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Hiring in Palestine

Hiring employees compliantly in Palestine means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Palestine so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Palestine; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Need assistance hiring in Palestine? Contact us about our International EOR Service

Labor Laws in Palestine

Employment laws in Palestine are uniquely suited to the country’s way of life, and crucial to understand if you want to employ local talent in this country. Get the details on Palestine employment laws and Palestine policies here.

Employee Probation Period

  • The work contract may start with a probation period, the duration of which is three months, and it may not be extended more than once for the same period and by the same employer

Annual Leave in Palestine

  • Employees are entitled to a minimum of 14 days for the first 5 years of employment; minimum of 21 days thereafter.
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Holidays in Palestine

New Year’s Day 1st January
Prophet's Ascension  
Labor Day 1st May
Eid al-Adha  
Islamic New Year  
Prophet's Birthday  
Independence Day 15th November
Christmas Day 25th December

 

Onboard employees in days, anywhere in the world

Maternity Leave Palestine

  • The working woman who had spent a period of one hundred and eighty days at work prior to each delivery, she shall have the right to a paid maternity leave for a period of 10 weeks, including at least 6 weeks after the delivery.

Paternity Leave Palestine

  • Fathers are entitled to 3 days of paternity leave

Sick Leave in Palestine

  • Based upon a report from the Medical Committee, the worker shall be entitled to a fourteen days paid sick leave each year. 
  • The worker is also entitled to another fourteen days’ sick leave, where he/she will be paid half of his/her wage.

Working Hours in Palestine

  • The actual working hours shall be forty-five hours per one week.
  • The daily working hours shall be reduced by at least one hour in all hazardous or health damaging occupations, in addition to nightly jobs.

Overtime in Palestine

  • Employees must be paid 150% of salary for overtime

Termination of Employment in Palestine

  • The employer may terminate the work contract for technical reasons or due to a loss, which made it necessary to reduce the number of workers, in such incident the worker shall maintain his/her right to be reimbursed for the notice and for the end of service bonus, provided that the Ministry is notified of such actions.
  • The worker shall have the right leave the work after the notifying the employer, while keeping his/ her legal rights, including the end of service bonus, in addition to any other rights he/she may be entitled to in any of the following cases: 
    • Using him/her in order to perform a work, which substantially differs in type or grade from the work, which was agreed upon under the work contract, unless necessity so requires and for a temporary period and in order to prevent the occurrence of an accident or in the event of force majeure. 
    • Being employed in a manner, which requires him/her to change his/her place of residence. 
    • Proving through medical report issued by the Medical Committee that continuing working in the same type work poses a danger to his/her life. 
    • Being assaulted slandered by the employer or his/her representative during or due to the work. 
    • The failure of the employer to fulfil his/her obligations towards the worker despite the workers written demands to do so.

Notice Period in Palestine

  • A contract can be terminated with one month’s notice period

Severance in Palestine

  • With respect to the regulation of severance pay, Article (45) under the Palestinian Labor Law provides that the severance pay will be counted on the basis of one month for each year the worker spends at work, on condition that the worker has spent more than one year at the workplace.
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Palestine Salary and Wages

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Income Tax in Palestine

  • Income Tax Law number 8 for the year 2011 (and its amendments) is the applicable Law in Palestine. 
  • According to this Law ‘all realized incomes in Palestine from any source for any person are taxable unless there is a clear tax exemption in the Income Tax Law’.
  • Employees who are working in Palestine are subject to tax on their wages, salaries, and benefits according to the following yearly brackets and rates:
  • From 1 to 75,000 Israeli shekels (ILS):  5%
  • From ILS 75,001 to ILS 150,000:  10%
  • From ILS 150,001 and above:  15%

Income Tax Rate

From 1 to 75,000 Israeli shekels (ILS) Group 1083
 5%
From ILS 75,001 to ILS 150,000 Group 1083 10%
From ILS 150,001 and above Group 1083 15%
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Social Security in Palestine

There are no social security contributions in Palestine.

