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Common Employee Benefits in Israel

When you are assigning employees to Israel, one of the typical requirements is to offer employee benefits in Israel according to their laws.  You may still be offering benefits in the home country (such as pension contributions) but you must also add in host country benefits to the compensation package.

Here are a few of the most common employee benefits in Israel for your employees on assignment: 

1.    Holiday Vouchers (Recreation Pay) in Israel 

While it may seem unusual for some nationalities, it is common for employers in Israel to give a “holiday voucher” to employees twice a year in line with the holiday seasons. The seasons are Spring (normally April) and Fall (normally Sep/Oct) to coincide with traditional holiday periods.

The amount is not significant, but it is required for all of your employees and normally the voucher is for 500 ILS for New Year and 750 ILS for Passover,  and the voucher can be couriered to the employee for a small cost of approximately ILS 50 (US$ 11).

The holiday voucher is in the form of an electronic “prepaid debit card” (not cash) which the employee can use in local shops, restaurants, etc. while on holiday.  Although it is a benefit, it is still taxable so you will need to include it in your Israel payroll.

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2.    Transport Allowance in Israel

A transport allowance is often a part of the compensation package, which can either be a company car or an allowance equal to the cost of operating a vehicle.  If there is no car allowance, then a public transport allowance is required by law.  Both car and transport benefits are taxable and included in the payroll amount.

3.    Vacation Days and Sick Days in Israel 

In Israel, all employees accrue 1.5 days of sick leave for every month of employment, up to a maximum of 90 days.  When your employee is ill, they are still compensated using their accumulated sick days, but the first day is not compensated at all and the second and third day only at 50% of salary.

In the first year of employment, your employees get 10 vacation days in addition to the 10 to 15 mandated Jewish holidays each year.  After every year of employment, the number of vacation days increases.

These types of compensation rules and employee benefits in Israel can be difficult for your HR department to navigate and ensure compliance with laws.  Many companies assigning staff abroad choose to use the Shield GEO payroll and employment solution to handle all of the details and provide a local employer of record.  This saves enormous time and expense, and allows you to focus on managing your assigned employees in their work activity rather than  administrative tasks.

Need help employing in Israel? Get in touch!

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