In recent years, it’s become more common for companies outside of Israel to hire employees who live in the country. This is largely due to employers not wanting to lose their employees when they immigrate to Israel, and to the wealth of skill and experience of employees in certain fields in Israel.
The biggest concern of employers is how they can hire in Israel without opening a local entity. Opening an entity results in financial and tax obligations that few companies want to shoulder, especially if they are only hiring one employee in the country.
Enter Employer of Record services like Route 38. An Employer of Record (or EOR) enters into a contract with the foreign company to provide a service, and hires the Israeli worker as an employee. Salaries are paid by the foreign company into a local bank account and are received by the employee in Israeli shekels. The EOR withholds taxes and ensures that all legal obligations are met on both sides.
The main benefits for the employer are:
- Hiring and onboarding is managed by the EOR
- Benefits and payroll are taken care of
- Adherence to Israeli labor and tax laws is ensured
- Rapid setup
- No local entity required
- Easily retain top talent with competitive packages
This arrangement is not just good for the employer; it also saves the employee from having to register as an Israeli freelancer, incurring accounting expenses as well as being liable for American Social Security payments as a self-employed person (if the employee is an American citizen).
How does it work?
At Route 38, the process to onboard an employee is pretty straightforward. A Master Service agreement is signed between the company and Route 38, and a monthly payment is made to Route 38. The foreign company pays a monthly salary into a local bank account, and the rest is taken care of for them.
