Employer of Record Israel
- Save upto 3% on your payroll cost
- Onboard Israeli employees in 7 days. no entity needed
- Bituach Leumi, pension, severance handled end-to-end
- Section 14 severance arrangement built in
- Hebrew + English payslips, monthly Form 102 filing
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Currency
New Israeli Shekel (ILS)
Capital
Jerusalem
Official Language
Hebrew (Arabic has special status)
Payroll Cycle
Monthly
Recognized Globally: Ranked #1 for ‘Ease of Use’ & ‘Customer Support’
our advantage
Why Asanify is the Employer of Record Israel Built for Modern Hiring
Asanify is consistently rated #1 for ease of use on G2 across HR, Payroll, and Employer of Record categories. We help global companies hire in Israel without setting up a local subsidiary, opening a Bituach Leumi employer account, or learning Hebrew payroll law.
From offer-letter generation and employment-contract drafting to monthly payroll, Israeli income-tax withholding, mandatory pension contributions, severance arrangement under Section 14, and statutory recreation pay, Asanify Employer of Record Israel runs the complete Israeli employment lifecycle for you. Our team handles every monthly Bituach Leumi filing, the annual Form 126 reconciliation, and the Form 106 tax certificate for each employee.
Companies switching to Asanify from generic global EOR providers report faster onboarding, lower per-employee cost, and clear visibility into Israel’s complex payroll-tax stack. Country-priced from $299 per employee per month, with no entity setup and no compliance overhead on your side.
Onboard Israeli Talent in 7 Days
Hire engineers, sales operators, and customer-success leads in Israel in 7 days, not the 4 to 6 months an Israeli subsidiary takes. Asanify generates Israeli-law-compliant employment contracts aligned with the Hours of Work and Rest Law, the Wage Protection Law, and the Advance Notice for Dismissal and Resignation Law.
Each offer letter includes the correct compensation breakdown, mandatory pension fund nomination, severance Section 14 election, and the recreation pay (Dmei Havraa) accrual schedule. Background checks, IP-assignment clauses with the Section 132 service-invention waiver, and bank-account onboarding run in parallel, so your candidate signs once and starts on day one.
Bituach Leumi, Pension, and Tax Handled End-to-End
Run fully compliant monthly payroll without operational overhead. As your Employer of Record Israel, Asanify automates salary processing, progressive income-tax withholding across 7 brackets (10% to 50%), tiered Bituach Leumi contributions on the reduced bracket and full bracket, mandatory pension at 6.5% of salary, and Section 14 severance funding at 8.33%.
Every month you receive a single consolidated invoice in your home currency, with Israel-side payroll fully reconciled. Employees get itemised tlush sachar (payslips) on the salary date. monthly Form 102 to Bituach Leumi by the 15th of the following month, semi-annual and annual Form 126 reconciliations, and Form 106 tax certificates by 31 March.
Mandatory Benefits Delivered, Not Just Tracked
Deliver competitive and compliant employee benefits in Israel. Asanify administers the mandatory pension scheme under the 2008 Extension Order (employer 6.5% + severance 8.33%, employee 6.0%), 12 paid annual leave days for years 1 to 4 increasing with seniority, sick-leave accrual at 1.5 days per month under the Sick Pay Law, 26-week maternity leave (15 weeks paid by Bituach Leumi maternity allowance) coordinated end-to-end, 5 days paternity leave, and the annual Recreation Pay (Dmei Havraa) after one year of service.
On top of statutory coverage, Asanify supports supplementary private health insurance for the employee plus family, study fund (keren hishtalmut) contributions, and tech-sector bonuses such as ESOPs administered through the payslip. AI-led payroll review catches calculation errors before payday, so your team never has to debug a Bituach Leumi mismatch.
Israeli Termination Done Right (Not At-Will)
Israel is not an at-will jurisdiction. Dismissal requires a documented fair-hearing process (shimua), proportionate notice under the Advance Notice for Dismissal and Resignation Law, and statutory severance of one month's salary per year of service under the Severance Pay Law 5723-1963. Get any of these wrong and you face Labour Court claims with reinstatement remedies.
Asanify Employer of Record Israel runs the full termination workflow for you: shimua hearing scheduling and documentation, notice calculation per the statutory schedule (1 day per month in months 1 to 6, scaling to 1 month after 1 year of service for salaried employees), severance calculation, Section 14 release-letter coordination with the pension fund, leave encashment, and final payslip with all statutory dues. Closures land within 30 days of the last working day, with zero compliance escalations.
How Employer of Record Israel Works End-to-End
When you partner with Asanify as your Employer of Record Israel provider, we step in as the legal employer for every Israeli hire. We sign the employment contract, run monthly payroll, withhold income tax across the 7 progressive brackets, file Form 102 with Bituach Leumi, contribute to the mandatory pension fund, fund Section 14 severance, and handle the full settlement on exit. while you keep day-to-day operational control over what your team builds, sells, and ships.
Here is how an EOR Israel engagement runs:
- Immediate Market Entry: Start hiring in Israel without registering a subsidiary, opening a Bituach Leumi employer file, or getting an Israel Tax Authority withholding number on your side.
- Compliant Offer and Onboarding: We generate Hebrew or English employment contracts in 7 days, run background checks within the limits of the Criminal Registry and Rehabilitation of Offenders Law, and set up bank, pension, and Bituach Leumi enrolments before day one.
- Full Employment Services: We handle monthly salary disbursement, Israeli income-tax withholding, Bituach Leumi tiered contributions, pension at 6.5% + severance 8.33%, leave accruals, expense reimbursements, and final settlements per the Severance Pay Law.
