Employ Candidates Compliantly in Israel

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  1. Overview: Israel
  2. Global PEO and Payroll
  3. Global HR Compliance
  4. Work permit for hiring expats via PEO
  5. Expand without a company set up
  6. Contractor vs. employee: which is better?
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Global HR Compliance in Israel

Israel is known for its high-tech industries, especially in cyber security. It is also one of the most important hubs for startups and entrepreneurs. The country has grown rapidly in recent years, and this growth has been accompanied by increased demand for skilled labor.

Suppose you plan to hire an international or a local Israeli workforce. In that case, the Hiring and Firing Workforce in Israel Guide below will help you understand the nuances of labor legislation in the country.

Global PEO —  One-Stop Destination for Global Businesses

If you’re looking to streamline your company’s operations and get a handle on global workforce management, partnering with a global professional employer organization (PEO) can be a great solution. PEOs can provide a full suite of services to help you replace the following numerous vendors.

  1. Payroll Company
  2. Employee Benefits Broker
  3. HR Consultants
  4. Background Checks Vendors
  5. IP Attorney
  6. Tax Advisor
  7. Translation service
  8. Legal Advisor
  9. Immigration Advisor
  10. HR Compliance Advisor.
  11. Licensing Consultancy

What Is an Employer of Record?

Different businesses have different needs when it comes to hiring employees. The Employer of Record international talent engagement model may be a good fit for fast-growing tech businesses and startups that need to take on people quickly and easily. 

An Employer of Record (EOR) is a business that employs workers on behalf of another company. The EOR arrangement is often used when an organization wants to hire employees in a foreign country. EORs can be used as an alternative to setting up a branch or company in the jurisdiction of employees. This can save time and money by avoiding having to go through the process of setting up a separate legal entity.

We have designed a Global Employer of Record service to help you outsource global employment of your foreign workforce to companies like ours.

10 Benefits of Partnering with a Global Employer of Record (EOR) in Israel

  1. A Professional Employer Organization (PEO) is a third-party staffing firm that provides its clients with administrative, HR, and insurance services. It takes over all the time-consuming, tedious, and risky tasks your HR, Finance, and Operations Team would have to do, allowing them to focus on what they do best.
  2. By paying a flat rate to a global PEO (Professional Employer Organization) partner like Acumen International, you hand off almost all the heavy burdens of HR management so that you can focus on what matters.
  3. A PEO handles payroll and benefits administration for your employees. It also takes care of tax withholding and filing, workers’ compensation insurance, unemployment insurance administration, regulatory compliance, employee handbooks, HR compliance, training and development programs, employee relations issues management, and more. 
  4. PEOs can provide a range of benefits to employees that other companies may not be able to offer. A PEO will also help with keeping track of your employee’s benefits and insurance across multiple jurisdictions, as well as making sure they stay up-to-date while they’re working for you. You might be surprised at how much time it takes to manage health insurance or pension plans, but PEOs deal with this daily. They make it their business to know what the most up-to-date employee benefits there are
  5. Reduced liability. Often, employers are unaware of potential liability issues regarding their employee’s insurance and benefits until it is too late. Using a global PEO to handle these matters instead of handling them on your behalf across foreign jurisdictions.
  6. A global PEO can help your company save on internal costs by acting as the single contact for insurance and benefits coverage. Global PEOs can also help improve the quality of your benefits coverage by providing access to a wider range of options.
  7. Your business faces many potential threats, from compliance issues to insurance costs and beyond. A global PEO can help you mitigate these risks by providing expert guidance and support. 
  8. A global PEO can help with immigration challenges and other concerns that may impact your business.
  9. By partnering with a global PEO, clients can often secure more favorable terms on employee benefit plans.
  10. Streamlined payroll and tax filings: The PEO processes payroll and does all the necessary tax filings for the company, significantly reducing administrative overhead for employers.

