Global coverage
Available in +150 countries
Employer costs, taxes, minimum wage and leave rules for hiring here, plus the faster route: hire a contractor with Ontop, no local entity needed.
2026
Currency
ILS ₪ (Israeli New Shekel)
Employer contributions
~21% (NII ~4.5-7.6%, pension 6.5%, severance fund 8.33%)
Minimum wage
ILS 5,571.75/month (2026)
Payment frequency
Monthly
Calendar year (Jan 1 - Dec 31)
Capital
Jerusalem / Tel Aviv (business hub)
Timezone
IST (GMT+2)
Employee or contractor
If the work is project-based or you need to move fast, a contractor gets you the same talent with a fraction of the paperwork.
Employee
~ILS 18,100 total
/month
For a gross salary of
ILS 15,000 gross/month
Setup
Local entity or employer of record, plus tax and social security registration
Employer contributions
~21% (NII ~4.5-7.6%, pension 6.5%, severance fund 8.33%)
Mandatory extras
Annual Bonus / Vacation Pay Redemption
Monthly admin
Monthly payroll - Form 102 by 15th - NII contributions - annual 106 by March
Contractor with Ontop
No local entity
$49
/contractor/month
The agreed rate, plus Ontop from $49 per contractor per month.
Sign a contract, yours or an Ontop template. No local registration on your side.
No employer contributions: the contractor handles their own taxes and social security.
One payment per invoice, in one payroll run.
Paid into their Ontop Global Account in USD.
See the full side-by-side comparison
+
A contractor's rate usually covers their own taxes, so compare total cost, not just gross pay. Run your numbers in the contractor vs employee calculator.
Hiring here: the full breakdown
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Payroll guide
Employer costs come on top of gross pay. Use these figures to budget a hire and to compare it with a contractor rate.
Total monthly cost
~ILS 18,100 total
Example gross salary
ILS 15,000 gross/month
~ILS 9,750 net
Net pay to the employee
Tax and employee contributions
Withheld from gross pay
~ILS 3,100 (NII, pension and severance fund)
Employer contributions on that salary
Employer contributions
~21% (NII ~4.5-7.6%, pension 6.5%, severance fund 8.33%)
Employee contributions
~11.87% employee NII (variable brackets) + income tax
Total cost above gross
~22-25% above gross
Figures are estimates for planning. Rates change with each budget and can vary by sector, so confirm them before you make an offer.
What people earn here, from the legal floor to the main cities, plus the extra pay most employers budget for.
National average
~ILS 12,000
Per month
Tel Aviv
ILS 15,000 - 35,000
~40%
Jerusalem
ILS 10,000 - 22,000
~15%
Monthly gross. National average salary per year:
~ILS 144,000
Minimum wage
ILS 5,571.75/month (2026)
Paid:
Monthly
Extra pay
Annual Bonus / Vacation Pay Redemption
Discretionary; mandatory vacation redemption on exit
December or on termination
Collective agreements can set sector minimums above the national one. Check whether one applies to the role before you set the salary. Next step: estimate the full cost of an employee.
Who collects what, how often, and what happens when a payment is late.
Income tax brackets
10% up to ILS 81,480 / 14% / 20% / 31% / 35% / 47%
Tax year:
Calendar year (Jan 1 - Dec 31)
Filing calendar
Monthly by 15th
Social security payments
April 30 (annual income report)
Income tax
By March 31
Employee tax certificate
Form 106 (Annual wage certificate)
April 30
Annual return
Annual Tax Return (Form 135 if required)
Late payment penalties
Late NII: 0.2% daily; late income tax withholding: 4% per annum + interest
Who collects what
Israel Tax Authority (ITA)
Income tax
Bituah Leumi (NII)
National insurance contributions
Ministry of Labour, Social Affairs and Social Services
Labor law and enforcement
The time off and paid leave every employee is entitled to by law. Budget for it when you compare an employee with a contractor.
Annual leave
Yomei Hofesh
16 days (1-4 yrs) / 18-26 days (increasing per year)
Public holidays
~11 public holidays
Sick leave
Sick Leave
1.5 sick days per month accrued; 100% from day 1 (after 90-day base)
Maternity leave
26 weeks (15 fully paid from NII)
100% NII for 15 weeks; employer tops up
The contracts you can use, and what ending an employment relationship costs.
Permanent
Hozeh Avodah Bli Kabbalat Tkoufah (Permanent)
Fixed term
Hozeh Avodah Ltkoufa Kevuah (Fixed Term)
Independent contractor
Hozeh Nooteen Shrutim (Service Contract)
Collective agreements
Heskemim Ktzinim (Sector CBAs)
Ending employment
Pitzuim (Severance Pay)
How it is calculated
1 month/year of service (most covered via manager insurance / Bituah Minahalhim)
Calling someone a contractor does not make them one. If the role works like employment in practice, local authorities can reclassify it, with back contributions and penalties.
The errors that most often trigger back payments and penalties here, and what to do instead.
Manager's Insurance (Bituah Minahalhim) Non-Setup
Risk Level: HIGH
Israeli law requires employers to set up a manager's insurance or pension fund for all employees within 3-6 months of hiring. The employer contributes 6.5-7.5% (pension) and employee contributes 6%. Failure to set up the policy triggers full retroactive liability for both employer and employee shares.
Overtime Calculation Errors
Risk Level: HIGH
Israeli labour law (Hours of Work and Rest Law 5711-1951) requires 125% for first 2 overtime hours daily and 150% thereafter. Paying a flat global hourly rate that does not separately cover overtime premiums is regularly challenged by labor courts.
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Next topicOntop is the Global Workforce Engine for contractor teams: contracts, compliance documents and payments in 150+ countries.
150+
countries
$49
per contractor per month
1 run
to pay your whole team
USD
Global Account for every contractor
FAQ
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Ontop works with contractors, not employees. As Contractor of Record, Ontop handles contracts, compliance documents and payments for contractors in 150+ countries. To employ someone, you need a local entity or an employer of record. Ontop doesn't act as your employer of record.
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Employers pay contributions on top of gross salary. The cost table on this page shows the rates that apply here and a worked monthly example. A contractor with Ontop costs the agreed rate plus Ontop from $49 per contractor per month.
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Many countries require an extra month or an annual bonus for employees. The salaries section on this page shows the one that applies here and when it is usually paid. Contractors are paid what you agree in the contract.
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Employers withhold income tax and the employee's social security share every pay run, then pay them to the local authorities. The taxes section on this page lists the brackets, rates and filing deadlines that apply here.
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Yes. The contractor vs employee calculator compares the full cost of an employee, employer contributions included, with a contractor rate plus Ontop's monthly fee.
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When the work is project-based, you need to start fast or you don't have a local entity. If the person will work fixed hours, under your direction and only for you, local law may treat them as an employee, so hire them as one.
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Misclassifying employees as contractors, missing tax and social security deadlines, and ignoring collective agreements that set higher wage floors. The mistakes section on this page covers the ones that come up most often here.
Compare employer costs, taxes and contractor rules in nearby countries:
Ready to hire? See Ontop pricing or learn how to build a global team without an employer of record.
Ready to hire? See Ontop pricing or learn how to build a global team without an employer of record.