Velocity Global’s Israel PEO (Professional Employer Organization) solution powers your company to quickly and compliantly expand internationally–and bypass the costly and lengthy foreign entity establishment process. Backed by our expert knowledge of compliance requirements in Israel, you’ll have the tools and support you need to confidently enter a vibrant new market.
When you enlist Velocity Global as your International PEO provider, we become your Employer of Record. As a result, we compliantly hire and fully support your team members in Israel while you maintain full control of their day-to-day operations. Our expertise covers all the small details necessary for a fully legal operation in Israel, so your legal, HR, and business development teams can stay focused on their core tasks. All while you take advantage of all that expansion into Israel has to offer.
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Israel Fast Facts
Currency: New Israel Shekel (NIS)
Population: 8.8 million
Economy: $381.5 billion
Top Sectors: High-technology and industrial manufacturing, diamond refinement, telecommunications, tourism
- Independence Day
- Victory Day
- Fast of Ninth of Av
- Rosh Hashanah
- Day of Atonement
- Simchat Torah
Hiring Considerations in Israel
Benefits of hiring in Israel:
- Despite being one of the world’s smallest countries, Israel ranks as the 20th most competitive economy in the world.
- Known for its entrepreneurial spirit, Israel is a hotbed of innovation with a thriving startup culture. The World Economic Forum ranks Israel as the worldwide leader in:
- Companies embracing disruptive ideas
- Growth of innovative companies
- Attitudes towards entrepreneurial risk
- Israel’s workforce is highly educated. The country ranks behind only the United States in ease of finding workers with the right skills and accessing venture capital. The readily available supply of venture capital helps power the country’s booming private sector.
- Israel leads the world in R&D expenditures, thanks in large part to its active startup market.
Challenges when expanding into Israel:
- Israel’s reputation as an innovation-friendly economy is well-known across the world. Consequently, U.S. companies entering the market face considerable competition from both Israeli and international companies.
- Similarly, to regulate the high amount of economic activity, the Israeli government implements significant business legislation. Many companies bristle at the bureaucracy and red tape affecting their business operations in Israel.
- Israel recognizes EU technical standards rather than international standards in certain industries, creating an additional hurdle for U.S. manufacturing, tech, and engineering companies.
- As a central player in Middle Eastern politics, Israel is subject to geopolitical forces that affect a company’s ability to conduct business.
Cultural nuances and must-knows for doing business in Israel:
- Communicate directly–and expect your Israeli business partners to do the same. Israelis are known for being forward and assertive. Avoid subtlety or feeling the need to be overly polite, as Israelis are not afraid to do what it takes to quickly reach solutions and achieve results.
- Be prepared to negotiate. Israelis are famed for their deal-making skills.
- Arrive to meetings on time, but do not be surprised if your Israeli business partners are late. Israelis move quickly and often make or change plans on the fly. Stay flexible and adaptable when doing business in Israel.
- Don’t be alarmed if an Israeli counterpart encroaches on your personal space. Closeness is not a gesture of offense or aggression, but a common cultural practice. Moving away from your associate is considered offensive and should be avoided.
- Do not schedule meetings or expect to do business on Fridays or Saturdays, as the country largely shuts down during these days of rest.
- Tread lightly when the conversation shifts to social, religious, political issues. Israelis are proud, passionate, and sensitive about perceived attacks on their country.
Employment Contracts in Israel
Minimum wages and salaries:
- The minimum wage in Israel is:
- NIS 5,300 (about $1560 USD) per month
- NIS 212 (about $62 USD) per day for a worker employed five days per week
- NIS 244.62 (about $72 USD) per day for a worker employed six days per week
- Employers and employees in Israel can decide to enter into probationary periods between 1 and 12 months.
- Some employers in Israel pay their employees a 13 Month Salary, though this bonus is not required.
Termination and severance considerations:
- Employers and employees are required to provide notice for termination of employment, as stipulated by the Advance Notice for Dismissal and Resignation Law.
- The notice period’s length depends on the duration of employment but cannot exceed 30 calendar days.
- Employer’s avoid the notice period by paying the employee the wages they would have earned during the period.
Paid Time Off & Benefits
- The Employment of Women Law mandates that female employees receive a 12-week, paid maternity leave. Women can take up to six weeks before giving birth and are entitled to the remaining weeks after delivery.
- For women hospitalized during pregnancy, or if the woman’s baby is hospitalized, maternity leave extends to 16 weeks.
- Female employees can extend their maternity leave for up to six months after work, though this leave is unpaid.
- Once the employee has returned to work, she is entitled to one hour of paid leave per day for four months.
- During a woman’s maternity leave, the National Insurance Institute is responsible for paying her wages.
- Parents are entitled to eight paid days of leave per year to care for a sick child under the age of 16.
- If a parent’s child has a terminal illness, that employee is guaranteed 30 days sick leave.
- Employees in Israel are entitled to 12 to 14 days of paid leave per year under the Annual Leave Law. An employee’s paid leave increases every year, maxing out at 24 days.
- Employers must approve of employee vacation days. Employers also have the right to mandate that all workers take vacation simultaneously.
- Israeli law does not guarantee employees a minimum number of sick days. However, employees earn 1.5 sick days for every month of employment they complete, maxing out at 90 days.
- Employees do not receive pay for the first sick day they take. Employees receive 37.5% of their regular wage on their second sick day, 75% on their third, and 100% thereafter.
Average workweek hours:
- A standard workweek in Israel spans Sunday through Thursday and comprises 42 hours.
- Regular hours for employees include 8.6 hours per day over four days of the week and 7.6 hours for the remaining day.
- Employees who work six days per week will work eight hours per day for four days, seven hours on another day, and three hours on Friday.
- Overtime hours include any hour exceeding the standard limits outlined above.
- To work overtime hours, employers or employees must obtain a permit from the Labour Ministry and meet the following restrictions:
- Employees must work no more than 12 hours a day, including overtime but excluding breaks.
- Employees must not work more than 16 hours of overtime per week.
- Israeli law mandates that employees receive a minimum of eight hours off between one working day and the next. Without this eight-hour break, the law sees the second day as overtime and mandates employers pay employees accordingly.
- Israeli workers are entitled to 125% pay for the first two hours of overtime and 150% pay for every additional overtime hour.
For non-resident employees, employers owe 0.59% plus 2.65% of the difference between NIS 6,331 and NIS 44,020. For resident employees, employers must pay 3.55% plus 7.6% of the difference between NIS 6,331 and NIS 44,020.
Choose Velocity Global
Whether you’re looking to source top talent or grow your market share, expanding into Israel brings tremendous potential to your business. Partnering with a global expansion expert helps you make the most of this opportunity. That’s where Velocity Global comes in.
By choosing our International PEO (Professional Employer Organization) solution, you ensure full compliance every step of the way. From managing risk mitigation and legally onboarding your supported employees to handling benefits, taxes, payroll, and more, we’re here to take care of the small details–so you can focus on what drives your business forward.
International PEO has the flexibility to cover both short and long-term projects in Israel and the scope to support teams large and small. Compared to the traditional route of entity establishment, our International PEO solution saves you up to 60% in costs and 90% in time savings, enabling you to set up in Israel quickly and cost-effectively.
Find out how International PEO can pay dividends for your company today.
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