Date:

June 16, 2026

Last updated:

June 16, 2026

Introduction

You're planning to expand into Israel, but the thought of setting up a local legal entity is holding you back. Between lengthy legal processes, complex payroll rules, and uncertain tax obligations, your hiring could come to a standstill.

Moreover, trying to navigate local compliance and payroll on your own often leads to delays, costly mistakes, and lost opportunities to onboard top talent quickly.

Skuad’s Employer of Record (EOR) acts as a legal employer and helps you hire, pay, and manage employees and contractors across 160+ countries.

We handle payroll, taxation, onboarding, and legal compliance, so you can expand your remote team and focus on growth without the need to set up a separate legal entity in Israel.

This guide walks through how EOR works, what it costs, and where it fits.

Israel at a glance

Population: 9.65 million

Currency: New Israel Shekel (NIS/ ILS)

Capital city: Jerusalem

Languages spoken: Hebrew (official), Arabic, English

GDP: NIS 1.62 trillion

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Employment In Israel

For every country's business standards, there is a set of rules and conduct to be followed by its citizens and foreign nationals.

Therefore, when expanding businesses in Israel and reaching out to its global network, one needs to be familiar with the employment laws while taking new employees on board.

Entitlements	Explanations
Statutory Working Hours	42 hrs per week
Overtime eligibility	Overtime is allowed for 16 hours per week or 2 hours per day at maximum. The overtime work should not exceed 12 hours a day or 58 hours a week. Overtime requires a permit from the Ministry of Labor (Regulation and Enforcement Administration).
Public Holidays	The public holidays in Israel are as follows: Purim Shusan Purim Public Holiday Pesach I Pesach VII Memorial Day Yom Haatzmaut/ Independence Day Jerusalem Day Pentecost Rosh Hashanah/ New Year Yom Kippur/ Day of Atonement Sukkot Simchat Torah Dates of these holidays and observances may change based on religious calendars.
Holiday pay	An employee in Israel receives a base of 12-14 days of paid leave for different working days a week. Annual leaves are calculated based on the number of years of employment and the number of working days per calendar year. A 14-day advance notice is needed for paid leave.
Medical leave	An employee in Israel is entitled to 1.5 days of paid sick leave per month for service for up to 90 days. An employee must produce a medical certificate from a medical practitioner. Sick pay is salary-based on a fixed scale: day 1 unpaid, days 2–3 at 50%, day 4 onward at 100% of salary If any employee produces the sick leave certificate before the seventh day of salary payment, then the employer can pay the sick leave payment as per the usual payment date. However, if the sick leave is produced after the payment date, then the employer must make the leave payment immediately.
Maternity leave	A female employee who has worked continuously for 12 months is eligible for 26 weeks of maternity leave. If she has worked for less than 1 year, she is eligible for 15 weeks of maternity leave. If a female employee gives birth to more than one child, then she can avail of maternity leave beyond twenty-six weeks. Before the expected birth date, a woman employee can avail up to 7 weeks of maternity leave; the rest can be taken post-delivery, i.e., up to 60 days. Such employees will receive payment from Israel’s social security system; however, they don't need to receive a payment from their employer. Out of the 26 weeks of leave, 15 are paid while the rest are unpaid leave.
Annual Leave Accrual Entitlement	Annual leave in Israel is estimated according to the number of years and actual days worked per calendar year. An employee receives a base of 14 days of paid annual leave for a six-day workweek and 12 days for a five-day workweek. Paid leave requires a 14-day prior notice period.

Navigating Israeli employment laws can be challenging. Check how Skuad can help you stay compliant with local employment laws if you’re hiring in Israel.

Contractors vs. Full-time employees

In Israel, contract-based employment is about 5-10% of all employment types in the labor market, while full-time employment is the most common employment type.

Full-time employment involves the provision of statutory sick pay, statutory maternity and paternity leaves, minimum notice periods, legal protection from unfair dismissal, statutory redundancy pay, time off for emergencies, and flexible work requests to employees recruited by organizations in Israel.

While a contractor in Israel is self-employed or working for a client. Contractors work on a project-to-project basis, pay their taxes, work for different clients simultaneously, and are not entitled to the benefits usually provided to full-time employees.