- Statutory Compliance Coverage: Every filing under the Wage Protection Law (5718-1958), the Hours of Work and Rest Law, the Mandatory Pension Extension Order, and the Income Tax Ordinance is tracked, filed, and reconciled by our team.
- Real-Time Visibility: Monitor onboarding status, payroll, leave balances, and compliance health on a single dashboard. Pull Form 106, Form 126, and tlush sachar reports any time.
- Risk Mitigation: Asanify holds the employment relationship under Israeli law, which insulates your foreign parent from permanent establishment exposure under the Israel-OECD treaty network.
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Employer of record
Israeli Employment Compliance Asanify Handles for You
Israel’s employment landscape is governed by the Wage Protection Law (5718-1958), the Hours of Work and Rest Law, the Severance Pay Law (5723-1963), the Advance Notice for Dismissal and Resignation Law (5761-2001), the Sick Pay Law (5736-1976), the 2008 Extension Order on Comprehensive Pension Insurance, and the Income Tax Ordinance. Each carries specific deadlines, calculation methods, and Labour Court precedent that compounds the operational load on a foreign employer.
Asanify ensures full Israeli labour-law compliance across the entire employee lifecycle, from offer to exit, and protects your business from regulatory penalties and Labour Court claims. Every monthly Bituach Leumi return, every income-tax filing, and every Section 14 pension transfer flows through our payroll engine with zero manual touch from your global HR team.
- Israeli income-tax withholding across 7 progressive brackets (10%–50%) with monthly Form 102 to Bituach Leumi by the 15th
- Tiered Bituach Leumi contributions (approximately 3.55% reduced bracket up to NIS 7,522, 7.6% on portion above) and employee health-insurance deduction (3.1%–5.0%)
- Mandatory pension fund (employer 6.5% + employee 6.0%) plus Section 14 severance contributions at 8.33% replacing the lump-sum Severance Pay Law liability
What our happy customers say
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Table of Contents
An Employer of Record Israel is a third-party company that becomes the legal employer of your Israeli workforce, while you keep operational control over what they build, sell, and deliver. The EOR signs the employment contract under Israeli law, runs monthly payroll, withholds income tax across 7 progressive brackets, contributes to Bituach Leumi, funds the mandatory pension and severance, manages leave and Recreation Pay, and handles the shimua-compliant termination when an employee exits.
For a global company hiring its first or its hundredth Israeli employee, an Employer of Record Israel partner is faster, cheaper, and lower-risk than incorporating an Israeli company, registering with the Israel Tax Authority and Bituach Leumi, opening an Israeli corporate bank account, and building an in-country HR and payroll team.
When companies use an EOR Israel
The Employer of Record Israel model fits five common scenarios:
- Expanding into Israel without a local entity: Test the market or hire 1 to 50 Israeli employees without the cost and complexity of incorporating, getting a Tax Authority withholding number, opening a Bituach Leumi employer file, or registering an Israeli corporate bank account.
- Hiring remote engineers or distributed teams: Compliantly employ Israeli engineers, R&D leads, sales professionals, and operators from anywhere in the world.
- Navigating Israeli employment regulations: Stay compliant with Israel’s layered framework of statutory laws, Labour Court precedent, and mandatory Extension Orders that govern pension, severance, and recreation pay.
- Reducing time-to-hire: Onboard employees in 7 days instead of the 4 to 6 months that subsidiary incorporation, registrations, and bank-account opening take.
- Maintaining workforce flexibility: Scale teams up or down without long-term legal commitments, severance liabilities under the Severance Pay Law, or fixed infrastructure costs.
What the EOR Israel provider handles
A complete Employer of Record Israel engagement covers the full Israeli employment lifecycle: locally drafted employment contracts, background checks within the limits of the Criminal Registry Rehabilitation Law, monthly payroll processing in ILS, progressive income-tax withholding, monthly Form 102 Bituach Leumi returns, semi-annual and annual Form 126 reconciliations, Form 106 tax certificates by 31 March, mandatory pension contributions at 6.5%, Section 14 severance funding at 8.33%, paid annual leave administration starting at 12 days, sick-leave accrual at 1.5 days per month, 26-week maternity leave coordination, 5-day paternity leave, annual Recreation Pay (Dmei Havraa) after one year, and shimua-compliant termination workflows.
The EOR also delivers harder-to-procure pieces: supplementary private health insurance for the employee plus family, study fund (keren hishtalmut) contributions for tech-sector talent retention, ESOPs accounted through the payslip, and city-specific allowances for Tel Aviv vs Jerusalem cost-of-living parity.
Why Asanify is a different kind of EOR Israel provider
Asanify provides the complete Israel employment infrastructure with transparent country-specific pricing from $299 per employee per month, not the $599+ entry fees most global EORs anchor at. Our Israeli payroll team handles the Bituach Leumi reduced-bracket vs full-bracket split, the Section 14 election paperwork with the pension fund, the Form 102 monthly cadence, and the annual Form 126 reconciliation. Companies hiring via Asanify get a cleaner cost stack, faster onboarding, and Labour Court-ready documentation from day one.
How Asanify's Employer of Record Works in Israel
Asanify acts as the legal employer for your Israeli workforce while you keep full operational control over what your team builds, sells, and ships. Our employer of record israel infrastructure runs the complete Israeli employment lifecycle end-to-end, from the first offer letter to the final Section 14 release. you focus on the work, we own the compliance stack.
Step 1: Role Brief and Compliant Offer
You share the role, compensation, and start date. Asanify drafts the Hebrew or English employment contract aligned with the Wage Protection Law (5718-1958), the Hours of Work and Rest Law, the Advance Notice for Dismissal and Resignation Law (5761-2001), and the Section 14 severance election under the Severance Pay Law (5723-1963). The contract includes IP-assignment clauses with the Section 132 service-invention waiver, mandatory pension fund nomination, and the recreation pay (Dmei Havraa) accrual schedule.
