Employee Benefits

Employees in Israel receive a monthly salary slip (tlush maskoret), explaining the deductions/benefits that are subtracted/added to their gross (bruto) salary.

Olim are often disappointed by the seemingly low salaries in Israel as compared to other Western countries. However, Israeli salaries are structured differently, often with benefits added to the base salary that actually make it higher than it appears at first glance.

Aside from income tax, some deductions on the tlush are actually a type of forced savings, which forms part of the employee’s pension. Therefore, it is important to understand the calculations on your tlush both as a way to check that no benefits are being overlooked, and to maximize your investment strategy.

For example, electing to set up a training fund, (keren hishtalmut), is one of the best opportunities to save on income tax as well as capital gains tax when you cash out. In this arrangement, monthly contributions are deducted from your salary and tax sheltered within the fund for a minimum of six years. In some cases, employers will also contribute. After six years you will have the option to withdraw money or let it continue to be invested and withdrawn at a later date. Upon withdrawal no taxes are paid – neither income nor capital gains.

Don’t miss out on your employee benefits


Ariel Gold gave a fantastic presentation. It was extremely informative, organized and succinct. Most of our staff feel that the information has already helped to increase their net income and/or pensions, and led to savings on some taxes.

M. Cooper


There is no connection between Jewish holidays and vacation. The employer is obligated to pay employees for a full day’s work during holiday absense as long as the employee is employed hourly or daily, has completed at least 3 months of work, and was not absent on the days before or after the holiday (unless with the employer’s consent). According to the general legal provisions, the qualifying holidays are two Rosh Hashanah days, Yom Kippur, two Sukkot holidays, two Passover holidays, Independence Day, and Shavuot. Chol HaMoed and other holidays are not considered holidays for which holiday fees are paid. Members of other religions have the option of choosing between the holidays of their religion or the Jewish holidays.

A woman who gives birth is entitled to maternity benefits for up to 15 weeks, if she meets one of the following criteria: 1. National insurance contributions have been paid for her for at least 10 months out of the 14 months preceding the determining day. 2. National insurance contributions have been paid for her for at least 15 months out of the 22 months preceding the determining day. Maternity allowance is calculated per day: the full salary in the three months preceding the 1st of the month in which she stopped working, divide by 90 – or the full salary in the 6 months preceding that day, divide by 180 (whichever is higher). Fathers are entitled to take paternity leave and receive benefits during the remainder of the maternity leave remaining for the mother after the end of the first six weeks after the date of birth. However, his leave is conditional upon a number of conditions including: the mother having 14 weeks leave, the mother has returned to work during the father’s leave, and the father must take at least 3 consecutive weeks leave. In effect, he can only substitute for the mother’s leave – not add to it.

In order to calculate the amount of severence you deserve, several things must be taken into account, including the amount set aside for the pension insurance, the year you started working for the employer, if your salary increased or decreased during employment. It is best to speak with the Human Resource representative of your former employer to understand your severance pay and how to apply for it.

The greatest benefit to employees currently available in Israel is called the keren hishtalmut (advanced training or sabbatical) fund. Keren hishtalmut contributions are made for six years and then, from the beginning of the seventh year onwards, the money accumulated in the fund is available tax-free to the employee (for contributions made on salaries less than NIS 15,700 bruto monthly). Maximum contributions to a keren hishtalmut are 7.5% of the bruto salary from the employer and 2.5% from the employee. This is 10% of one’s salary, prior to paying any taxes, contributed monthly, and invested over the life of the fund. It can be taken out tax-free in Israel after the sixth year, or can remain in the fund and continue to accrue gains that are tax-free in Israel for as long as you keep your account open. Once funds are taken out of the account, no new contributions can be made (new payments will need to be contributed to a new keren hishtalmut), but money in the account can continue to be invested, and all gains are tax-free. Contributions are not automatically deducted from your monthly salary or received from your employer, rather you must request this fund and negotiate your employer’s contributions.

A keren pensia (pension plan) is a collective agreement between all members of the pension fund (i.e., anyone who opens up an account with the pension fund) and the company running the fund. The fund provides money management and insurance services to all the members of the fund and estimates what future benefits will be. It does not guarantee future benefits that may change, for instance, as the fund’s financial strength (or pay solvency) changes or as life expectancy grows. A keren pensia is generally cheaper administratively than a bituach menahalim policy and includes some disability and life insurance (paid out as a pension to the surviving spouse and children) built into the policy. However, disability insurance is provided with a more limited definition, which pays out only if a person cannot work at any occupation at all, not just in his original field.

Bituach menahalim (management insurance) policies, in contrast, are personalized contracts between the employee and the insurance company, guaranteeing you future benefits based on the agreed-upon contract. They tend to be more expensive administratively but give you more flexibility to decide whether or not to include life insurance and disability insurance. There have been changes affecting bituach menahalim policies in the last few years. The most significant change is the elimination of a fixed retirement estimate for determining one’s pension. In older policies prior to 2014, there was a fixed estimate of months the retiree was estimated to live in retirement which determined the level of the pension paid by the insurance company. This fixed rate left the insurance companies exposed if longevity continued to grow, as they would need to pay pensions for more years. The fixed estimate in bituach menahalim was thus eliminated so that bituach menahalim policies are now more similar to kranot pensia.