social security contribution rates as of the last review in February 2023. The corporate tax rate is 23%, while the standard rate for Value Added Tax (VAT) is 17%.
Overtime Pay
In Israel, the standard working hours for a five-day workweek, from Sunday to Thursday, is 48 hours. Employees are entitled to overtime pay for any additional hours worked beyond regular working hours. The calculation for overtime pay is as follows:
The payment is calculated at 125.00% of the regular wage for the first two overtime hours.
Any additional work hours during the weekly rest day are calculated at 150.00% of the regular wage.
Some companies may choose to provide a global monthly amount as compensation for overtime pay instead of calculating it based on specific hours worked.
Paid Leave
In Israel, employees are entitled to mandatory annual leave of 16 days.
Sick Leave
In Israel, employees accrue 1.5 days of paid sick leave for each month worked, with a maximum accumulation of 90 days. The entitlement to sick leave begins on the second day of absence, as the first day is unpaid. During the second and third days of sick leave, employees are paid 50% of their usual wages. Starting on the fourth day, employees receive their full pay. Employees must provide a medical certificate to validate their sick leave.
Public and Provincial Holidays
Notice Period
In Israel, the notice period for employees is determined based on the number of years they have been employed. The notice periods are as follows:
- In the 1st year of employment, employees are required to provide 1 day of notice for every month worked.
- In the 2nd year of employment, the notice period increases to 14 days.
- In the 3rd year of employment, employees must provide a notice period of 21 days.
- After completing three years of employment, the notice period extends to 1 month.
13th Month Bonus
In Israel, a 13th month pay is not mandatory but is commonly provided by employers as an additional benefit to their employees.
Setting up a standalone business operation in Israel for the purpose of team creation can be a taxing endeavor, often accompanied by substantial legal fees.
At the same time, navigating the complexities of Israeli labor laws and aligning with the expectations of employees present multifaceted and rigorous challenges. This situation is further complicated by the necessity to secure precise and up-to-date employment information specific to Israel. Additionally, the management of contracts and the tracking of invoices through emails and spreadsheets are prone to disorder and inaccuracies.
In this scenario, adhering to compliance becomes paramount, necessitating a diligent observance of Israeli regulations, especially in regards to taxes and legal stipulations.
ALLSTARSIT simplifies this process by providing a comprehensive staff augmentation solution for the identification and recruitment of employees in Israel, managing HR and payroll, and ensuring compliance is seamlessly automated. We streamline the process to make it straightforward and eliminate complications.
Choose the right expert professionals required for your specific project, saving time and wasted effort.
This service enables software development companies worldwide to meet any technical needs outside their core skill set by adding specialized staff on demand while retaining control of the project's specifications and scope.
Establish R&D / Tech Support / QA & Testing / DevOps / Data Entry Centers in your chosen location.
Forget about investing in facilities, equipment, technology, or human resources. We manage all necessary operations as your specialist. This can help you save money and resources, all while reducing frustration and simplifying internal processes.
Use ALLSTARSIT as your EOR / CM to easily hire employees in new countries without setting up a legal entity.
We act as the employer for your new hire, handling all HR, payroll, tax, and compliance requirements on your behalf, while you maintain control of their workload.
Effortlessly Access Expert Tech Support for Your Projects
Our Tech Support service provides companies worldwide with access to the best technical experts tailored to their specific project needs. Whether you require troubleshooting, maintenance, or specialized assistance, we ensure that you have the right professionals on hand to support your endeavors effectively.
Maximize Your Customer Satisfaction Level with Our Customer Support Service
Access tailored customer care solutions for your business needs. Our expert team is dedicated to addressing inquiries, resolving issues, and delivering personalized assistance. Say goodbye to challenges and hello to exceptional customer care with us.
Contact us, and we’ll help you hire the best tech talent in Israel
