Hiring in Israel

The terms set out role, salary in ILS, working hours, leave, pension, notice and any restrictive covenants. The EOR is the counterparty to the employee, which is what removes the need for your own entity.

English is standard for tech and commercial roles, with Hebrew widely used elsewhere.

Fixed-term contracts are permitted, but repeated renewals invite scrutiny and most EORs default to indefinite terms. Courts enforce non-competes narrowly, so rely on confidentiality and IP assignment clauses instead.

Set probation from day one. An extension needs the employee's agreement, and the pre-dismissal hearing still applies during probation.

Some EORs shorten probation as policy because they, not you, carry the dismissal risk. Ask before you agree a start date.

Overtime is paid at 125% of the hourly rate for the first two hours a day and 150% after that, within daily and weekly caps.

Many tech contracts use a global overtime payment, a fixed monthly sum in place of hourly tracking, but the employer must still be able to show it covers the hours actually worked. Put the position in writing either way.

Market practice for professional roles is 18 to 22 days, well above the statutory floor, so quote the market figure when you budget.

Sick leave accrues at 1.5 days a month, with day one unpaid and days two and three at half pay. Maternity leave is 26 weeks, 15 of them paid by National Insurance, and reserve duty pay is reimbursed by National Insurance, so confirm which costs the EOR carries and which it passes through.

Either side may terminate on notice or pay in lieu. A pre-dismissal hearing is mandatory, with the reasons given in advance and a fair chance to respond, and skipping it is a common ground for claims.

The EOR runs the process as the legal employer and will want the paperwork in order, including final pay, unused leave, severance and the release of pension funds. Pregnancy and reserve duty carry special dismissal protections, so check status before you start.

A study fund (keren hishtalmut), private medical cover and group life are standard for professional roles even though they are not mandatory. Recreation pay and commuting costs are statutory and easy to miss in a budget.

EORs often bundle benefits through a group scheme. Ask what is included in the fee and what is billed on top.

Employer contributions add roughly 19% to 22.5% on top of gross salary: National Insurance at 4.51% or 7.6% by salary band, 6.5% pension and 8.33% severance funding. That is before the EOR fee.

Section 14 is the trap. If the contract does not apply a Section 14 arrangement, monthly severance deposits do not discharge the obligation, and a top-up can fall due when the employee leaves.

Ask whether the EOR sponsors directly or refers to a partner. A partner-model EOR often cannot sponsor at all, and the high-tech fast track depends on the sponsor's recognition by the Israel Innovation Authority, not on yours.

Set start dates after approval, not before.

Get the data processing terms in the service agreement, not just the privacy notice. Transfers abroad need a lawful basis under Israel's transfer regulations, although Israel's EU adequacy status eases flows from Europe.

Ask where payroll data is hosted and who in the partner chain can see it.

Incorporation here is quick, but the running cost is the point: a mandatory annual audit, accounting, VAT and tax registrations, payroll software and, for R&D subsidiaries, transfer pricing set an annual floor.

Permanent establishment risk is about what people do, not where payroll sits. Revenue-generating activity can create exposure regardless of the employment route.