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As a global leader in innovation and technology, Israel attracts international businesses and boasts a highly educated, highly skilled workforce. However, the intense competition for talent, particularly in the thriving high-tech sector, means employers must take a strategic approach to their employee benefits offering and the technology used to deliver it.

To attract and retain top talent, benefits packages in Israel need to be competitive, flexible, and easy to navigate. Many organizations are responding by expanding their offerings and introducing greater choice, supported by digital platforms that enhance the overall employee experience.

Mandatory benefits

Employers in Israel are required to provide a range of statutory benefits as part of the country’s comprehensive social security framework. While these form a strong foundation, benefits technology plays an important role in helping employees understand and manage their entitlements.

National Insurance (Bituach Leumi)

The National Insurance Institute (NII) underpins the social security system, funding key benefits such as pensions, unemployment support, maternity benefits, and healthcare through mandatory contributions from both employers and employees.

Employer contributions typically range from 3.45% to 7.5% of salary, while employee contributions range from 0.4% to7%, depending on income levels.

Health tax (Mas Briut)

This tax is included within NII contributions and funds access to Israel’s public healthcare system, which provides comprehensive coverage for residents.

Mandatory pension (Bituach Pensi’oni)

All employees must be enrolled in a pension arrangement, which may be provided through a pension fund, provident fund, or manager’s insurance plan (Bituach Menahalim).

Minimum contribution levels are typically:

• Employer: 6% (severance/Pizuyim) and 6.5% (savings/Tagmulim)
• Employee: 6% (savings/Tagmulim)

A portion of the employer contribution (6%) is allocated toward severance pay, which is generally paid out when the employee leaves the organization, subject to certain conditions.

Annual leave (Chofsha)

Paid annual leave increases with tenure, typically starting at 10 to 12 days per year during the first five years of employment (based on a six-day work week).

Core benefits

To remain competitive, employers in Israel typically enhance statutory benefits with additional offerings—particularly in high-demand sectors. In some cases, collective agreements may influence the structure of these benefits.

Extended pension and severance contributions

Many employers contribute above the statutory minimum, often increasing contributions to 7.5% for both savings and severance, demonstrating a commitment to their employees’ long-term financial wellbeing.

Study fund (Keren Hishtalmut)

Unique to Israel, the study fund is one of the most popular and tax-efficient of their voluntary benefits. Employers can contribute up to 7.5% of salary, with employees contributing 2.5%. Funds are typically accessible after six years and are commonly used for further education, professional development, or general savings. In some cases, funds can be accessed earlier for recognized training purposes.

Private medical insurance

While public healthcare is comprehensive, many employers offer supplementary private medical insurance to provide faster access to specialist care, broader provider choice, and additional services not fully covered by the public system. Dental coverage is often as part of more competitive benefits packages.

Life and disability insurance

Group life insurance is widely offered, typically providing coverage based on a multiple of salary. Long-term disability insurance is also common, offering income protection in the event of serious illness or injury.

Popular benefits

Israeli employers are increasingly focusing on supporting work-life balance, flexibility, and overall wellbeing.

Meal/daily allowances (Arakhot)

Meal allowances are extremely common and are often delivered through debit-style cards such as Cibus or 10bis, providing employees with tax-advantaged support for daily meals.

Gift cards

These are also widely used, typically provided twice a year around major holidays such as Jewish New Year and Passover, reinforcing cultural alignment and employee engagement.

Transportation and commuter benefits

Employers are required to support commuting costs, usually through transport allowances or reimbursements.

Wellness and mental health

Wellbeing benefits – including gym subsidies, wellness allowances, and Employee Assistance Programs (EAPs) – are becoming increasingly common as organizations focus on supporting both physical and mental health.

Flexible work arrangements

Flexible working is a key differentiator in the Israeli market. Many companies offer hybrid working, flexible hours, and home working allowances, reflecting both global trends and the expectations of a digitally native workforce.

Professional development

Professional development is highly valued. Employers often provide access to training, certifications, and tuition support to help employees keep pace with rapid technological change.

Key considerations for implementing benefits technology in Israel

1. Meet digital-first expectations. Israel’s workforce is highly digitally literate and expects a mobile-first, intuitive experience. Benefits platforms must be easy to access and navigate, with minimal reliance on manual or paper-based processes.

2. Simplify complex tax and benefit structures. The tax treatment of certain benefits, such as the study fund and various allowances, can be complex. Providing clear guidance through a centralized platform helps employees understand their options and make informed decisions.

3. Enable flexibility and choice. In a highly competitive talent market, offering personalized benefits and flexible options is essential. Technology enables employees to select and manage benefits in a way that aligns with their individual needs.

4. Reduce administrative burden and improve compliance. Automating processes such as contributions, reporting, and benefit selection helps ensure compliance while significantly reducing manual workload for HR teams.

A flexible, digitally enabled benefits strategy is essential for organizations looking to succeed in Israel’s competitive talent market. By combining strong statutory foundations with enhanced benefits and intuitive technology, employers can deliver a compelling, compliant, and engaging employee experience.

If you’d like to explore Israel’s benefits landscape in more detail, book a meeting with one of our global benefits experts.