Hiring and Firing Guide for Your Workforce in Israel

Employment Contracts

Workers can be employed as full-timers or on a fixed-term basis, and based on that, on collective agreements and individual contracts, they may have varying lengths of the contract. In drawing up an employment contract, the employer must include a detailed description of the job, hours of work, wage, and leave entitlements.

Employment Regulations in Israel

Working Hours 

The standard working hours for employees under 18 years old is 40 weekly. Employees who are 18 years and above customarily work 45 hours per week. For a regular 5-day work week, an employee is not supposed to work more than nine hours per day unless with the Ministry of Industry, Trade and Labor permission. Likewise, an employee who has a regular 6-day work week may not work more than 6 hours per day without the consent of the Ministry. Most employers give their employees a 36-consecutive rest hour each week. Because of the orthodox beliefs of the Israelites, these rest hours are usually given to include the Sabbath for the Jews or any other time from Friday to Saturday for non-Jewish employees.

Probation Period

New employees can work a suitable probationary period of between one and 12 months, depending on the terms of their contract of employment or collective agreement. The agreed probation period can be extended and terminated (before and after the given period) based on the extension provisions in the relevant contract or agreement.

Annual Leave

Annual paid leave is given based on an employee’s years of service with the employer, starting from 12 to 21 days. These do not include public holidays or the period the employee is out of work due to maternity leave. Employees have the right to accumulate their annual vacation for up to 2 years, providing they use seven days out of the entitled leave in the given year. An employee can agree to payment in place of the leave. Employers are obligated to compensate employees for any paid leave that was not used prior to the termination of the employment contract.

Parental Leave

Maternity leave is not completely paid for in Israel. Employers are required to provide 26-week maternity leave to their female employees who are expecting a baby, and can be increased in the case of multiple childbirths or complications. Since only 14 weeks are paid for throughout the maternity leave, the employee is entitled to receive a daily allowance from the Social Security Institute that must not exceed 1,459.50 shekels. In addition, one month grant is usually given to them to help cover the initial expenditure after childbirth. On concluding the maternity leave, the employee must be given a daily hour of paid rest during working hours for 4 months.

Male employees have the right to 6 days’ paternity leave, three days of which will be taken from their annual leave and the other three from sick leave. Paternity leave can be taken as unpaid leave if the employee has used up all his paid annual- and sick leave. With the consent of the new mother and under the condition that she would resume work as soon as required, a working father can take up the wife’s maternity leave beginning from the 6th week after the child is born. The male employee will be entitled to an allowance that must not exceed 1,459.50 shekels daily during this period.

After the paid leave has ended, either of the parents will have the right to an unpaid leave that can vary in length up to 12 months, depending on his/her years of service to the company.

Sick Leave

During sickness, an employee is eligible for paid leave starting from the second day that he is away from work due to sickness. A sick employee is entitled to 37.5 percent of his normal wage during the first three days of sickness absence and 75% for the following days. Sick leave can be amassed up to 90 days -1.5 days per month and 18 days per year throughout the employee’s service period in a given company.

Overtime

There are constraints on the number of hours an employee can work over the regular hours. Regardless of the type of workweek, an employee is by law not allowed to work more than 4 extra hours a day or 12 extra hours a week. Overtime is compensated with a 25% premium of the employee’s base wage for every first 2 extra hours and a 50% premium afterward. Shift workers who work between 3 am and 11 pm are entitled to 1.5 of their normal pay, and those who work between the hours of 11 pm and 7 am have the right to 1.425 of their base pay. Employees are entitled to 1.5 of their base pay and an additional holiday each time they work on a paid holiday.

Employment Termination

Individual contracts or collective agreements may regulate the reasons and conditions for which an employer can end an employee’s employment contract. An employer must give his employee a notice period between one day and one month before he can terminate the contract depending on the period worked and type of employment.

Dismissed employees who are paid by the month are entitled to receive severance pay within 24 days of their last remuneration, which amounts to one month of their basic salary per year worked. The rest of the employees are entitled to receive a severance pay within 24 days of their last remuneration, which amounts to two weeks of their basic wage for each year they worked.

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