Employer cost 2026: cost table by gross salary
The table is produced by the same calculation engine that powers the calculator above, assuming two years of seniority (6 recreation days), a full-time position, 6% severance provisioning and no study fund. All figures are monthly and in shekels.
| Gross salary | Employer NI | Pension 6.5% | Severance 6% | Recreation | Employer cost | Added |
|---|
| 6,000 | 271 | 390 | 360 | 209 | 7,230 | 20.5% |
| 8,000 | 370 | 520 | 480 | 209 | 9,579 | 19.7% |
| 10,000 | 522 | 650 | 600 | 209 | 11,981 | 19.8% |
| 12,000 | 674 | 780 | 720 | 209 | 14,383 | 19.9% |
| 15,000 | 902 | 975 | 900 | 209 | 17,986 | 19.9% |
| 20,000 | 1,282 | 1,300 | 1,200 | 209 | 23,991 | 20.0% |
| 25,000 | 1,662 | 1,625 | 1,500 | 209 | 29,996 | 20.0% |
| 30,000 | 2,042 | 1,950 | 1,800 | 209 | 36,001 | 20.0% |
| 40,000 | 2,802 | 2,600 | 2,400 | 209 | 48,011 | 20.0% |
The practical takeaway: the rule of thumb of 20% above gross is remarkably accurate in the basic scenario. It only breaks down once a study fund or full severance provisioning enters the picture.
What makes up employer cost
1. National insurance and health, employer share
This is the only component that is not a flat percentage. In 2026 the employer pays 4.51% on the portion of salary up to NIS 7,703 per month and 7.60% on the portion above it, up to the income ceiling of NIS 51,910. Salary above the ceiling is not charged at all. Rates are unchanged from 2025 under a temporary provision valid through the end of 2026.
The practical implication: calculators that assume a flat 7.6% overstate employer cost at low and mid salaries. At a gross of NIS 10,000 the difference is about NIS 238 per month, roughly NIS 2,856 a year per employee.
2. Pension contributions
The employer share of pension contributions is 6.5% of salary, alongside 6% deducted from the employee. This is mandatory under the mandatory pension expansion order.
3. Severance provisioning
Ongoing severance provisioning is 6% of salary in the common scenario, or 8.33% when covering the full severance liability of one month per year of service. The higher rate usually accompanies a section 14 arrangement under the Severance Pay Law.
4. Study fund
A study fund is not a statutory requirement in the private sector. Where it applies, the employer share is 7.5% up to a salary ceiling of NIS 15,712 per month, a maximum deposit of about NIS 1,178. It is the single most significant optional component, adding roughly 6 to 7 percentage points.
5. Recreation pay
The binding private-sector rate is NIS 418 per day, with the number of days rising by seniority from 5 in year one to 10 from year 20. Payment is usually made in the summer months, but for correct costing it should be spread across 12 months, which is how the calculator presents it.
6. Company car
The taxable value of a company car is imputed income and therefore increases the national insurance base. It should not be confused with the actual cost of the vehicle: leasing, insurance and fuel are a separate expense to add on top of the calculator result.
2026 update: recreation pay rising to NIS 451.50
On 22 June 2026 a collective agreement was signed between the Histadrut and the business sector leadership raising the private-sector recreation day rate from NIS 418 to NIS 451.50. The agreement is not yet binding: it depends on ministerial approval and publication of an expansion order. Until then the binding rate remains NIS 418, which is the rate this calculator uses.
In money terms: for an employee with 7 recreation days, the new rate adds about NIS 234 a year. For a business employing 20 such workers, that is roughly NIS 4,680 a year.
Costing a hire correctly
Three recurring mistakes at small and mid-sized businesses:
Budgeting against the gross. If the approved budget is NIS 15,000 per employee, the real budget required is about NIS 18,000, a gap of NIS 36,000 a year discovered too late.
Forgetting costs outside the payslip. Equipment, workspace, software licences, recruitment and training are not employer cost in the narrow sense, but they are part of the true cost of employment.
Ignoring seniority. Recreation pay rises with tenure, and so does severance liability. An employee of twelve years costs more than an identical employee in their first year, at exactly the same gross salary.
To see what the employee actually takes home from that gross, use the gross-net calculator, and for business VAT the VAT calculator.
Sources and last review
The data in this calculator and article was reviewed on 5 August 2026 and is based on: the National Insurance Institute of Israel (2026 national insurance and health insurance rates, thresholds and ceilings), professional payroll tables published by Hashavim and Malam Payroll, and the collective agreement of 22 June 2026 between the Histadrut and the business sector leadership regarding recreation pay. Pension and severance rates are based on the mandatory pension expansion order and the Severance Pay Law.
The calculator was built by the SFB Digital Marketing team, which advises Israeli businesses on budget planning and growth. It is an estimation aid and does not replace a payroll accountant.
