Israel’s vibrant economy makes it a prime target for international investment – and a well-educated and highly motivated workforce is at the heart of Israel’s economic growth.
International companies moving into the Israeli economy must tap into this rich source of talent but taking the first step can be a daunting prospect. This is the perfect occasion to bring in a specialist to oversee the process for you.
Bradford Jacobs’ benchmark platforms as a Professional Employer Organization (PEO) have worldwide reach and include a total understanding of the challenging complexity and potential of the Israeli economy and employment market. You can trust Bradford Jacobs to put the brightest talent in place for your company.
You need your staff to be ‘up and running’ as soon as possible – and this guide highlights everything an employer needs to understand the recruitment process in Israel.
The Recruitment Process in Israel
Networking and market knowledge are key to recruiting in Israel, where it is estimated around half of upcoming positions are never advertised. Expats planning to relocate can find the transition particularly difficult without some knowledge of Hebrew, while employment agencies tend to represent only those job-searchers already based in Israel.
Aliyah organizations can assist foreigners with proven Jewish heritage to find work in the country, as they are automatically considered Israeli citizens through the ‘right to return’.
Incoming foreigners will need to be highly qualified for their targeted sectors as employers tend to favor Israeli applicants from the intensely competitive employment market. Accountants, medical and healthcare professionals, software engineers and IT specialists vie for the most sought-after positions.
Recruitment is time-consuming … and difficult to achieve if your company’s home country is possibly thousands of miles away.
This is where Bradford Jacobs adds our unrivalled experience of global recruitment. It is vital to know where to locate the finest talent to be a perfect fit for your company’s expansion plans.
Then we step in to handle the next stage of the recruitment process – hiring and onboarding. Foreign companies opening a legal entity subsidiary must follow strict procedures to register and onboard employees.
- The candidate must have a job offer and work permit before applying for a B1 Work Visa. It is a criminal offence to work without one
- Complying with the provisions of the Income Tax Ordinance, for both nationals and non-residents covering wages, dividends, assets
- Registering with the social security for remitting contributions to the National Insurance Institute
- Filing annual tax returns on a calendar year basis
- Remitting withheld taxes by the 15th of the following month’s deadline
- Creating employment contracts
- Calculating monthly salary and tax contributions to be remitted
- Creating pay slips, which under Israeli accountancy rules must be divided into various sections
- Salaries must be paid by the ninth of the following month
Legal Checks you can make on Employees in Israel
- Scope: Screening an applicant’s employment and educational background are allowed with the individual’s permission. Other checks are subject to restrictions.
- Discrimination: Israel’s Equal Opportunities Law protects employees and those applying for jobs against discrimination on the grounds of gender, sexual orientation, sexual harassment, pregnancy, age, nationality or race, religious beliefs, country of origin or political views. Each category is protected by various laws and such questions should not be part of the interview process.
- References: Checks on educational and employment background are common, but they can be made only with the permission of the applicant.
- Criminal Records: Such screening is permitted for government and security positions. Employers providing services to children, the disabled or mentally ill need police confirmation that prospective employees have not been convicted of a sex offence.
- Credit Checks: These can be carried out only with the applicant’s permission, provided such information is directly relevant to the position being applied for.
- Immigration and work permit compliance checks.
Basic Facts on Hiring in Israel
Companies hiring staff for expansion into Israel must comply with a framework of laws and regulations on employment and taxation. Statutes and regulations provide employees with minimum entitlements, which can be extended by Collective Bargaining Agreements (CBAs) authorized by the Ministry of Economy, in addition to individual contracts. Where more than one level of entitlement applies to employees, the most beneficial always takes effect. The Enforcement Unit of the Ministry of Economy or federal or state authorities oversee employment laws.