For this reason, people in Israel are more inclined to full-time employment as it provides attractive benefits and a higher level of job security in comparison with contract-based employment.

Whether you hire full-time or engage a contractor in Israel changes your compliance exposure, since labor courts often re-classify contractors who work like employees.

Skuad helps you manage both full-time employees and contractors on a single platform.

EOR for full-time employees

Acts as the legal employer across 160+ countries, so you can hire without setting up a local entity
Supports employment contract generation aligned with local labor laws across supported markets
Facilitates statutory contribution workflows covering applicable social insurance, pension, and severance obligations
Supports payroll processing in 70+ currencies with automated tax withholding and year-end reconciliation
Helps administer statutory benefits, paid leave, and parental entitlements in line with local requirements

Contractor management

Helps onboard contractors with locally compliant agreements that reduce misclassification exposure
Supports invoice generation, approval workflows, and payment processing
Helps flag classification risk before it becomes a compliance issue with built-in worker classification checks
Facilitates multi-currency payouts across 70+ currencies with no manual reconciliation
Helps manage contractor records, contracts, and payment history from one dashboard alongside full-time employees

Full-time or contractor, Skuad supports both. See pricing

Hiring in Israel

A popular means of hiring in Israel is by utilizing job portals such as Nefesh B'Nefesh, Israemploy, JobMaster, Jobnet, Janglo, Monster, Indeed, Google for Jobs, etc.

On these platforms, the organizations place their available job positions for applications by qualified candidates. After this, the in-house recruiting personnel sort and select the candidates that fit their organization's needs.

Undoubtedly, the process of handling hiring is challenging and time-consuming.

However, with an Employer of Record platform like Skuad, organizations can easily hire and onboard contractors and full-time employees.

Check how Skuad helped RemoteLock to hire tech talent across six countries.

Probation and termination

Probation period

The normal probation period in Israel is 3 months. The probation period can be extended to 6 months only when the worker does not have an active pension fund.

Termination of service

By a written agreement between the employee & the employer, the employment contract can be terminated as the fixed-term contract ends.

The conditions for terminating employment prematurely include dismissal, death, retirement, resignation, or expiration of the work contract. Severance pay is required to be given to the employee in case of dismissal.

However, there are certain circumstances in which the dismissed employee is not entitled to receive severance, i.e., with cause. The retirement age is 67 and 62 years for male and female employees, respectively.

Israel's Labor Court handles terminations; the employer must invite the employee for a hearing with 2 days' notice. During the hearing, the management and the direct manager raised concerns and noted that the company is considering terminating the contract.

There must be a written termination letter along with the reasons for termination. The minimal statutory period for the dismissal and resignation of employees whose salaries are paid monthly is as follows:

For the first six months of employment, it is one day
From the seventh month, it is 6 days + an additional 2.5 days for every month worked
After the completion of the first employment year, it is 30 days

Incorporation

Incorporating in Israel means filing attorney-verified registration documents with the Registrar of Companies, then registering separately for income tax, VAT, and Bituach Leumi before you can legally employ anyone.

For a small or first team, that overhead rarely pays off.

Skuad’s EOR acts as the legal employer on your behalf, so you can build a remote team without a subsidiary, local entity, or in-house payroll setup, while staying aligned with Israeli labor requirements.

EOR solution in Israel

When planning to expand your business in another country, it is important to decide whether you want to create your own team for hiring or hire a local entity familiar with the country's laws to help speed up the hiring process.

Many businesses use outsourcing services like EORs and PEOs to hire employees in a new country. The Employers of Record (EOR) model is a smart solution for companies seeking to enter and expand in Israel fast.

With the help of Skuad's Employer of Record solution, business entities abroad can source and hire the right professionals as per the organization's requirements. Hired employees get on board seamlessly, helping your business save up a huge percentage of hiring and onboarding costs.

Skuad helps manage employment contracts, process payroll and income tax, statutory benefits, and manage the overall administration of the backend HR processes.

Our platform works as a unified employment platform with automated workflows, digital signatures, employee payroll, contractor payout, and all types of compliance solutions.

To get started on your expansion journey in Israel, you can book a demo with us here.

Types of visas in Israel

Israeli visas are the legal documents that approve your arrival and stay in Israel. You can come here for work, study, tourism, religious purposes, and more, with varying visas for each.

