Employing Foreign Executives and Specialists in Israel

Two questions, decided by different bodies

An assignment to Israel is not a single procedure. Permission to work is granted by the Israeli immigration authorities, and it attaches to a named employer and a particular role. Employment terms are governed by Israeli labour law, which applies to work performed in Israel largely independently of what the contract says or which law it selects.

Neither answers for the other. A person permitted to work is not, by that fact, employed on terms that comply with Israeli law, and a contract drafted to Israeli standards does not by itself entitle anyone to enter and work. Both have to be in place, and they are prepared in parallel because each takes its own time.

The starting point is therefore factual rather than legal: what the person will actually do in Israel, for how long, for whom, and who will pay them. Almost every question that follows is decided on that description, so it is worth getting it right before anything is filed or signed.

Which entity employs

A foreign parent may employ directly from abroad, an Israeli subsidiary may employ locally, or the person may remain employed abroad and be seconded to the Israeli entity under an agreement between the two companies.

The choice reaches well beyond payroll. It determines which entity carries the obligations of an Israeli employer and answers for them if the relationship ends badly, how the person is presented in an application to the immigration authorities — because permission is tied to a named employer — and how the cost of the assignment is charged between group companies.

It also determines something easy to overlook. A group that places people in Israel while maintaining that it has no local operation is describing two different things to two different authorities, and the description that reaches one of them tends to reach the other eventually.

Permission to work

Israeli practice distinguishes between categories of foreign worker, and the category relied on shapes what has to be shown: the seniority or specialisation of the role, why it is being filled from abroad rather than locally, and the standing of the employer making the application.

The application is made by the employer rather than by the individual, and it is made before the person begins work. Permission and the entry document that follows it are separate steps handled by different offices, and the second does not begin until the first has produced a result. Nothing in the sequence is automatic. No adviser can commit an authority to a decision, and we do not.

What the file contains is largely documentary: the employer's own corporate and operating documents, the description of the role and the reason it is being filled from abroad, evidence of the person's qualifications and experience, and personal documents. Documents issued abroad generally have to be legalised for use in Israel and to arrive with a translation, which is the part that most often sets the timetable.

Israeli employment terms apply to work performed here

Israeli employment law sets mandatory minimum terms that a contract cannot reduce. They cover the written particulars an employee is entitled to receive, working hours and rest, annual and sick leave, pension and social arrangements, and what is owed when employment ends. A foreign employer's standard template is a starting point rather than a document to be signed as it stands.

Two points recur with assignments in particular. The first is that a short assignment is not a simpler case: where a person remains on a foreign payroll and works here, both the Israeli position and the foreign one have to describe the same relationship, and they are read together rather than separately. The second is that the distinction between an employee and an independent contractor is decided on the substance of the relationship rather than on its label, and a relationship characterised incorrectly can be recharacterised later with retrospective effect.

Payroll, registrations and the practical side of the move

An employer registers as such before the first salary is paid, and payroll is run to Israeli requirements from the beginning, including the withholdings and contributions an Israeli employer makes. In Israeli practice this is handled with an accountant, alongside the entity's other registrations.

The individual has a position of their own. Where they will be present here, where they remain taxable, and how the two systems treat the same income are questions for the person's own advisers as well as the employer's, and they are better asked before the assignment starts than reconstructed afterwards. Where part of the remuneration continues to be paid abroad, both payrolls have to be consistent with the single relationship they describe.

Accompanying family members are dealt with alongside the employee, and whether an accompanying spouse may work is a separate question with its own answer rather than a consequence of the employee's permission.

The practical arrangements of a move meet the same documentary requirements as everything else. A lease and a bank account both call for identification and for an explanation of what brings the person here, and both are easier where the employment documents already exist. Where the family will arrive later, that is worth planning at the start rather than treating as a second, unrelated matter.

When an assignment changes or ends

Because permission attaches to an employer and a role, a change of either is a new application rather than an amendment, and an extension is a fresh procedure with its own file. Moving a person between group companies is a change of employer even where nothing about their work changes.

The end of an assignment has both sides again. Employment ends on Israeli terms, with notice and a final accounting; the permission ends on its own terms; and the paperwork that closes the relationship is what the person will produce next time they are asked about their history here.

Where employers lose time

Four patterns repeat. The assignment is agreed and announced before anyone has established what has to be applied for, so the start date is a commitment nobody controls. The foreign template contract is signed as it stands and has to be reopened once its Israeli consequences are seen. Documents from abroad arrive without legalisation or translation and have to be requested again at a distance. And a secondment is treated as an internal group arrangement, so nothing exists that an Israeli authority, an Israeli bank or an Israeli court can read.

How the firm works on this

We advise on which entity should employ and on the structure of the assignment, prepare the Israeli employment or secondment documentation, prepare and file the applications to the Israeli immigration authorities and represent the employer before them, arrange legalisation and translation of the documents that come from abroad, coordinate the employer registrations and payroll with the client's accountant, and act where an application is refused or an assignment ends in dispute. Instructions, drafts and reporting are in English.