Pay your remote
talent in Israel,
without the hassle.

Say goodbye đź‘‹ to the complexities of local laws, tax systems, international payroll, and contractor payments. Skuad takes care of everything in 160+ countries.

Schedule a demo







Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Automate payroll in 160+ countries

Put your global payroll on auto-pilot and analyze your payroll data in seconds. Pay your international team - accurately, securely, and quickly, with a single click.


Integrate your payroll processes

Consolidate all things payroll on our unified platform. Reduce manual calculations on excel sheets and gain control of your payroll data. Ensure data integrity and consistency.


Enhance payroll compliance

Our global payroll infrastructure ensures compliance with local employment and tax regulations. We take the guesswork out of payroll compliance.



Introduction to Payroll in Israel

An established outsourcing destination, Israel does not have a constitution or codified employment law contained in a single act, but you nonetheless need to comply with and conform to the country’s employment legislation and common labor practices, especially regarding payroll. Noncompliance opens you up to legal fees and fines, and going against established norms will only hurt your relationship with employees. What you require is a partner that can guarantee compliance to local legislation while also providing you with a payroll processing solution upon which you can rely for running payroll in Israel.

Employee compensation, benefits, and taxes in Israel

The in-country expertise offered by Skuad guarantees compliance with local employment laws while its software platform seamlessly runs payroll processing, everything from wage computation to tax deductions to the execution of contributions and benefits:

  • Income, regional, or corporate taxes
  • Social contributions for health insurance, unemployment benefits, and pension
  • Different types of holiday and leave compensation
  • Other employee deductions

Payroll Process in Israel

The labor laws and common employment practices in Israel to which you need to adhere encompass and influence every stage of payroll.

Pre-payroll phase

For all intents and purposes, the pre-payroll phase is a due diligence stage where standardization of policies and collection and validation of inputs happen in preparation for later phases.

Setting up the organization

You’ll need to focus on key portions of your organization in a way that ensures they meet statutory requirements while also reflecting your values and approaches to internal policy. These areas include:

Business profile

Your business profile includes the registered business numbers and other forms of identification unique to your organization that you will later use for the submission of required government forms and other supporting documentation.

Work location

It is important to note that policy relating to work location is ideally customized to every workplace, even every individual workplace in the same market.

Leave policy

The type of leaves granted to employees will of course influence payroll computation, so leave policy should be compliant, crystal clear, and accurate to avoid potentially costly oversight.

Attendance policy

As the very foundation of wage computation, attendance policy should be given due thought and deliberation. You need to incorporate increases in base rates (e.g. from performance bonuses or overtime) and deductions (e.g. partial pay for half-days) as well as integrate tools used to track work hours (e.g. digital time sheets or biometrics).

Statutory components

Ensure that you implement any mandatory requirements guided by Israel’s local employment legislation pertaining to payroll processing.

Salary components

Generally speaking, compensation packages are an amalgamation of locally mandated minimums, internal company policy, market and industry rates, and other supplementary additions.

Pay schedule

Employees in Israel should be paid on a monthly basis no later than the 9th of the month for compensation earned for the previous month.

Employee information

A lot of the inputs that you need to collect and validate in the pre-payroll phase involve employee information that impacts wage computation. Some examples would be invoices, reimbursement forms, and any approvals from direct-line supervisors concerning bonuses or deductions.

Payroll calculation phase

This stage is focused on one task: the actual wage computation for your employees. Often payroll software carries the brunt of the payroll calculation phase, and if you did not perform due diligence during pre-payroll, you can expect inaccuracies and delays in payout.

Post-payroll phase

Salary payments

The salary payments make up most of the post-payroll phase. You send an advice to your payment processor or bank and they carry out wage disbursement.

Payroll accounting

Payroll accounting is a crucial internal process that keeps track of significant company expenses, which naturally includes employee salaries.

Payroll reporting and compliance

Payroll reporting is a matter of compliance to local labor laws. Reports and official forms are submitted to appropriate government bodies at the end of payroll processing.

Book a demo with Skuad and you can see for yourself how you can run payroll in Israel successfully.

Everything you need to know about payroll in Israel

Talk to an expert

Payroll Processing in Israel

Outsourcing processes such as payroll is an attractive option for businesses due to complex compliance concerns and associated potential penalties. Companies that attempt to run remote payroll in-house risk being bogged down by local regulatory management and therefore depriving other areas of business of critical HR resources.

Payroll Processing Company in Israel

Successfully implementing payroll in Israel necessitates a comprehensive understanding of the country’s statutory labor laws and common labor practices. For companies looking to grow through building globally distributed teams, this compliance challenge presents a significant hurdle to both HR and payroll processes. Global HR and payroll solutions providers like Skuad make the difference with in-country expertise and systems that not only guarantee compliance with local labor laws, but also seamless and cost-efficient payroll operations for your remote teams.


If your head is already spinning, leave your payroll activities in Israel to Skuad.

Book a Demo


Payroll Management in Israel

Skuad includes payroll management in its list of services. Defined as records keeping and management for any payroll-related supporting documentation, payroll management is crucial for compliance to local employment legislation.