Israel has agreements with some close ally countries; with this, you don't need a visa if you stay for 90 days.

Below are the different types of visas that you need to travel to Israel:

Visa category	Explanation
Immigration Visa	This visa is applicable to people with Jewish roots who wish to settle back in Israel. It is granted after you prove your ancestry related to Israel.
A/1 Temporary Resident visa	The A/1 is a temporary resident visa for people who are eligible under Israel’s Law of Return. It allows them to live in Israel for a limited period, usually about 3 years, and it is renewable while they decide whether to obtain Israeli citizenship. The visa is issued and approved by diplomatic and consular representatives at the Israeli mission (embassy or consulate) in the applicant’s country of residence.
A/2 Student visa	This visa is for students across different countries who wish to study at an Israeli high school, conduct research at academic institutions, or at youth institutions.
A/3 Clergy Visa	This visa applies to clergymen invited by religious institutions from Israel to perform different rituals and prayers. Requires prior Ministry of Interior approval
A/4 visa for spouses and children	This visa is for spouses and children of the recipients of any of the A3/ A2 visas.
B/1 Work visa	This is a temporary stay visa in Israel for people who wish to work here for some time, on a contract or part-time.
Working Holiday Visa	This visa is open to young adults (typically 18–30) from countries with bilateral agreements with Israel.
B/2 Visitor's visa	It is applicable to all tourists and visitors who wish to travel to Israel for tourism purposes or to stay temporarily.It is valid for stays up to 90 days.

Work permits

A foreign national relocating to Israel for work or business purposes will need to obtain a work permit & employment visa known as the B/1 work visa.

Work permit	Explanations
Can Skuad Sponsor a Work Permit in Israel	Yes. An Israeli employer (or EOR with a local entity) sponsors the permit.
Processing time	For a standard B/1 expert work permit + visa, it usually takes about 30 to 60 days to process. Only certain high-tech and cyber fast-track routes (SEA/STEP/HIT) can get approval in about 6 working days, and only for visa-exempt nationals.
Work permit process	The process for a work permit is as follows: Step 1: Skuad’s EOR submits an online application on behalf of the employer on the Ministry of Interior’s website. Step 2: The employer submits all the required documents. Step 3: The application is reviewed by the Ministry, and the employer may be asked to resubmit any documents or make corrections, if any. Step 4: After getting approval from the Ministry of Interior, the employer can download the permit from the website.
Work permit validity	The work permit is valid for up to 1 year, extendable up to ~5 years 3 months (63 months).
When Can Employees Travel to Israel?	Travel is permitted after PIBA ( Population and Immigration Authority ) approves the work permit and either the B/1 visa is issued at an Israeli consulate (consular path) or, for visa-exempt nationals, after electronic approval with the visa issued at Ben Gurion Airport (border path).
What's The Cost of a Residence Visa?	As of January 2026, the main fees are: B/1 work visa fee: about 205 NIS (≈ $55) Work permit submission fee: 1,420 NIS (≈ $385) B/1 one-year employer fee: about 10,340–10,680 NIS ETA-IL (entry authorization): 25 NIS
Duration of residence visa processing	1-2 months

The process to get a B/1 Visa

The process is simple; a complete application is submitted to the Ministry of Interior, Israel, stating the work intentions.

The B/1 visa is issued to scientists, high-tech professionals, artists, and experts in their respective fields. The visa will be valid for 30 days of stay and work, and, in case of an extension of employment, a work permit may also be required.

This visa can be extended with proper renewal information. The Israeli Ministry gives you an option to apply for the same simultaneously with the visa application.

Work visa requirements

Here are the requirements for getting your visa application processed:

Approval letter from the Ministry of Interior.
Visa interview
Medical certificate
Verified certificate of good conduct
Biometrics (fingerprints and photographs)
Completed Israeli work permit visa application form
Two passport-size photos
Employer's hiring documents

Once in Israel, the employee needs to visit the immigration office and get their visa stamped to get access for 30 days. Extensions are then useful for up to a year and allow an employee to leave and enter Israel as many times as needed.

There is also a high-tech work visa, which is again for professionals, and the process is similar.

