The global talent pool is limitless. So, if you’re on the search for new team members, consider extending beyond your physical borders. Gain access to a bigger, more affordable talent pool of skilled professionals worldwide with fresh perspectives and valuable insights.
Leading companies worldwide are looking to countries like Israel for top talent. As the 7th largest startup ecosystem in the world, Israel has fostered a culture of innovation. By hiring from Israel, you can tap into this pool of talent and benefit from their innovative mindset and expertise for a fraction of the cost of hiring domestically.
If you’re interested in hiring employees from Israel, it’s key to understand how much it costs. This guide will break down everything you need to know.
Costs to Consider
There are several costs to keep in mind when hiring employees from Israel. Some are legally mandated, while others are optional but frequently offered. We’ll also go over some fringe benefits that can help attract and retain top talent.
Mandatory Costs
- Salary
- Taxes and benefits
- Paid time off
- Overtime pay
- Severance pay
Optional and Frequently Offered Benefits
- Added Benefits
- Bonuses, discounts, and rewards
- Extended health plan
Optional Perks
- Coworking space
- Health and wellness benefits
Mandatory Costs of Hiring in Israel
To start, you need to take the following costs into account - there’s no way around it. So make sure to budget for them to ensure you comply with local Israeli laws and regulations.
Salary
The monthly minimum wage in Israel currently stands at ILS 5,571.75, or USD 1,526.21. The average salary has revolved around ILS 12000 for the last couple of years, which equates to just over USD 3,000.
Taxes and contributions
Employers with an Israeli workforce must make monthly national insurance contributions based on a portion of each employee's income. The employer social security contribution rate is 3.55% on incomes up to ILS 7,122 and 7.6% on incomes up to ILS 47,465.
Paid Leave
Employees in Israel are entitled to the following types of paid leave from work.
Vacation: In Israel, employees are entitled to a minimum amount of annual paid vacation days based on their length of employment.
- Four years: 14 days
- Five years: 16 days
- Six years: 18 days
- Seven years: 21 days
- Eight years and onwards: One additional day per working year up to a period of leave of 28 days.
Sick leave: There is no specific statutory limit on the number of sick days employees in Israel are entitled to. The pay rate is typically 50% of the employee's average daily wage for the first nine days, increasing to 100% from the tenth day onward.
Maternity Leave: Pregnant employees are entitled to take up to 26 weeks (182 days) of maternity leave. This period is divided into two parts: prenatal leave and postnatal leave. During maternity leave, employees are eligible to receive maternity allowance, which is typically paid by the National Insurance Institute. The maternity allowance is based on a percentage of the employee's average salary and is subject to a maximum limit set by law.
Paternity Leave: As of this year, fathers are entitled to take up a minimum of 14 days of paid paternity leave.
Public holidays: Israel has eight public holidays. In most cases, for work performed on public holidays, employees are generally entitled to an overtime premium of 150% of their regular hourly wage for all hours worked. However, it's important to note that this can vary based on individual employment agreements and industry-specific regulations.
Overtime Pay
For the first two hours of overtime worked on a regular workday, employees are entitled to receive an overtime premium of 125% of their regular hourly wage. Beyond the initial two hours, employees are entitled to an overtime premium of 150% of their regular hourly wage.
Severance Pay
Employees who have completed at least one year of continuous employment with an employer are generally entitled to receive severance pay upon termination of their employment. The calculation of severance pay is based on the employee's monthly salary and the length of their employment.
Optional Costs
Attracting in-demand talent in today’s job market isn’t easy. The ongoing labor shortage has companies locked in fierce competition around the world, making it increasingly important to level up. Consider implementing the following benefits to attract and retain top talent.
Benefits
Offering a solid benefits package shows job seekers and employees that you value your team. Many employers in Israel offer private health insurance as a benefit to employees that provides additional coverage for medical expenses beyond what is covered by the public healthcare system. The type and extent of coverage offered by private health insurance plans may vary depending on the company and the specific plan.
An EOR, like Borderless, offers localized benefits packages that typically include the following:
- Medical Insurance
- Vision Insurance
- Dental Insurance
- Life Insurance
- Retirement Contributions
In addition to health insurance, it’s wise to add extra perks to your benefits package. Consider offering a health and wellness spending account, professional development opportunities, and monthly subscriptions. These are just a few attractive offerings that can help incentivize new hires.
Bonuses
Along with attracting top talent, bonuses come with a range of benefits. They help to improve retention rates, strengthen company morale, and boost productivity. Providing your team with a variety of generous bonuses shows them you value their hard work. There are a number to choose from, like signing, referral, and holiday bonuses.
Perks and Rewards
In addition to bonuses, many employers opt to provide their team with fun perks and gifts as a way to show their appreciation. For example, employers offer their workers rewards based on their interests, such as free sports tickets or live shows. They wine and dine employees and work to show them a good time outside of working hours. Another approach many top companies take is to offer quality employees more paid time off and flexible working arrangements.
Workspace Costs
Working with a global team helps cut down on costs surrounding real estate, utilities, cleaning, office furniture, etc. In short, remote-first work can save you a ton. However, it is a good idea to put aside some money for your distributed team members' workspaces.
Many companies offer their remote employees a budget for their home office or set them up in a coworking space. These membership-based workspaces have been proven to help employees thrive and are available throughout Israel.
You can seat your Israeli team up at WeWork, which has 14 locations throughout Israel and workspaces for the price of a cup of coffee. Woolink is another great option, conveniently located in the center of Tel Aviv, offering desks for under 200 USD a month.
Save with Borderless
Sign up with Borderless to learn everything you need to know about hiring in Israel. Our intuitive platform and dedicated team will make sure you take care of your new teammates and maintain compliance every step of the way. Book a demo today.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