Payroll Compliance in Israel

Lacking a constitution, Israel uses basic laws instead, and the country’s local labor practices are collected under several sources, such as:

  • Human Dignity and Liberty Law
  • Freedom of Occupation Law
  • Collective bargaining agreements
  • Employment contracts

Skuad helps you navigate the complexities the arise from these sources of mandatory employment practice so you can run payroll in Israel without worry.


It’s crucial to get your payroll taxes and deductions correct in Israel and elsewhere in the world. Book a demo with Skuad to see how we can help.

Book a Demo


Payroll Components in Israel

The components of payroll in Israel are guided by the country’s local labor laws that you need to meet and integrate into your internal processes.


Israel’s minimum wage currently stands at Israel new shekels — ILS 5,300 ($1,581.88) per month. Note that you not only need to meet this minimum for your remote workers in Israel, but also match market rates and industry standards.

You can use indicators such as Israel’s average salary, which is ILS 9303.81 ($2,776.89) per month.

Working hours

Employees in Israel typically work from Sunday to Thursday, and often have a short workday on Friday. Schedules cluster around the 8:30AM to 6PM time frame, with Friday work hours often stopping at noon. Generally, employees are entitled to 36 hours of consecutive rest per week.

Overtime laws

Overtime in Israel is capped at 16 hours per week. The first two hours of overtime is paid at 125% the base rate, and the rest is paid at 150% the base.

Social security

Social security contributions in Israel go towards a National Insurance scheme, with employers paying 3.55% of monthly employee income for earnings of ILS 6,331, and then 7.6% on the difference between ILS 6,331 and ILS 45,075 of monthly income.

Sick leave

Sick leave credits in Israel are earned: employees earn 1.5 paid sick days for every month of employment, with a maximum of 90 paid sick days.

Parental leave

New mothers are entitled to 26 weeks of maternity leave, 15 of which are fully paid and the rest unpaid, provided that they have been with the same employer for a year. New mothers employed for less than a year are only entitled to the paid portion of maternity leave. Maternity leave may be taken up to seven weeks prior to the due date.

There are no separate paternity leave entitlements in Israel, although new fathers may partake in their partner’s maternity leave credits, and the National Insurance scheme also compensates them with paternity allowance for loss of income due to parental obligations.

Public holidays

Israel follows the Hebrew calendar, which syncs with the Gregorian calendar every 19 years. This means public holidays in the country — typically beginning and ending at sundown—fall on different Gregorian dates every year. In 2023, the public holidays in Israel will fall on these dates:

  • April 6: Passover
  • April 12: Seventh day of Passover
  • April 26: Independence Day
  • May 26: Feast of Shavuot
  • September 16 to 17: Rosh Hashanah
  • September 25: Yom Kippur
  • September 30: First Day of Sukkot
  • October 7: Simchat Torah

Employees are allowed nine paid holidays leaves, and may choose to take these leaves based on their religious holidays if they are not Jewish.

Payroll taxes

Israel’s tax system levies personal income tax using progressive, earnings-based brackets that have a set tax rate, but also accompanying taxes on excess of the brackets that are expressed in percentages:

  • From ILS 0 to 77,400: Taxed ILS 0 with 10% on excess
  • Between ILS 77,400 to 110,880: Taxed ILS 7,740 with 14% on excess
  • Between ILS 110,880 to 178,080: Taxed ILS 12,427 with 20% on excess
  • Between ILS 178,080 to 247,440: Taxed ILS 25,867 with 31% on excess
  • Between ILS 247,440 to 514,920: Taxed ILS 47,369 with 35% on excess
  • Between ILS 514,920 to 663,240: Taxed ILS 140,987 with 47% on excess
  • Over 663,240: Taxed ILS 210,697 with 50% on excess

Other laws

Additional fundamental components of payroll include probation periods and termination. In Israel, probationary periods span one to 12 months. As for termination, notice periods depend on length of employment:

  • one day notice for every month worked for one year of employment
  • 14 days notice for two years of employment
  • 21 days notice for three years of employment
  • a month’s notice for over three years of employment

Feel free to schedule a demo with Skuad’s experts to gain a more comprehensive understanding of payroll in Israel.


Want to get started with payroll management in Israel? Book a Skuad team demo to understand exactly what’s expected of your business.

Book a Demo



If you want to aggressively scale your company, getting hampered by compliance concerns for every new outsourcing destination is bad for your business strategy. You’ll need a global HR and payroll platform like Skuad to help you stay compliant with local labor laws so you can maintain your business’ rate of growth.

The local legal expertise that Skuad affords lets you run payroll in Israel smoothly and compliantly so you can get back to your company’s bottom-line. Even better, Skuad can also offer extended HR and management services not just in Israel but many other parts of the world to help you build more globally distributed teams.

Need to run payroll in Israel? Book a demo with Skuad and fulfill your company’s true potential for international growth.

Israel’s exchange rate currently stands at $1 for every ILS 3.35.

Onboard & pay your contractors for free.

Skuad makes building globally distributed teams, quick and hassle-free.

Request a demo