Israel HR and Payroll Glossary: 16 Local Terms and Acronyms Explained

The terms and acronyms you meet on payslips, tax and employment documents in Israel. Figures are for 2026; the calculations are on Israel's HR data page and in the take-home pay calculator.

42-hour week Annual leave Bituach Leumi Credit points Dismissal permit (Employment of Women Law)Health tax Income tax Israel Tax Authority Keren hishtalmut Mandatory pension Ministry of Labour Prior notice Section 14 arrangement Severance pay Shimua Surtax

Tax

Credit points Tax credit points

נקודות זיכוי

Israel's personal tax credits, each worth ILS 242 a month (ILS 2,904 a year) in 2026 and subtracted from tax. A resident man gets 2.25 points and a woman 2.75; more are given for children, new immigrants, discharged soldiers and degrees. Employees claim them from the employer on Form 101. Source

Income tax

מס הכנסה

Computed annually and withheld monthly by the employer. After Amendment 288, the 2026 brackets run from 10% up to ILS 84,120 a year to 47% above ILS 560,280, with a 3% surtax above ILS 721,560 that makes the top rate 50%. Tax is then reduced by credit points. Source

Surtax High-income surtax

מס יסף

An additional 3% income tax on annual income above ILS 721,560 in 2026, which takes the top marginal rate on salary to 50%. Source

Social security and pensions

Bituach Leumi National Insurance

ביטוח לאומי

Israel's social security system and the agency that runs it, covering old-age pensions, unemployment, maternity and work injury. In 2026 the employee pays 1.04% on monthly pay up to ILS 7,703 and 7% above it, and the employer 4.51% and 7.6%, up to a ceiling of ILS 51,910 a month. Health tax is collected with it. Source

Health tax

מס בריאות

The employee-only contribution that funds the national health service, collected by Bituach Leumi with National Insurance: 3.23% on monthly pay up to ILS 7,703 and 5.17% above, up to ILS 51,910. Combined with National Insurance the employee pays 4.27% and 12.17% on the two bands. It is not deductible for income tax. Source

Mandatory pension

פנסיית חובה

Every employer must enrol employees in a pension fund under the general extension order. The minimum is 6% from the employee, 6.5% from the employer and 6% employer severance component, on pay up to the national average wage (ILS 13,769 a month in 2026); many employers contribute on full salary. The employee's deposit earns a 35% tax credit. Source

Pay and payroll

Annual leave

חופשה שנתית

Under the Annual Leave Law 1951, an employee on a five-day week gets 12 working days a year in each of the first five years, rising with seniority to about 20 working days from the 14th year. Leave can be carried over for up to two further years. Source

Keren hishtalmut Study fund (education fund)

קרן השתלמות

A savings fund that is not required by law but is standard for white-collar staff: typically 2.5% from the employee and 7.5% from the employer. It is tax-exempt up to a ceiling and can be withdrawn after six years, so candidates treat it as part of the salary package. Source

Employment law

42-hour week

שבוע עבודה של 42 שעות

The full-time week has been 42 hours since April 2018 under the Hours of Work and Rest Law and an extension order. Overtime is paid at 125% for the first two hours a day and 150% after; senior and trust positions can be excluded. Source

Dismissal permit (Employment of Women Law)

היתר פיטורים לפי חוק עבודת נשים

An employer may not dismiss a pregnant employee with six months' service, an employee on or just after maternity leave, or one in fertility treatment, without a permit from the Ministry of Labour. Reservists returning from duty have similar protection. Source

Prior notice

הודעה מוקדמת

Notice either side must give under the Prior Notice Law 2001. For monthly-paid staff it is one day per month in the first six months, then 6 days plus 2.5 days a month to the end of the first year, and one month after a year. It can be paid in lieu; professional contracts often give one to three months. Source

Section 14 arrangement

הסדר סעיף 14

An agreement under Section 14 of the Severance Pay Law by which the employer's monthly severance deposits to the pension fund (often 8.33% of salary, at least 6%) replace statutory severance. The fund balance belongs to the employee on any departure, including resignation, and the employer owes no further severance for that pay. Source

Severance pay

פיצויי פיטורים

Under the Severance Pay Law 1963, an employee dismissed after 12 months' service is owed one month's last salary per year of service; some resignations (relocation, health, worsened conditions) also qualify. In practice most employers pre-fund it through monthly pension deposits under a Section 14 arrangement. Source

Shimua Pre-dismissal hearing

שימוע

Israeli case law requires an employer to hold a hearing before dismissing anyone: written notice of the reasons, time to prepare and a real chance to respond, with the decision taken afterwards in good faith. Dismissal without one exposes the employer to compensation even when there are grounds. Source

Agencies and institutions

Israel Tax Authority

רשות המסים בישראל

The tax authority. Employers open a withholding file, withhold income tax monthly using the employee's Form 101, and give each employee an annual Form 106 showing pay and tax. Source

Ministry of Labour

משרד העבודה

The ministry that enforces labour laws through its inspectorate, issues extension orders such as mandatory pension, and grants permits to dismiss protected employees. Disputes go to the Labour Courts. Source

For Japan, see the Japan HR Glossary.