Professional Employer Organization (PEO) in Israel

What is a PEO? 

A PEO is a service provider that helps a business achieve growth. It does so by taking on several workflows and administrative functions related to hiring, onboarding, and managing employees. 

For example, when you partner with a PEO, you’d hand over the following functions: 

• Payroll
• Compliance
• Recruiting and hiring
• Employment law regulations
• Benefits administration
• Compensation 

A PEO is an outsourced human resources department for SMEs and startups, allowing the organizations to provide services that might not be available otherwise. Additionally, a PEO can help you create a more streamlined and efficient organization through workflows and processes. 

Investing in a PEO is a smart and strategic move for many companies, not only improving overall operations but allowing leaders to focus on more revenue-generating tasks. And all of this is provided so you can go global without setting up a business in Israel. 

Are you not sure if a PEO in Israel is right for your company? Speak to a Skuad agent today to learn more about how our PEO services can help you start doing business in Israel ASAP.

What are the benefits of using a PEO provider in Israel? 

Partnering with a PEO not only puts your mind at ease and reduces stress, but it allows your organization to expand and obtain the most talented global workers. 

With a PEO, your company gains access to many benefits that are usually only available to larger organizations. You can have a solid human resources partner without the expense of hiring a whole department — and that delivers benefits such as…

A trusted compliance partner

A PEO manages compliance and regulations, saving your organization a ton of money — and a lot of risk — while improving your operations through efficiency and process enhancement. A PEO strives to be a partner working with leadership to scale and grow an organization. After all, when your business succeeds, so does theirs. 

Local legal support

There are many laws and regulations around hiring and managing employees in any country. A PEO has lawyers available and already knows about these laws and regulations, saving both time and money.

You get the benefits of global expansion without the expenses of global expansion. 

Nurture your talent

Israel’s time zone is GMT+2. And while that’s pretty workable for businesses HQed in Europe, if your core team is in the US, South America, or Asia then that time difference becomes pretty tricky to manage. 

Who can you employee(s) and contractors in Israel speak to with HR questions? Who will they have on hand to submit expenses to? Who can help organize their contracts in real-time?

When you work with a PEO partner like Skuad, the answer is simple! Book a demo to see exactly what we can do.

Considerations when hiring in Israel 

Before doing business in Israel, it’s important to understand the culture, employment laws, and how the workweek is structured. There are many holidays recognized in Israel — most professionals consider their coworkers an extended family, and giving gifts is common to both customers and employees. 

Some legal considerations before hiring in Israel: 

• Employment contracts
• Corporate tax rate
• Employment laws

Learn more about each below. 

Employment contracts in Israel 

Employment contracts are not legally required… but they are expected. Each contract should be in English and Hebrew. And each document should outline compensation, vacation allowance, parental leave allowance, termination guidelines, and other relevant details. All currency should be written in Israeli shekel. 

The minimum wage in Israel is 212 NIS (~$66) per week for someone working five days a week. For employees working six days a week, the amount increases to 244.62 NIS (~$76). 

Israel corporate tax rate 

The corporate tax rate is 23% as of 2020. Israel tax rates progress based on income for employees. 

Both employers and employees are responsible for contributions to national insurance and health insurance funds. Employees are taxed at 12% of salary, and employers are taxed at 6.75% of salaries paid. Employers can expect to contribute 8.5% to the national pension fund. 

Employment laws in Israel 

The standard workweek in Israel is Sunday to Thursday. Overtime wages start at anything over 43 hours a week and are always paid for work on Saturdays. 

When it comes to paid time off (PTO) in Israel…

• Workers get 1.5 sick days accrued each month. Absences are unpaid for the first day, at 50% pay for 2 and 3, and 100% for days 4 and after. It is common in many industries to pay 100% from day 1. 
• There are 37 recognized holidays in Israel, though every employee will not celebrate all of them. It will depend on their personal beliefs. Employees are entitled to 10-23 paid days off each year, dependent on how long they have worked with the organization.
• When it comes to maternity leave, anyone who has worked with an organization for 6 months gets 7 weeks at 100% pay. For workers who have been with the employer for more than 10 months, 14 weeks of 100% paid maternity leave is required. And 7 weeks can be taken before the birth of the child. Workers who adopt receive the same leave benefits as pregnant workers. 
• Fathers are entitled to 8 days of leave following the birth of a child. Three of those days are vacation days and five are paid by the employer. 

Termination requirements in Israel

Dismissed workers are entitled to severance pay from the company unless a special circumstance applies. All employees must receive written termination and proper notice beforehand. Termination reasons can include death, completion of a limited contract, resignation, retirement, or dismissal. 

Employees cannot lose their job while on maternity leave or 60 days after. Employers can only dismiss a pregnant employee with a special permit. 

‍Contact Skuad today to learn how we can help your business grow with Israeli workers.

What does it cost to build a team in Israel? 

How much it costs really depends on how you decide to achieve business expansion in Israel. When you go with a PEO or EOR in Israel, your costs will be much less than if you decide on company incorporation in Israel. Discover more about each below. 

PEO in Israel

By partnering with a PEO, the cost of doing business in Israel is as low as $19 per month, per contractor, or $199 per month, per employee. You could build a small team of Israeli workers for just a few thousand dollars a month. 

Learn more about Skuad’s pricing structure and what each package includes on our pricing page. 

Company Incorporation in Israel 

But if you decide foreign company registration in Israel is a better choice for your organization, you will have many additional costs. Starting a business in Israel as a foreigner will be daunting at first. You have to research and discover what type of entity registration in Israel is most applicable for your business. 

To do international business in Israel, your business will have to appoint an Israeli citizen as a grantor for your company. This person will be legally bound to take on all liabilities of your business. 

The business must also register with several agencies and the cost of company registration in Israel for foreign companies is NIS 2,244 (roughly $700). Then there are other expenses to consider too, such as the cost of banking, hiring or buying an office space — which could amount to a lot more over time. 

Lastly, an Israeli lawyer must review and approve all documents related to Israel company registration. Employers are required to pay VAT, national insurance, monthly tax installments, and taxes from salaries following Israel’s income rate. 

For savvy small businesses looking to hire faster and more economically, the solution is clear…

Start building your team a PEO in Israel today 

Do you want to hire, manage, and pay global talent in Israel? When you get started with Skuad, you can have new hires onboarded in minutes! And payroll is a breeze with only a single click needed to submit. 

Skuad offers several plans to help you expand business in Israel without setting up a new entity or spending thousands of dollars. With our secure platform, we guarantee compliance with local laws in over 160 countries while maintaining your data privacy. This partnership could be what your business needs to scale and grow!

Interested in learning more? Schedule a demo today to check out our platform and chat with a representative about how Skuad can help your business expand with PEO in Israel.