Employer of Record in Israel

How hiring through an employer of record works in Israel

The local employer signs the Israeli contract, reports the employee to the National Insurance Institute and runs payroll, while your managers direct the work. The Notice to Employee (Terms of Employment) Law, 2002 requires written terms within 30 days of the start date, covering duties, supervisor, pay components and dates, normal hours, weekly rest day and benefit payments. That is the text as first enacted, so later amendments are confirmed with the local employer. The Institute makes monthly online reporting mandatory.

Employer costs and contributions in Israel

On monthly pay up to NIS 7,703 (60% of the average wage) the employer pays 4.51%. Above that, up to the NIS 51,910 ceiling, it pays 7.60%. Employee National Insurance and health insurance come out of salary, so there is no employer health tax.

The Knesset Research and Information Center records that every employer sets aside 12.5% of pay at its own cost: 6.5% pension and a 6% severance component. The employee's share comes from the same extension orders, on pay up to the national average wage. Within that cap the employer lines add up to 17.01% on the first NIS 7,703 and 20.1% above it.

Working time, leave and pay rules in Israel

• Hours: 42 a week full time under the 2018 extension order, with a daily limit of 8 hours on a six-day week and 9 on a five-day week.
• Overtime: 125% for the first two overtime hours a day, 150% after. Weekly rest is 36 consecutive hours.
• Annual leave: 12 working days a year on a five-day week and 14 on a six-day week in the first five years, rising with seniority.
• Sick leave: 1.5 days per month worked, up to 90. Day one is unpaid, days two and three 50%, then 100%.
• Recuperation pay (dmei havra'a): once a year after a year of service, starting at 5 days at a daily rate, normally June to September.

Notice, severance and dismissal in Israel

For monthly-paid staff, notice from either side is one day per month worked in the first six months, six days plus two and a half per extra month from month seven to eleven, and one month after a year. Missing notice costs that period's salary. Pregnant women cannot be dismissed without labour ministry permission, and reservists are also protected.

Severance is one month's wage per year of service once a year is completed, on dismissal and listed resignations such as ill health, due within 15 days of the last day. An 8.33% severance component from the first day of pension cover replaces it. With only the 6% component, the employer may owe a severance top-up at exit. Probation and any hearing step are confirmed with the local employer.

Getting paid in stablecoins, USDC, USDT, tokens and crypto in Israel

Short answer: No. Section 2 of the Wage Protection Law, 1958 requires wages in cash, allowing a cheque or postal order only by agreement, and Section 3 limits pay in kind to food, drink and housing. Israeli regulators say virtual currencies are not legal tender. Salary stays valued and reported in shekels.

What the law says about the form of pay

Section 2 of the Wage Protection Law, 1958 says wages are paid in cash, with a cheque or postal order only if the contract, a collective agreement or the employee agrees. Section 3 allows part-payment in food, drink or housing at no more than market value. This is the Knesset's text as first published, and a 2018 amendment made section 2 subject to the cash limits in the Law to Reduce the Use of Cash. A 2014 joint notice from the Bank of Israel, Tax Authority, Securities Authority and others states that virtual currencies are not legal tender, so no one has to accept them as payment.

What it means for employee salary

Israeli salary therefore stays in money, valued and reported in shekels, and USDC or USDT is not among the forms of wage payment the Law lists. The Bank of Israel's 2023 stablecoin principles are a proposal, not law. Toku confirms what applies to a specific hire.

Contractors

For a service provider paid in crypto, Tax Authority Circular 5/2018 treats the payment as barter: income is recorded at the shekel fair value on receipt, that value is the cost for a later sale, and VAT applies to the service.

Tax on crypto and tokens

The Tax Authority treats such tokens as property: a sale is a capital gain under section 91 of the Income Tax Ordinance, or business income if the activity is a business. The State Comptroller (November 2024) says these rules are not codified, records that tokens allocated to employees are salary income under Circular 7/2018, cites real gains taxed at 25%, and notes tax can only be paid in shekels from an Israeli account.

How Toku handles it

Employee salary in Israel stays in local currency. Toku’s stablecoin payroll and its USDC or USDT payouts through contractor management are separate arrangements from employee salary, and token grants are administered through token grant administration. What applies to a specific hire in Israel is confirmed before an offer.

Reviewed November 7, 2026 against the official sources listed below. General information, not legal or tax advice. Tax on crypto or tokens received depends on local rules and where the person is resident, so confirm it with a local adviser.

How hiring through Toku works in Israel

1. Share the role, location, salary and start date.
2. Toku confirms coverage, the contract type and the right to work.
3. The local employer issues the contract and onboards the person.
4. Payroll, contributions and filings run each cycle.

Toku checks the role, location and contract terms before a start date is set. Prepare identification, bank details and any existing pension fund details. The local employer issues the written terms within 30 days of the start date. Your quote confirms the onboarding timeline for Israel.

What an employer of record costs in Israel

Where Toku supports the hire, its employer of record service starts at $599 per employee per month, with salary, employer contributions and benefit premiums itemized in your quote. Coverage in Israel is confirmed before an offer. See the published pricing.

More on hiring in Israel

• Payroll and hiring in Israel
• Employer of record coverage in 100+ countries