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How to hire remote employees in
Laws about hiring are complicated, and the same is true in Israel. But there are ways to sidestep the headaches—if your company hasn’t already established a physical presence in Israel, you have two real options when it comes to hiring. We’ll detail both below.
If you want to successfully hire in
Israel
, you have two options:
Laws about hiring contractors are significantly more simple in
Israel
. Onboarding talent takes days, not weeks or months. Both you, the company, and your talent have more flexibility. And in many cases, since you’re remote, the talent you’re hiring is better classified as a contractor, anyway. Of course, it’s not possible in every case, but it’s what we built Thera for.
This is the long route. You can either establish a physical presence with an entity and register as an employer, or you can use an Employer-of-Record (EOR) solution. Odds are, you’ll find using an EOR to be the easier route. Still, using an EOR in
Israel
is expensive—it can often be $500 per month per employee—and sometimes prone to lengthy onboarding times.
Hiring contractors is normally the easier, faster, more flexible choice—but don’t just take it from us. Below are the specific benefits and drawbacks to hiring contractors in
Israel
.
Hiring employees takes months, at the minimum. When you hire with Thera's locally-generated contracts, it’s a matter of days or weeks. This means you can hire the best talent, fast, without losing them to a hellish procession of paperwork.
It costs just $0 to sign up for Thera, then $25 per month to hire your contractors with Thera. If you hired employees manually (or did contracting on your own), you’d likely be on the hook for thousands of dollars each month. Setting up an entity alone can cost tens of thousands of dollars.
Hiring contractors in
Israel
means you’re generally not on the hook for things like health insurance and paid time off. This makes hiring flexible for you, and it gives your talent more options.
Hiring employees is a bigger commitment, and can open you up to increased liabilities and regulations. When you hire contractors overseas, your biggest risk is misclassification—but laws surrounding contractor classification are often significantly more straightforward.
The contractor life isn’t for everyone—some people want the security that being an employee often appears to provide. Though it’s rare, this does happen, and it’s one disadvantage of manage an all-contractor team.
Most countries’ contractor-employer relationship laws stipulate that the employer can’t set fixed working hours, among other things. These laws give contractors more freedom over how and when they do their work than an employee would have. In reality, however, most contractors are willing & able to work on the company’s schedule—it’s a matter of setting expectations beforehand.
If you’re hiring contractors in
Israel
, you can pay them with Thera in a single click. You won’t need to worry about complicated wire transfers, fees, or currency conversions. We’ll take care of it all. Just make a click and your contractor will get paid in their currency of choice. This is a valuable bonus for talent in countries where the local currency is particularly weak—most people appreciate the ability to receive their payment in stronger currencies.
If you’ve read up until this point, you’ll know that it’s easier, cheaper, and more flexible to hire contractors in Israel than employees. Still, there are valid reasons why you might want to hire employees instead. The content below is for you—we’ll cover employer taxes and obligations in Israel.
PTO is calculated by the:
During the first five years of employment full time employees who work five days per work week are entitled to 12 net vacation days (not including the weekly rest day), and then as follows:
The vacation entitlement of employees who work in a part-time capacity is calculated in accordance with the number of actual worked days, all in accordance with a specific calculation mechanism set forth in the applicable law.
There are 6 national holidays in Israel (Rosh Hashana (2 days), Sukkot (2 days), Yom Kippur, Passover (2 days), Shavuot and Independence Day.
Sick leave is accrued at a rate of 1.5 days per month with a maximum of 90 days total.
Upon return, the employee must provide a medical certificate from a doctor.
A woman who has worked less than 1 year with the employer prior to the leave, is entitled to 15 weeks of maternity leave.
A woman who has worked more than 1 year with the employer prior to the leave is entitled to 26 weeks of maternity leave (which includes 15 paid weeks and 11 unpaid weeks).
As of the labor contractions and up to 24 hours after the birth, the spouse or partner of a woman who gave birth is entitled to be absent on account of the accrued sick leave.
In addition, the spouse or partner is entitled to 5 days of paid paternity leave, with respect to the first five calendar days following the birth. The first three days will be on account of the employee’s accrued annual vacation days, and the additional two days will be on account of the employee’s accrued sick leave.