Step 2: Onboarding in 7 Days
The candidate signs digitally, completes the Form 101 annual employee declaration to capture tax credits (nekudot zikui), family status, and supplementary income, and is enrolled with Bituach Leumi and the chosen pension fund before day one. Background checks run within the limits of the Criminal Registry and Rehabilitation of Offenders Law. Bank-account setup and statutory registrations are completed in parallel, not in series.
Step 3: Monthly Payroll Cycle
Each month our payroll engine calculates gross salary, applies progressive income-tax withholding across the 7-bracket scale (10% to 50%), deducts the employee Bituach Leumi tier (3.5% on the reduced bracket, 12.0% on the portion above NIS 7,522), processes pension and severance deductions, and funds employer-side contributions. Net pay is disbursed in ILS via direct bank transfer no later than the 9th of the following month under the Wage Protection Law. Employees receive a detailed itemised tlush sachar (payslip) in Hebrew or English on the salary date.
Step 4: Statutory Filings
Form 102 is filed with Bituach Leumi by the 15th of the following month, semi-annual and annual Form 126 reconciliations are filed with the Israel Tax Authority, and Form 106 individual tax certificates are issued to each employee by 31 March of the following year. Section 14 severance contributions of 8.33% transfer to the pension fund every month, so there is no end-of-year severance reconciliation surprise.
You receive a single consolidated invoice in your home currency. Asanify employer of record israel covers every step in between.
What Asanify Handles Under Employer of Record (EOR) in Israel
Asanify operates as a fully managed employment infrastructure for Israel, owning every compliance and administrative step so your team can focus on hiring, performance, and product. Below is the complete scope of what we run end-to-end as your employer of record israel partner.
Compliant Employment Contracts
We draft Israeli-law employment agreements aligned with the Wage Protection Law (5718-1958), the Hours of Work and Rest Law, the Sick Pay Law (5736-1976), the Advance Notice for Dismissal and Resignation Law (5761-2001), and the 2008 Extension Order on Comprehensive Pension Insurance. Contracts include the Section 14 severance election, the mandatory pension fund nomination, IP-assignment with the Section 132 service-invention waiver, and the Form 101 employee declaration trigger.
Onboarding and Bituach Leumi Enrolment
Our onboarding process covers Form 101 collection, pension fund nomination, Bituach Leumi registration, bank-account setup, and background checks within the limits of the Criminal Registry and Rehabilitation of Offenders Law (5741-1981). Hires are productive in 7 days.
Monthly Payroll Processing
We process gross-to-net payroll monthly, calculate the Bituach Leumi tier split (approximately 3.55% employer on the reduced bracket up to NIS 7,522, 7.60% on the portion above), apply progressive income-tax withholding, fund the mandatory pension at 6.5% and Section 14 severance at 8.33%, and disburse net pay in ILS by the 9th of the following month.
Statutory Filings and Reconciliations
Monthly Form 102 returns to Bituach Leumi by the 15th, semi-annual and annual Form 126 reconciliations to the Israel Tax Authority, and Form 106 individual tax certificates issued to each employee by 31 March. We also handle Form 161 severance approval filings when required at exit.
Mandatory Pension and Section 14 Severance
We administer the 2008 Extension Order on Comprehensive Pension Insurance with employer 6.5% to the pension component and 8.33% to severance, plus the employee 6.0% deduction. The Section 14 arrangement is registered with the pension fund on the first contribution, so severance accrues directly into the fund and the lump-sum cash exposure at termination is eliminated.
Statutory Leave Administration
Asanify tracks and processes 12 paid annual leave days for years 1 to 4 (scaling with seniority up to roughly 20 working days by year 14), sick-leave accrual at 1.5 days per month under the Sick Pay Law capped at 90 days lifetime (day 1 unpaid, days 2-3 at 50%, day 4 onwards at 100%), the 26-week maternity entitlement (15 weeks paid by Bituach Leumi maternity allowance), 5 days paternity leave, and the annual Recreation Pay (Dmei Havraa) after one year of service.
Hebrew or English Payslips
Detailed itemised tlush sachar payslips are mandatory under the Wage Protection Law (Amendment 24, 2009) and delivered to employees on the salary date in their preferred language.
Termination and Shimua Workflow
Israel is not at-will. Asanify runs the full shimua fair-hearing workflow, calculates statutory notice (1 day per month in months 1 to 6, scaling to 1 month after 1 year of service for salaried employees), reconciles severance and Recreation Pay, issues the Section 14 release letter so the employee collects accrued severance directly from the fund, and typically closes the file within 30 days of the last working day.
Supplementary Benefits Administration
We support common Israeli tech-sector benefits: supplementary private health insurance for the employee plus family, study fund (keren hishtalmut) contributions, term life and accident cover, and ESOPs accounted through the payslip.
