# Hiring in Israel: employment costs, payroll and compliance

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> Statutory data last updated: 2026-04-01. Every figure below carries its own source year.

## Country

| Field | Value |
|---|---|
| Region | Asia |
| Currency | ILS (Israeli Shekel) |

## Pay & working time

| Field | Value | Source year |
|---|---|---:|
| Minimum wage | ₪6,444 | 2026 |
| Average wage | 54,736 | 2024 |
| Statutory work week | 42 hours/week | 2018 |
| 13th-month salary | none | 2026 |

## Employer cost & tax

| Field | Value | Source year |
|---|---|---:|
| Employer social security | 6.3% | 2025 |
| Employee social security | 8.8% | 2025 |
| Total tax wedge | 26.1% | 2025 |
| Corporate tax rate | 23% | 2025 |

## Termination

| Field | Value | Source year |
|---|---|---:|
| Notice period | 4.3 weeks | 2019 |
| Severance pay | 23.1 weeks | 2019 |
| Employment protection | 2.8 | 2019 |

## Leave & time off

| Field | Value | Source year |
|---|---|---:|
| Maternity leave | 15 weeks | 2024 |
| Paternity leave | 0 weeks | 2026 |
| Parental leave | 0 weeks | 2024 |

## Labour market

| Field | Value | Source year |
|---|---|---:|
| Retirement age | 65 | 2024 |
| Unemployment rate | 2.7% | 2025 |
| GDP per capita | $54,177 | 2024 |
| Union density | 27.2% | 2023 |
| Collective bargaining coverage | 45.8% | 2023 |

## Overview

Israel sits in a different category from the Gulf states or Eastern Mediterranean markets that employers often put beside it in a shortlist. It has a high-income economy, with a GNI per capita of around $52,910, a skilled and well-paid workforce, and labour protections that look much closer to Western Europe than to regional neighbours. The average annual wage is 54,736 ILS, the statutory work week is 42 hours, and the unemployment rate is just 3.5%, so you are hiring in a tight, competitive market where candidates have options.

Using an Employer of Record (EOR) here means the EOR holds the employment contract, handles payroll in ILS, and keeps you compliant with Israeli labour law without you needing a local entity. The employer social security contribution sits at 6.3% of gross salary, which is relatively contained compared with many European markets, but severance entitlements are substantial at 23.1 weeks, and that is the figure that most surprises first-time hirers. Getting those obligations right from day one is exactly where an EOR earns its place.

## Cost context

On top of every gross salary you pay in Israel, you carry an employer social security contribution of 6.3% of gross. That is the primary statutory add-on driving your total employer cost, and it is lower than what you would face in most of Western Europe. The corporate tax rate is 23%, which is relevant if you are also weighing up whether to establish a local entity rather than use an EOR.

## Things to watch

A few specifics about Israeli employment law deserve your attention before you hire your first person there.

- Severance is significant. At 23.1 weeks, Israel's statutory severance entitlement is among the higher figures you will encounter globally. Budget for it from the start, not as an afterthought when an employment ends.

- Collective bargaining covers a large share of workers. With collective bargaining agreement coverage at 45.8% and union density at 27.2%, sector-level agreements can set terms above the statutory floor, including on pay and conditions. Check which agreements apply to your employee's role and sector.

- The minimum wage is a real floor, not a formality. At 6,443.85 ILS per month, the minimum wage is set at a level that reflects a high-cost economy. Any offer below this is simply not lawful, and in a tight labour market, most professional roles will sit well above it anyway.

- Maternity leave runs 15 weeks with no separate statutory parental leave. Plan your cover arrangements accordingly, and confirm with your EOR how the benefit is funded and administered under Israeli social security rules.

Providers ranked for Israel: https://eoroverview.com/best/israel/