Fathers can take days off after the birth of a child, but these days will be subtracted from the maternity leave.
None.
None.
In the event of a death of a member of the employee’s immediate family, the employee is entitled paid grief days, as customary in his religion, and up to 7 calendar days of paid leave (including the weekly rest day).
The grief period during which the employee was absent from work is fully paid and will not be deducted from the employee’s annual vacation or sick leave allowance. In accordance with applicable law, the entitlement to a grief period depends on completing 3 months of employment.
In Israel, the labor court’s rulings regarding the termination of an employee are strict. An employer is not able to terminate an employee without prior notice.
The employer must give the employee an invitation letter to a hearing and must include the reasons according to which the employer is considering the termination of the employee’s employment with details of the grievances. The employer is required to provide the employee with at least 2 days to prepare (weekends and holidays are not included).
The employee is entitled to represent himself or can have a lawyer or other representation in the hearing.
During the hearing, the employer should only refer to the arguments which were included under the invitation and must allow the employee to counter. It is the duty of the employer to listen and consider the employee’s counterclaims before making a final decision on terminating the employee. In addition, the hearing must be documented and if the employee requests, a copy must be provided to them.
Once the employee completes his/her arguments, the hearing is done, and the person conducting the hearing informs the employee that the employer will now consider all that the employee said and reach a decision with regard to the employee. The employer is not allowed to deliver any decision right after the hearing session ends or during the hearing session itself.
Following the hearing, the employer may not immediately dismiss the employee, but must provide for ample time to deliberate and consider the employee’s case as presented at the hearing.
A decision should be delivered to the employee (preferably in a personal meeting) following a reasonable time from the date of the hearing (while taking in consideration the scope of the employees claims as were raised during the hearing). The decision should be in writing and should include reference to the employee’s arguments during the hearing session and the company’s response to them.
If the termination process is not followed accurately, a labor court may rule that the employee be reinstated or be provided compensation from the employer.
The notice period in Israel is:
If the employer chooses to terminate the employee after the hearing, the employer must provide written notice to the employee which must include the date of dismissal.
During the first six months, one day of notice is accumulated for each month of employment.
In addition to the 6 days accumulated, 2.5 days of notice are accumulated for each month of employment from the sixth month to the end of the first year.
Following the first-year, termination requires a 30-day notice.
Under the Section 14 Arrangement, the employer is required to carry out monthly contributions equivalent to 8.33% of the employee’s monthly salary payment towards the severance pay component, and the accrued amount is to be released to the employee upon termination, even if the employee resigns without circumstances that would entitle the employee to severance pay if he was not subjected to the Section 14 Arrangement.
The amount of severance pay depends on the number of years the employee has been employed. One months’ salary for every year worked is paid as severance. If the employer contributed every month 8.33% to Severance pay, then he won’t need to pay severance in termination.
None.
A full work week in Israel consists of 42 hours. The work week is Sunday-Thursday.
In general, the first 2 hours of overtime are paid at a rate of 125% of the regular pay, and 150% after that.
It is common practice in Israel to include a clause in the employment agreement that sets forth an arrangement with the employee by which the employee receives a predetermined overtime pay reflecting an estimated amount of overtime hours such employee is expected to work per month, in average (“Global Overtime Payment”).
The said estimated number of overtime hours should be specified in the employment agreement (“Overtime Quota”).
Every employee is entitled to 36 continuous hours of rest per week, which must include the day of rest according to his or her religion (for Jewish employees – ‘Shabbat’).
Employment on the rest day is prohibited unless authorized by the Minister of Labor by a special permit, where working is deemed in the interest of the general public due to security, safety, and economic considerations.
If an employee works during the weekly rest day or during public holidays (according to such permit), the employee shall be entitled to special hourly remuneration at 150% of the usual hourly rate.
According to the labor court’s ruling, with respect to an employee that worked for 42 hours on regular working days, and is required to work on the rest day (subject to the obtaining of a permit by the employer, allowing his employees to work on the rest day), the hours worked on the weekly rest day are considered overtime as of the first hour worked.
As a result, the employee shall be entitled to receive a pay of 175% for the first two hours worked on the rest day, and 200% from the third hour onward.
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