Employer of Record vs Entity Setup in Israel
For most foreign companies hiring 1 to 50 Israeli employees, an employer of record israel partner closes faster, costs less upfront, and removes the multi-vendor compliance build that a wholly-owned Israeli subsidiary requires. The table below contrasts the two routes on the dimensions that matter most: speed, cost, statutory registrations, and ongoing operational load.
| Criteria | Israel EOR (Asanify) | Israeli Subsidiary |
|---|---|---|
| Setup Time | 7 days from candidate selection to day-one onboarding | 4 to 6 months for Registrar of Companies incorporation, Tax Authority registrations, and bank-account opening |
| Setup Cost | US$0; predictable monthly fee from $299 per employee per month | Approximately US$15,000 to $30,000 in legal, Registrar of Companies, corporate-services, and bank-account opening costs |
| Bituach Leumi Employer File | Handled under Asanify’s existing Bituach Leumi employer registration | You self-register the entity with Bituach Leumi as a new employer and manage all returns |
| Israel Tax Authority Withholding | Handled under Asanify’s withholding number, with monthly Form 102 and Form 126 filings | You apply for a Tik Nikuim (withholding file) with the Israel Tax Authority and run filings in-house |
| Mandatory Pension Fund | Pension fund nomination and enrolment set up by Asanify under the 2008 Extension Order | You negotiate directly with a pension fund, register the employer, and manage monthly transfers |
| Section 14 Severance | Configured by default in every employment contract, with monthly 8.33% transfer to the pension fund | Your legal team drafts the Section 14 clause, registers the election with the fund, and tracks compliance |
| Monthly Compliance | Handled end-to-end: payroll, Form 102 by the 15th, Form 126 reconciliations, Form 106 by 31 March, leave administration | In-house Israeli payroll team and compliance team required, or an external bookkeeping firm on retainer |
| Termination Liability | Asanify holds the employment relationship and runs the shimua hearing, notice, and Section 14 release | Your entity holds the relationship and the Labour Court exposure; you run the shimua process in-house |
| Best For | Testing the Israeli market, hiring 1 to 50 employees, distributed R&D teams, fast time-to-hire | 50+ employees with steady-state hiring, permanent strategic presence, customer-facing sales operations in-country |
The decision usually comes down to scale and timeline. If you are testing the Israeli engineering market or scaling under 50 hires, the employer of record israel route is faster and cheaper. If you have crossed 50 employees and plan to stay decades, an Israeli subsidiary starts to make sense.
Employer of Record (EOR) Cost in Israel: Pricing Guide
Understanding the true cost of hiring through an employer of record israel partner versus standing up an Israeli subsidiary is the most important budgeting decision a foreign company makes when entering this market. Asanify’s pricing is country-priced, transparent, and structured to remove the entry-fee anchoring used by generic global EOR providers.
Asanify Management Fee
Country-priced from US$299 per employee per month for Israel. This covers the full scope of work: compliant employment contracts, monthly payroll processing, Bituach Leumi tier calculations, progressive income-tax withholding, mandatory pension at 6.5% and Section 14 severance at 8.33% administration, monthly Form 102 filings, semi-annual and annual Form 126 reconciliations, Form 106 tax certificates by 31 March, statutory leave administration, shimua-compliant termination, and Hebrew or English payslips. No one-time onboarding fee.
Employer-Borne Statutory Costs (Pass-Through)
These are statutory contributions that any Israeli employer pays, billed at cost on top of the management fee:
- Bituach Leumi employer contribution: approximately 3.55% on the reduced bracket up to NIS 7,522 monthly, and 7.60% on the portion from NIS 7,522 up to the contribution ceiling of NIS 50,695.
- Mandatory pension: 6.5% of salary to the pension component under the 2008 Extension Order on Comprehensive Pension Insurance.
- Section 14 severance: 8.33% of salary to the severance component, transferred monthly to the pension fund. This replaces the lump-sum severance liability under the Severance Pay Law (5723-1963).
- Statutory load total: approximately 19.34% to 23.43% of gross salary, depending on the salary band relative to the reduced-bracket ceiling.
What You Do Not Pay Asanify
- No entity setup fee (saves approximately US$15,000 to $30,000 versus subsidiary incorporation).
- No one-time onboarding fee per hire.
- No deposit or refundable severance bond.
- No minimum commitment period.
Compared to Subsidiary Setup
Standing up a wholly-owned Israeli subsidiary costs approximately US$15,000 to $30,000 in legal, Registrar of Companies, corporate-services, and bank-account opening fees, followed by US$5,000 to $10,000 per month in in-house payroll, accounting, and compliance team costs. The break-even point versus the employer of record israel route typically arrives somewhere around the 30 to 50 employee mark, depending on the role mix and the salary band.
Compared to Generic Global EOR Providers
Many global EOR platforms anchor their Israel pricing at US$599 or higher per employee per month as a base entry fee. Asanify’s country-specific pricing strips out the multi-country overhead margin and starts at US$299, which on a 10-engineer team saves approximately US$36,000 a year before statutory contributions.
Who Should Use Employer of Record in Israel
An employer of record israel partner is the right fit when you need fast, compliant, low-overhead access to Israeli talent without committing to a multi-month subsidiary build. The model fits six common buyer scenarios.
1. Testing the Israeli Market with 1 to 5 Engineers
Founders and VPs of Engineering exploring whether Israel is the right second R&D location can hire 1 to 5 engineers through Asanify within 7 days, validate the talent pool and time-zone fit, and decide on subsidiary investment with real data instead of speculation. The risk of a wrong-bet entity build is removed entirely.
2. Hiring Israeli Tech Talent for Global Product or R&D Teams
Israel is a top-tier source of engineering, machine learning, cybersecurity, and fintech talent. Companies building distributed product and R&D teams hire Israeli engineers, ML researchers, security architects, and fintech operators alongside teams in the US, EU, and India. Asanify handles the Israeli employment piece while you keep the team integrated into one global engineering function.
3. Acqui-Hires and Retained Founding Teams
Foreign acquirers that have closed an acqui-hire of an Israeli startup and need to retain the founding engineers post-close use an employer of record israel partner to absorb the Israeli team without immediately spinning up an acquirer-side subsidiary. The shimua process, Section 14 severance continuity, and pension fund transfers are managed without breaking the retention deal.
4. Companies Wary of Israeli Compliance Paperwork
Bituach Leumi, the Israel Tax Authority, the mandatory pension extension order, and the Form 101 / 102 / 106 / 126 cycle are operationally complex. Companies that do not want to build an in-house Israeli payroll function offload the compliance stack to Asanify and never touch the underlying paperwork themselves.