Immigration Palestine

  • Individuals of all nationalities must apply for working permits if they want to work in Palestine.
  • Work permits are issued by the Ministry of Interior. 
  • An applicant may not begin working in Palestine before obtaining a work permit. 
  • Work permits may not be transferred from one employer to another; therefore, if an employee changes employers, the previous work permit is canceled, and the worker must apply for a new permit. 
  • Foreign investors may engage in almost any type of economic activity. 
  • The Palestinian Authority does not limit foreigners’ investments, except for certain sectors, including energy, manufacturing of firearms, oil and gas, which require prior approval. 
  • In addition, foreign ownership of a public shareholding company may not exceed 49%. 
  • Foreign investment for the establishment of a new company requires prior registration and authorization from the Palestinian Ministry of National Economy. 
  • To register and obtain authorization, the articles of incorporation, bylaws and board of directors’ authorization must be filed, and a resident representative must be appointed.
Need assistance hiring in Palestine? Contact us about our International EOR Service

Value Added Tax (VAT) in Palestine

  • The VAT rate in Palestine is 16% on the deals that are subject to VAT.

VAT

Standard Rate

Group 1083

16%

Mandatory Benefits in Palestine

  • These are mandatory benefits as postulated by law
  • These include probationary period, annual leave, public holidays, sick leave, maternity leave, overtime pay, notice period, and severance pay
  • Statutory benefits also include social security benefits
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Mandatory Benefits overview

  • Probationary period

  • Annual Leave

  • Public Holidays

  • Maternity Leave

  • Sick Leave

  • Overtime Pay

  • Notice period

  • Severance Pay

  • Social Security Benefits

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Payments And Invoicing 

  • The taxable period is the calendar year starting 1 January and ending 31 December.
  • Tax returns must be submitted by 30 April of the next year. 
  • Manual tax returns should be submitted to the Income Tax Department in person.
  • The tax shall be assessed as follows:
    • Self-assessment by the taxpayer by submitting the tax declaration and its attachments.
    • Administrative assessment by the assessor if the taxpayer did not submit the tax declaration or if it is totally or partially rejected.
    • Assessment by agreement between the taxpayer and the Department on the amount of tax liability if the assessor does not accept the self-assessment or the taxpayer objects to the administrative assessment.
    • Assessment by the Court.
  • Payments must be made in advance as either:
    • One single payment (entitling the taxpayer to a discount).
    • Equal instalments:
      • First instalment:  End of quarter one.
      • Second instalment:  End of quarter two.
      • Third instalment:  End of quarter three.
      • Fourth instalment:  End of quarter four.
  • Any remaining tax liability will be paid along with the tax return.
  • For payroll tax and WHT, payments must be paid through the employer on a monthly basis.

Payroll Accrual in Palestine

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Payroll Accruals Additional Information

 

 

Employment Accruals
Annual Leave Employees are entitled to a minimum of 14 days for the first 5 years of employment; This equals 3.8% (14/365 days) of annual income
Maternity Leave The working woman who had spent a period of one hundred and eighty days at work prior to each delivery, she shall have the right to a paid maternity leave for a period of ten weeks, including at least six weeks after the delivery. This equals 19.2% (10/52 weeks) of annual income
Sick Leave Based upon a report from the Medical Committee, the worker shall be entitled to a fourteen days paid sick leave each year. This equals 3.8% (14/365 days) of annual income
Overtime Employees must be paid 150% of salary for overtime Depends on the number of overtime hours worked
Severance With respect to the regulation of severance pay, Article (45) under the Palestinian Labor Law provides that the severance pay will be counted on the basis of one month for each year the worker spends at work, on condition that the worker has spent more than one year at the workplace. This equals 8.33% (1/12 months) of annual income
13th Month Pay The worker who completes a year at his/her work shall be entitled to an end of service bonus, the amount of which shall be a one-month wage for each year he/she spent at work.

 This equals 8.33% (1/12 months) of annual income
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Accrued Benefits in Palestine

Christmas Bonus %

Employees are entitled to one month's wages as a christmas bonus

 8.33% of annual salary
Christmas Bonus Over Vacations % 0%
Severance per Year%

    
Employees are entitled to one month's severance pay

 8.33%
Vacations %

Employees are entitled to 14 days of annual leave 

 3.83% of annual salary
Notice %

Employees are entitled to one month's notice period

 8.33%
Christmas Bonus Over Notifications % 0%
Vacations Plus % 0%

Total percentage of Salary (yearly)

The total employment accruals as a percentage of salary per anum are equal to

28.8%

Why use Global Expansion to hire in Palestine

Establishing a branch office or subsidiary in Palestine can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Palestine labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Palestine law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Palestine. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Palestine Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.

 

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