Companies moving their operations into Israel must comply with various requirements on hiring. These include:
- Oral contracts are legally binding and do not have to be written, except in the case of foreign workers. Under the Foreign Employees’ Law their contracts must be in writing, in a language they understand
- Employment contracts are not enforceable if they do not meet statutory minimums
- New employees can request a written contract; existing employees on verbal agreements can request written confirmation of changes in their work practices
- Oral or written agreements should cover location and responsibilities, entitlements and working conditions, disciplinary procedures, termination, and severance payments
- A contract should be presented or agreed within 30 days of starting work. Employees on an oral contract must be given a written ‘notification’ of the essential points in this period
- Employers should check prospective new employees are not restricted by a ‘non-compete’ clause with their previous employer
- Members of employee labor organizations and Collective Bargaining Agreements are likely to receive more protection
After hiring and onboarding, employers must be aware of other considerations:
Minimum standards apply to such as sick leave, minimum wages, working hours, maternity allowances, paid vacations, termination and severance, notice periods and social insurance payments. Other rules regulate workplace discrimination.
To hire employees, companies must register with the tax authorities as an employer, although it is not generally a legal requirement to set up a subsidiary. However, companies that decide to set up a subsidiary must follow procedures:
- Select a company name and decide on the business structure, typically a limited liability company (Ltd) operating under the Companies Law (1999). Register the name in Hebrew and English; if it matches with an Israeli company, the name of the home country should be added after the company name
- The company must provide a local office address
- No minimum share capital required
- Appoint company director, not necessarily a local
- Minimum of one shareholder, which can be an individual or a company
- Register of shareholders must be publicly available
- Company must hold an annual meeting, prepare, and submit financial reports
Documents for registering a foreign company can be deposited at the Tel-Aviv District Office.
- Validated Incorporation Certificate from parent company’s home country
- Notarized Hebrew translations of the Incorporation Certificate, Articles of Association and Status Certificate proving the parent company operates in its home country
- Power of Attorney authorizing an Israeli citizen to act on the company’s behalf and receive court documents
- List of directors including passport numbers (foreigners) and Israeli ID numbers (locals)
- Proof of payment of all registration fees
Now able to operate payroll, the company must register both Israelis and foreigners with the Income Tax Ordinance office and register with the Social Security authority to be able to remit payments to the National Insurance Institute.
Working with a Recruitment Agency in Israel
Recruitment agencies in Israel generally act for jobseekers already based in the country, where the competitive employment market sees little more than 50 per cent of available positions advertised as vacancies are filled either internally or by networking.
This makes access particularly difficult for foreign-based candidates looking to relocate to Israel to find employment. However, individuals with proven Jewish heritage can be assisted by Aliyah organizations under the ‘right to return’ principle, which treats all Jewish people from any country automatically as Israeli citizens.
The Israeli Employment Service operates as part of the International Labor Treaty, providing free placement services for workers and employers. The Employment Service comes under the supervision of the Ministry of Labor and Social Affairs, which assists close to half a million job seekers each year.
What are the Benefits of Hiring Outsourcing for Israel?
A major benefit of outsourcing recruitment in Israel is that it streamlines international expansion by opening potential new markets efficiently, speedily, and cost-effectively. Outsourcing allows companies to focus on planning and managing their new venture.
Advantages for the parent company include:
- A wide-ranging talent search undertaken by a Professional Employer Organization (PEO) with reduced recruitment costs
- Control over capital expenditure, as outsourcing removes the initial need to establish premises for a subsidiary
- Reduced risks with an ‘easy in, easy out’ operation while exploring fresh markets
- Quickly start new projects
- Focus on core business
- Improve flexibility
- Scale the global workforce to fit the pace of expansion
Do not leap into the Unknown!
At Bradford Jacobs, our Employer of Record (EOR) services take care of employee recruitment, onboarding, payroll, compliance and providing ongoing support. We choose the best-qualified talent to fill the roles you need. Our expansion expertise guarantees you comply with all Israel’s payroll regulations, including salaries, tax, and social insurance by the time your new employees are sitting at their desks.
We ensure you are ready for every eventuality. To get started on your recruitment expansion in Israel, contact us today.