5. Distributed Teams Where Israel is Under 30% of Headcount
If your Israeli headcount is a minority slice of a global team, the fixed cost of a subsidiary almost never pencils out. The employer of record israel route lets you keep Israeli hires as a fully variable cost line, scaled with the team size instead of locked behind a fixed entity overhead.
6. Companies Needing Fast Onboarding
Competitive offers for senior Israeli engineers often close in days, not months. The 7-day Asanify onboarding window beats the 4 to 6 month subsidiary route by an order of magnitude, which is the difference between landing the candidate and losing them to a faster-moving competitor.
Why Asanify is Different from Generic EOR Providers
Most global EOR platforms treat Israel as one country in a 150-country portfolio, with the same generic playbook applied everywhere. Asanify is built differently for Israel. Here is what changes when you choose an employer of record israel partner with country-specific depth instead of breadth.
Country-Priced from US$299, Not US$599
Many generic global EOR providers anchor their entry pricing at US$599 or higher per employee per month and then negotiate down from there. Asanify is country-priced. Israel starts at US$299, with no minimum commitment and no one-time onboarding fee. On a 10-engineer team that is roughly US$36,000 of annual margin returned to your budget before statutory contributions.
Section 14 Severance Configured by Default
Under the Severance Pay Law (5723-1963), the Section 14 election lets the 8.33% monthly pension-fund contribution fully replace the lump-sum severance liability. Many EOR providers leave this as an optional toggle or never elect it, which leaves a real cash-flow exposure at termination. Asanify configures Section 14 in every employment contract on day one, registers the election with the pension fund on the first contribution, and issues the Section 14 release letter on exit so the employee collects the accrued severance directly from the fund.
Hebrew and English Payslips
The detailed itemised tlush sachar is mandatory under the Wage Protection Law (Amendment 24, 2009). Asanify delivers payslips in Hebrew or English on the salary date based on the employee’s preference, with full Bituach Leumi, pension, severance, and income-tax breakdown.
Section 132 Service-Invention Waiver Built into Contracts
Under Section 132 of the Patents Law (5727-1967), service inventions made by an employee in the course of employment vest in the employer by default, but employees can claim compensation from the Compensation and Royalties Committee. Asanify’s standard Israeli employment contract includes an explicit IP-assignment clause and a written service-invention waiver, in line with recent rulings allowing express informed waivers, so your IP position is clean from day one.
Form 101 Collected on Onboarding
The Form 101 annual employee declaration captures tax credits, family status, supplementary income, and pension-deduction elections. Generic EOR providers often collect it on the first payroll run, which produces tax-credit surprises on the first payslip. Asanify collects Form 101 during onboarding, so first-payroll withholding is correct.
Shimua Hearing Workflow Run End-to-End
Israel is not at-will. Most EOR providers calculate notice and severance but leave the shimua fair-hearing process to your team. Asanify runs the full shimua workflow: scheduling, documentation, written notice of contemplated dismissal, consideration of the employee’s response, and post-hearing decision letter, all in line with Labour Court precedent.
G2 4.9 Across 350 Reviews and Techstars Backing
Asanify is consistently rated #1 for ease of use on G2 across HR, Payroll, and Employer of Record categories, with a 4.9 average rating across 350+ reviews. We are Techstars-backed, with operations across India, the Middle East, and Asia-Pacific.
Why Use an Employer of Record in Israel
Israel is one of the deepest engineering talent markets in the world per capita. It is also one of the most compliance-heavy labour jurisdictions a foreign employer is likely to encounter. An employer of record israel partner exists to bridge that gap, so global companies can access Israeli talent without absorbing the compliance build.
Israel as a Tier-One Engineering Talent Market
Israel punches far above its weight as an engineering and deep-tech talent source. The country hosts thousands of technology companies and is consistently among the global leaders in cybersecurity, AI, semiconductor design, fintech, and defence-tech. Tel Aviv, Haifa, Herzliya, Jerusalem, and Beer Sheva each anchor a distinct talent cluster. For global product, R&D, and security teams, an Israeli hire is often the difference between shipping on roadmap and missing the quarter.
Why Israeli Compliance Is Not DIY-Friendly
Israel is not an at-will jurisdiction. Dismissals require a documented shimua fair-hearing process under Labour Court precedent. Statutory severance under the Severance Pay Law (5723-1963) is one month’s last salary per year of service, replaced in practice by the Section 14 monthly 8.33% pension-fund contribution. Bituach Leumi runs on a tiered structure with a reduced bracket up to NIS 7,522 (approximately 3.55% employer) and a full bracket above (7.60% employer up to the NIS 50,695 ceiling). Mandatory pension under the 2008 Extension Order adds 6.5% employer plus 6.0% employee. Monthly Form 102, semi-annual and annual Form 126, and Form 106 by 31 March all carry penalty exposure on late filing. The compliance load is real and continuous.
Why Entity Setup Is Too Slow and Too Expensive for Testing the Market
Incorporating an Israeli subsidiary, registering with the Israel Tax Authority for a Tik Nikuim, opening an employer file with Bituach Leumi, and getting an Israeli corporate bank account live takes 4 to 6 months and US$15,000 to $30,000 in setup costs, followed by an in-house payroll and compliance overhead. If your Israeli headcount is under 30 to 50 people, the fixed cost almost never pencils out.