Payroll and taxes in Israel

Payroll in Israel

Through Skuad’s platform, employers can manage payroll and pay employees in 70+ supported currencies, accurately and quickly.

With a few clicks, you can grow your business and say goodbye to manual processes and Excel sheets. Skuad helps to streamline salaries and taxes to local benefits.

Taxes in Israel

Income tax	According to the Israeli tax laws, the basic rates of income tax are: Israel uses progressive rates from 10% to 47%, plus a 3% surtax on high income, taking the top marginal rate to 50%.
Tax returns	Yes. Most salaried employees are taxed at source (PAYE- pay as you earn) and don't file. However, the self-employed and higher earners must file annual returns.
Financial year-end date	December 31
Withholding Tax (For Non-Residents)	Varies by income type and tax treaty
Payroll Tax	No payroll taxes other than employer national insurance. This is true for ordinary companies, but banks/financial institutions pay a VAT-equivalent payroll tax at 18%, and non-profits pay a wage tax at 7.5%.
VAT	18%
Employers' Social Security and statutory contributions	Employer's contribution- 7.60% Employee contribution- 12.00%
Medical Insurance	There is health insurance for every Israeli citizen. Individuals can choose a private policy from one of the four Health Maintenance Organizations

Setting up payroll and taxes in Israel requires in-depth knowledge of the local policies and regulations, which come with several risks and liabilities.

Professional Employer Organization (PEO)

A PEO (Professional Employer Organisation) service allows companies to hire employees in Israel without setting up an entity.

A PEO manages tasks for the employer, like paying taxes, human resources, managing payroll, employee benefits, etc., which leaves the leadership of the company free to focus on the business goals.

Businesses willing to expand into another country must establish a legal presence in the country. Collaborating with a PEO firm will require the companies to set up a legal entity separately. However, when you partner with an EOR team, you can legally start working and hiring employees in the country, as it is already a legal employer.

Skuad helps companies hire, pay, and manage employees and contractors across the world, without needing to set up a local legal entity in every country.

Book a demo with us, and we’ll help you choose between our EOR solution and PEO services.

What next?

As you expand operations into Israel, manually managing mandatory pension auto-enrolment, statutory severance, advance-notice dismissal rules, and labor-court scrutiny increases the compliance failures, costly penalties, and hiring delays.

Skuad helps you to hire and pay employees in Israel without setting up a local entity, and stay compliant with the local employment laws, taxes, and audit requirements.

Book a demo now and expand your team across Israel and 160+ countries with no local entity or bank account required.

FAQs

1. What is the employer of record service in Israel?

Employer of Record (EOR) services help you hire talent in Israel without a local legal entity. They act as the legal employer for your Israeli staff, handling HR complexities like payroll, taxes, and social security.

2. What is the difference between EOR and PEO?

An employer of record (EOR) legally employs individuals on behalf of another company and handles all compliance, payroll, and HR tasks. A Professional Employer Organization (PEO) co-employs staff, sharing responsibilities with the client company, but typically requires the client to have an established business entity in the country.

3. What are the compliance risks of misclassifying workers in Israel?

Israeli labor courts frequently re-classify contractors as employees, which can trigger back pay for benefits, pension, leave, notice, overtime, and social security contributions. It can also create tax exposure, interest, legal costs, and, in some cases, reputational or regulatory risk.

4. What is the difference between an employer of record and a staffing agency?

EORs become the legal employer for your overseas hires, handling HR tasks like payroll, taxes, and compliance. While staffing agencies focus on sourcing candidates, screening resumes, and conducting interviews.

5. How quickly can an EOR onboard an employee in Israel?

Most EORs can onboard an employee in Israel within one to two weeks, since the provider already has a local entity and registrations in place.

About the author

Martyna Krawczyk

HR and Immigration Lawyer, Global HR Operations

Martyna Krawczyk is an HR and Immigration Lawyer and an Associate in Payoneer Workforce Management(Formerly Skuad) Global HR Operations team. She earned an LPC LL.M. from the University of Law in the UK and holds an Associate CIPD certification. Martyna is Vice President of the Labour Law Association of Poland and was awarded the Wolters Legal Hackathon 2024. She specialises in international employment law, cross-border workforce compliance, and global immigration - key areas that reflect Skuad's core values.