Providing competitive compensation and benefits is the key to finding the right employees and staying compliant. Meeting or exceeding Israel’s compensation laws will help you show employees you care and make sure you meet the statutory requirements. Plus, providing more benefits than simply the minimum requirements will help persuade prospective job candidates to choose your company over another.
However, it’s hard to focus on benefits and compensation when you’re also trying to hire employees, add them to your payroll, and run all your company’s locations. Here are a few things you should know about compensation and benefits in Israel.
Israel compensation laws
One of the most important Israel compensation laws is the country’s minimum wage. However, not all employees in Israel are under the minimum wage, so you should check to see if your team members are covered before drafting an employment contract.
Guaranteed benefits in Israel
Every employee must receive the statutory minimum of benefits as part of your Israel benefits management plan. The country celebrates 8 public holidays, during which employees should get time off. Paid annual leave depends on how long the employee has worked for your company, but the minimum period is anywhere between 10 and 23 days.
Another guaranteed benefit is maternity leave. Pregnant employees should get 7 weeks of maternity leave at full pay as long as they worked the previous 6 to 10 months. Employees who worked more than 10 months get 14 weeks of paid maternity leave. Fathers get 8 days of paid paternity leave, as well as 3 paid vacation days and 5 sick days paid by the employer.
Israel benefits management
When you craft your Israel benefits management plan, you should also take the time to add supplemental options. Additional benefits will increase retention rates and help you find the best talent. Many companies contribute to “managers’ insurance” policies or pension funds, while other employers give out disability insurance.
Although it’s not required by law, employees expect to get compensated for travel expenses. You may choose to provide a company car or pay a separate fee for the use and maintenance of a car. Travel expenses can be included in the employee’s salary — it’s best to get written consent so that both parties are aware.
Restrictions for benefits and compensation
You can’t give out compensation and benefits until you incorporate in Israel. Unfortunately, it can take a significant amount of time to establish a subsidiary in another country.
As a global Employer of Record (EOR), G-P can help you start working in Israel in a fraction of the time, without setting up new entities. We’ll also make sure your teams receive the benefits and compensation they deserve.
Israel competitive benefits planning
Designing a benefits package requires focusing on key industrial requirements, market trends, and employee needs. When you balance these factors, you’ll be able to create a more successful plan that advances your company’s growth goals in a new country.
Israel employee benefits plans
Both compliance and employee needs are fundamental considerations when building your benefits program. Keep in mind that you can leverage your benefits offerings to advance recruiting and hiring.
Beyond these advantages, a competitive benefits plan can also strengthen overall workplace morale and motivate employees to do their best work. When workers feel supported, it deepens workplace engagement and overall company success.
You can meet employees’ critical needs with fringe benefits such as:
- Childcare support
- Ongoing learning courses
- Physical and mental wellness resources
- Travel and housing assistance
Mandatory employee benefits in Israel
Before you incorporate supplemental offerings into your plan, ensure you meet legal requirements by providing the following benefits:
- Public holiday leave
- Sick leave
- Maternity leave
- Annual leave based on years of service
- Paternity leave
- Bereavement leave
- Parental leave
- Pension
How to design your employee benefits program
Because each country has unique regulations, you can expect to navigate different benefits plan requirements in each region. Still, some fundamental best practices will be applicable anywhere.
1. Set your program goals and budget.
Begin by identifying priorities for your program, evaluating hiring and employee retention goals. Then, decide what team size and competitive offerings you can support with your available budget.
2. Research the labor market.
Take time to research local economic conditions and evaluate employees’ needs. Assess industry trends and do a comparative analysis of your competitors’ benefits programs. See if you can match their provisions or deliver additional benefits for employees.
3. Design your benefits program.
Base your program structure on your budget and research. Incorporate the required benefits first, then build in additional provisions based on employee preferences and your remaining funds.
As you finalize your plan, be sure to factor in employee contributions.
Average cost of benefits per employee
Benefits program costs can vary considerably based on your company’s unique scale and goals. Focus on building a budget that’s sustainable for your company rather than letting a national average guide your planning.
Consider setting a percentage of funds to contribute to your yearly benefits plan. That way, you can easily scale your offerings as your team grows.
How to calculate employee benefits
You can use Israel’s labor codes to set appropriate pay rates for mandatory employee benefits, such as holiday and annual leave. While most forms of leave require full pay, sick leave payments should be set at these rates:
- No payment for the 1st day of leave
- 50% of regular pay for the 2nd and 3rd days of leave
- 100% of regular pay for the 4th day of leave and beyond
When you set fringe benefit values, you can use your industry research to determine competitive rates.
How are employee benefits taxed in Israel?
Most benefits are considered taxable, so you’ll need to include bonuses, leave payments, and most other offerings when calculating employee income. Companies are responsible for retaining the appropriate percentage of each employee’s paycheck for tax payments.
Employee health benefits plans
Companies must provide employer contributions to each employee’s social security and National Health Fund services. All individuals in Israel must enroll in the universal healthcare program.
Partner with G-P to build your everywhere workforce.
As your partner in global expansion, G-P will handle payroll and compliance, so you can focus on growing your team and scaling your business. Our market-leading global employment platform is powered by the first fully customizable suite of global employment products and backed by the industry’s largest team of in-country HR and legal experts to streamline payroll management and help you offer competitive, compliant local benefits.
Learn more about our platform and request a proposal today.