Why Contractor Hiring Does Not Work in Israel
The Israeli misclassification doctrine is strict. Labour Courts apply a multi-factor test that looks at integration into the business, economic dependence, exclusivity, and control. A worker reclassified as an employee retroactively triggers retroactive Bituach Leumi, pension, severance, and recreation pay liabilities, plus penalties. Tax Authority audits in this space are common. Treating an engineer as a 1099-style contractor is a frequent and expensive mistake. The employer of record israel route removes the misclassification risk entirely by employing the worker correctly from day one.
Israeli Employment Compliance Checklist for International Hiring
Hiring workers in Israel requires navigating a multi-layered regulatory framework that spans the Knesset’s statutory laws, Labour Court precedent, and binding Extension Orders. International hiring teams must ensure compliance across the following domains to avoid penalties, severance disputes, and Labour Court reinstatement claims.
Employment Contracts under the Wage Protection Law and Hours of Work and Rest Law
Israeli employment contracts must comply with the Wage Protection Law (5718-1958), the Hours of Work and Rest Law, and the relevant Extension Orders for the sector. Contracts must clearly define compensation, working hours (standard 42 hours per week with overtime cap of 16 hours per week), leave entitlements, termination terms, the Section 14 severance election, and the mandatory pension fund nomination.
Probation length is not statutorily prescribed but is commonly 3 to 12 months by contract. Statutory notice and dismissal protections still apply during probation. Contracts in Hebrew are recommended for enforceability; English contracts are valid but Hebrew-language employee handbooks are best practice.
Payroll Tax Withholding under the Israel Income Tax Ordinance
Employers must withhold income tax from employee salaries on the progressive 7-bracket scale (10% on the first NIS 84,120 of annual income, scaling to 47% above NIS 560,280, plus a 3% surtax taking the top effective rate to 50% above NIS 721,560 for 2025). Monthly tax withholding accounts for tax credits (nekudot zikui), pension contributions, and study fund deductions.
Employers file Form 102 with Bituach Leumi by the 15th of the following month, semi-annual and annual Form 126 reconciliations of all salaries and withholdings, and Form 106 individual tax certificates to each employee by 31 March of the following calendar year. Failure to file on time triggers interest, penalties under the Tax Ordinance, and audit exposure.
Tax Rates and Direct Tax Slabs Applicable to Salaried Employees
Israeli salaried employees pay income tax on the standard progressive scale and contribute to Bituach Leumi at 3.5% on income up to NIS 7,522 monthly and 12.0% on the portion above (combining national insurance and health insurance). The tax burden is reduced by tax credits for residency, dependents, military reserve service, and qualifying education. Employers must apply the correct credits based on each employee’s Form 101 (annual employee declaration).
The annual employee Form 101 captures family status, dependents, supplementary income, and tax-credit elections. Asanify Employer of Record Israel collects this on onboarding and updates it annually.
Mandatory Pension and Severance under the 2008 Extension Order
Mandatory pension applies to all employees after 6 months of service (3 months for employees with an existing pension fund). Employer minimum: 6.5% of salary to the pension component plus 8.33% to the severance component. Employee minimum: 6.0%. The Section 14 election allows the 8.33% severance contribution to fully replace the lump-sum severance liability under the Severance Pay Law (one month’s salary per year of service).
Asanify configures the Section 14 arrangement out of the box for every Israeli hire, transferring severance accrual to the pension fund monthly and providing the Section 14 release letter on exit so the employee can collect their accrued severance directly from the fund.
Termination, Severance, and Notice Periods
Termination procedures are governed by the Severance Pay Law (5723-1963) and the Advance Notice for Dismissal and Resignation Law (5761-2001). Israel is not at-will. Employers must conduct a documented shimua hearing before any dismissal decision, give written reasons, and observe the statutory notice schedule (1 day per month in months 1 to 6, then 6 days plus 2.5 days per month in months 7 to 12, scaling to 1 month after 1 year of service for salaried employees).
Statutory severance is one month’s last salary per year of service, payable to the employee on dismissal after one year of service (or on resignation in defined scenarios). The Section 14 arrangement, if elected, fully replaces this lump-sum liability with monthly 8.33% pension-fund contributions. Failure to follow shimua procedure or pay correct severance triggers Labour Court claims with reinstatement remedies and statutory damages.
Background Checks under the Criminal Registry and Rehabilitation of Offenders Law
Pre-employment criminal background checks are generally prohibited under the Criminal Registry and Rehabilitation of Offenders Law (5741-1981, as amended 2019, in force 2022). An employer may not request, directly or indirectly, criminal-record information from a candidate. Exceptions exist for roles involving children, persons with mental or developmental disabilities, state-security positions, and specific licensed financial roles.
Credit checks are permitted only with written consent and only where the role objectively justifies it. Reference checks are permitted with consent and are subject to the Protection of Privacy Law (5741-1981).
Work Permits for Foreign Workers
Foreign nationals working in Israel require a B/1 Expert Work Visa, issued by the Population and Immigration Authority for skilled professionals. The B/1 process requires sponsor-employer documentation, professional qualification proof, and security clearance. Asanify Employer of Record Israel can sponsor the B/1 for qualifying tech, R&D, and senior commercial roles.
Employer of Record (EOR) Services Across Major Israeli Cities
Israel’s tech talent is concentrated in five distinct city clusters, each with its own industry mix, salary benchmarks, and hiring dynamics. Asanify’s EOR infrastructure operates identically across all five, so the underlying Bituach Leumi, pension, Section 14 severance, and Form 102 compliance is consistent regardless of where your hire sits.
Employer of Record (EOR) in Tel Aviv
Tel Aviv is the heart of Silicon Wadi and accounts for roughly half of Israeli tech employment. It is the headquarters cluster for fintech, AI, cybersecurity, and SaaS, with average salaries the highest in the country. Companies hiring senior engineers, ML researchers, product leaders, and commercial talent in Tel Aviv face the most competitive offer environment in Israel. Asanify handles Tel Aviv hires through the same Bituach Leumi employer file, Section 14 pension fund setup, and Form 102 monthly cadence used for every Israeli employee.
Employer of Record (EOR) in Jerusalem
Jerusalem combines a government and policy hub with a growing biotech, life-sciences, and academic-spinout cluster anchored by Hebrew University and the Hadassah ecosystem. Cost-of-living dynamics differ meaningfully from Tel Aviv, which often shifts the compensation conversation. Companies hiring research scientists, biotech engineers, and policy-adjacent operators in Jerusalem run the same Asanify employer of record israel workflow with no city-specific compliance overhead on your side.
Employer of Record (EOR) in Haifa
Haifa is the semiconductor and hardware engineering capital of Israel, anchored by the Technion and home to design and engineering teams for Intel, Apple, Microsoft, Google, and other chip-stack operators. Companies hiring silicon designers, firmware engineers, and hardware architects in Haifa benefit from Technion’s pipeline and a lower salary band than Tel Aviv. Asanify runs the same Section 14 severance, mandatory pension, and Bituach Leumi tier calculations for Haifa hires as for any other Israeli location.
Employer of Record (EOR) in Herzliya
Herzliya is the corporate HQ cluster for many multinational sales, finance, and operations teams that locate in Israel, plus a meaningful media-tech and adtech presence. Companies hiring country managers, sales leaders, finance operators, and media-tech engineers in Herzliya use the same Asanify EOR infrastructure, with permanent-establishment risk carefully managed so a Herzliya-based country manager does not inadvertently trigger PE exposure for the foreign parent under Article 5 of the Israel-OECD treaty network.
Employer of Record (EOR) in Beer Sheva
Beer Sheva has emerged as Israel’s cyber capital, anchored by the Cyber Park, Ben Gurion University, and the relocation of select government cyber units to the city. Companies hiring security researchers, penetration testers, threat-intel analysts, and cyber-defence engineers in Beer Sheva access a fast-growing pipeline of Ben Gurion graduates and ex-government cyber talent. Asanify handles Beer Sheva hires through the same end-to-end EOR workflow used in every other city.
Whether your team works fully in-office in Tel Aviv, hybrid in Haifa, or remote from anywhere in Israel, Asanify’s payroll engine handles the underlying Bituach Leumi, pension, Section 14 severance, Form 102, Form 126, and Form 106 cycle identically across the country. The Asanify platform is built to scale your Israeli team without adding city-specific compliance load on your side.
Employer of Record Israel FAQs
What is an Employer of Record in Israel?
An Employer of Record Israel, sometimes written as EOR Israel, is a third-party company that signs the employment contract on behalf of your business and becomes the legal employer of record for your Israeli hires under the Wage Protection Law (5718-1958) and the broader Israeli employment framework.
The Employer of Record Israel provider handles all statutory employment obligations: monthly payroll in ILS, progressive income-tax withholding across 7 brackets, tiered Bituach Leumi contributions, mandatory pension at 6.5% plus severance funding at 8.33% under the 2008 Extension Order, monthly Form 102 returns, annual Form 126 reconciliations, Form 106 tax certificates by 31 March, paid leave administration, and shimua-compliant termination.
You retain complete operational control. you assign work, manage performance, decide compensation, and run day-to-day team management. The EOR Israel company handles employment compliance under Israeli law so your business never builds a permanent establishment in Israel.
How quickly can Asanify onboard an Israeli employee?
You can onboard employees in Israel within 7 days of candidate selection through Asanify’s Employer of Record Israel service. We prepare locally compliant offer letters and employment agreements aligned with the Wage Protection Law, the Hours of Work and Rest Law, the Mandatory Pension Extension Order, and the Section 14 severance election under the Severance Pay Law.
In parallel, we run background checks within the limits of the Criminal Registry and Rehabilitation of Offenders Law, complete the mandatory pension fund nomination with the employee, register the new hire with Bituach Leumi, and configure payroll. Your new hire receives the offer, signs digitally, completes the Form 101 employee declaration, and is fully onboarded ready for day one in 7 days, with no involvement from your global HR team beyond the initial role brief.
Do I need to register a company in Israel to hire employees?
No, you do not need to establish a legal entity in Israel to hire employees through Asanify’s Employer of Record Israel service. We serve as the legal employer for your Israeli hires, eliminating the need for company incorporation with the Registrar of Companies, Israel Tax Authority withholding-number registration, Bituach Leumi employer-account opening, or opening an Israeli corporate bank account.
Your foreign parent company simply contracts with Asanify. We hold the Israeli employment contract, your team builds the work product, and your global brand keeps full operational control without the cost and lead time of subsidiary incorporation, regulatory approvals, and ongoing Israeli corporate filings.
What statutory contributions does Asanify manage in Israel?
Asanify Employer of Record Israel handles all mandatory statutory contributions including Bituach Leumi (the National Insurance Institute) at approximately 3.55% on the reduced bracket up to NIS 7,522 monthly and 7.60% on the portion from NIS 7,522 up to the contribution ceiling of NIS 50,695, plus the employer-side mandatory pension contribution of 6.5% of salary and the Section 14 severance funding at 8.33% under the 2008 Extension Order on Comprehensive Pension Insurance.
We also manage the employee-side deductions: 3.5% Bituach Leumi (national insurance + health) on the reduced bracket and 12.0% on the portion above, the employee 6.0% mandatory pension contribution, and progressive income-tax withholding across 7 brackets ranging from 10% to 50%.
On the income-tax side, we file monthly Form 102 to Bituach Leumi by the 15th, semi-annual and annual Form 126 reconciliations to the Israel Tax Authority, and issue Form 106 tax certificates to each employee by 31 March of the following year.
How does Section 14 severance work, and does Asanify handle it?
Section 14 of the Severance Pay Law (5723-1963) lets employers fund severance liability through monthly contributions of 8.33% of the employee’s salary into the employee’s pension fund, replacing the lump-sum severance obligation of one month’s salary per year of service that would otherwise apply on dismissal.
The Section 14 election must be made in writing in the employment contract and registered with the pension fund. Once elected, the 8.33% monthly contribution accrues directly into the employee’s pension fund severance component, and on termination the employee receives a Section 14 release letter from the employer to collect the accrued severance directly from the fund. This eliminates the lump-sum cash hit on the employer at the time of termination.
Asanify configures the Section 14 arrangement out of the box for every Israeli hire we onboard. We register the election with the pension fund on the first contribution, transfer the 8.33% monthly, and issue the Section 14 release letter to the employee within 14 days of the last working day. Companies that switch to Asanify from EORs that do not configure Section 14 by default eliminate a real cash-flow exposure.
What are the mandatory employee benefits in Israel?
Israeli employees are entitled to mandatory statutory benefits including pension fund contributions under the 2008 Extension Order (employer 6.5% + severance 8.33%, employee 6.0%), 12 paid annual leave days for years 1 to 4 increasing with seniority up to roughly 20 working days by year 14, sick leave accrual at 1.5 days per month under the Sick Pay Law (5736-1976) capped at 90 days lifetime, 26-week maternity leave entitlement for employees with 12+ months of service, of which 15 weeks are paid by Bituach Leumi maternity allowance, 5 days paternity leave, and the annual Recreation Pay (Dmei Havraa) after one year of service (5 to 10 days based on tenure).
On top of statutory benefits, Asanify supports competitive supplementary benefits common in the Israeli tech market: private health insurance for the employee plus family, study fund (keren hishtalmut) contributions for tech-sector talent retention, term life and accident cover, and ESOPs accounted through the payslip. We ensure full compliance with all benefit entitlements under Israeli law and the relevant Extension Orders.
How are payroll and taxes processed in Israel through an EOR?
Payroll in Israel is processed monthly under the Wage Protection Law (5718-1958), with salaries due no later than the 9th of the following month. Asanify calculates gross salaries, applies progressive income-tax withholding across the 7-bracket scale, deducts Bituach Leumi tiered contributions and the mandatory employee pension share, processes expense reimbursements, and disburses net pay via direct bank transfer in ILS.
We generate detailed Hebrew or English tlush sachar (payslips), file monthly Form 102 to Bituach Leumi by the 15th, file semi-annual and annual Form 126 reconciliations to the Israel Tax Authority, and issue Form 106 individual tax certificates by 31 March. Employees access payslips, Form 106, leave balances, and tax declarations through a self-serve portal in real time.
What are the termination rules and notice periods in Israel?
Notice periods in Israel are governed by the Advance Notice for Dismissal and Resignation Law (5761-2001) and apply equally to employer-side dismissal and employee-side resignation. For salaried employees: 1 day per month in months 1 to 6 of service, then 6 days plus 2.5 days per month in months 7 to 12, scaling to 1 month after 1 year of service. For wage (hourly) employees: 1 day per month in year 1, 14 days plus 1 day per 2 months in year 2, 21 days plus 1 day per 2 months in year 3, scaling to 1 month after 3 years.
Israel is not an at-will jurisdiction. Employers must conduct a documented fair-hearing process (shimua) before any dismissal decision, give the employee written notice of the contemplated dismissal and the reasons, and consider the employee’s response before deciding. Failure to follow shimua procedure triggers Labour Court claims with potential reinstatement remedies. Asanify Employer of Record Israel runs the full shimua workflow, schedules the hearing, documents the proceedings, and coordinates the post-hearing decision letter.
Can I terminate an Israeli employee, and what are the costs?
Yes, you can terminate an Israeli employee through Asanify’s Employer of Record Israel service, subject to the shimua hearing requirement, statutory notice under the Advance Notice for Dismissal and Resignation Law, and statutory severance under the Severance Pay Law. Statutory severance is one month’s last salary per year of service, payable after one full year of employment when terminated by the employer.
If the Section 14 election is in place (Asanify configures this by default), the 8.33% monthly pension-fund severance contribution fully replaces the lump-sum severance, and you issue a Section 14 release letter so the employee collects the accrued severance directly from the fund. Without Section 14, the lump-sum severance is payable from your account on the last working day.
Asanify manages the full Israeli termination process: shimua hearing, statutory notice calculation, severance and Recreation Pay reconciliation, leave encashment, Form 161 filing for severance approval if needed, Section 14 release-letter issuance, and final payslip with all dues. Closures land within 30 days of the last working day in line with statutory timelines.
Will using an Employer of Record Israel create a permanent establishment for my company?
No. When you use Asanify as your Employer of Record Israel, the formal employment relationship sits with Asanify. Your foreign parent company never holds the Israeli employment contract, never pays Israeli salary directly, and never files Israeli payroll under its name. which means there is no fixed-place-of-business or dependent-agent permanent establishment trigger under Article 5 of the Israel-OECD model treaty network.
Asanify handles every statutory filing (income-tax withholding under the Israel Income Tax Ordinance, monthly Form 102 to Bituach Leumi, Form 126 reconciliations, Form 106 tax certificates, mandatory pension and severance contributions) under the local Israeli employment infrastructure. Your parent company receives a single consolidated service invoice in its home currency. PE risk only arises if the Israel-based employee is given habitual contract-concluding authority on behalf of the foreign parent (Dependent Agent PE) or operates a fixed place of business attributable to the parent. for purely employee roles within the Asanify EOR structure, no PE is triggered.
