Employer of Record in Palestine

Navigating the complexities of international hiring requires a clear understanding of local employment regulations. For companies looking to expand into Palestine, establishing a compliant and efficient hiring process is crucial. This involves adherence to Palestinian labor laws, which govern everything from employment contracts and working hours to termination procedures and social security contributions.

Companies seeking to hire talent in Palestine have several primary avenues to consider, each with its own set of requirements and implications for compliance and operational overhead.

• Establishing a Local Entity: This involves setting up a registered legal entity within Palestine, which requires significant time, investment, and ongoing management of local compliance, accounting, and HR functions.
• Utilizing an Employer of Record (EOR): An EOR, like Rivermate, acts as the legal employer for your team members in Palestine, handling all payroll, tax, and HR compliance without you needing to establish your own local entity.
• Hiring Independent Contractors: Engaging individuals as independent contractors can offer flexibility, but it's essential to carefully assess the nature of the work to avoid misclassification risks, which can lead to severe penalties under Palestinian labor law.

How an EOR Works in Palestine

An Employer of Record service simplifies the process of hiring in Palestine by taking on critical responsibilities, ensuring your operations remain compliant with local legislation.

• Compliance with local labor laws: The EOR ensures all employment contracts, working conditions, and termination processes adhere strictly to Palestinian labor codes.
• Payroll processing and tax management: This includes accurate calculation and timely disbursement of salaries, along with the withholding and remittance of all necessary income taxes and social security contributions to the relevant Palestinian authorities.
• Benefits administration: The EOR manages mandatory and supplementary employee benefits, such as health insurance, leave entitlements, and other statutory requirements as per Palestinian employment standards.
• Visa and work permit sponsorship: For non-Palestinian employees, the EOR can facilitate the complex process of obtaining necessary visas and work permits, if applicable.
• HR support and guidance: Providing ongoing HR support, including policy development and employee relations, all while ensuring adherence to local best practices.

Benefits of Using an EOR in Palestine

Partnering with an EOR offers distinct advantages for businesses aiming to build a team in Palestine without the burden of establishing a local entity.

• Rapid Market Entry: Hire employees in Palestine quickly without the delays and significant investment associated with setting up a local subsidiary.
• Reduced Legal and HR Compliance Risks: Mitigate the complexities of navigating Palestinian labor law, tax regulations, and social security obligations, as the EOR assumes this responsibility.
• Cost-Effective Solution: Avoid the substantial costs and administrative overhead of entity registration, maintenance, and a dedicated local HR department.
• Access to Local Expertise: Leverage the EOR's in-depth knowledge of the Palestinian employment landscape, ensuring best practices and compliance are consistently applied.
• Operational Flexibility: Easily scale your workforce up or down as business needs evolve, with the EOR managing the administrative aspects of employment changes.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Palestine includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Palestine.

Employers in Palestine are responsible for withholding income tax from employees' salaries and remitting it to tax authorities, with progressive rates based on income levels. As of 2025, the tax brackets are:

Additionally, employers must provide workers' compensation insurance, with costs varying by industry. Contrary to previous reports, there are no social security contributions in Palestine in 2025. Employers are required to submit monthly payroll tax reports and an annual reconciliation, with payments due shortly after reporting periods. Foreign entities should note tax treaties with countries like Jordan and Turkey, which may offer reduced rates or exemptions. For foreign workers, tax residency is established after 183 days, affecting worldwide income taxation, and non-resident withholding tax on payments to non-residents is set at 10%.

In Palestine, salary levels vary significantly by industry, role, and experience, with high-demand sectors like technology, finance, and construction offering higher compensation. For 2025, estimated annual salaries range from $6,000 for entry-level roles such as customer service agents to $30,000 for specialized positions like software engineers. Key salary data includes:

The legal minimum wage in Palestine is approximately 405 USD annually (ILS 1,450), which employers must meet or exceed. Compensation packages often include bonuses such as annual, Ramadan/Eid, and allowances for transportation, housing, education, or cost of living, helping attract talent. Payroll is typically processed monthly via bank transfers, with detailed payslips required for compliance.

Salary trends forecast moderate growth driven by increased demand for tech skills, emphasis on employee benefits, inflation adjustments, and evolving labor policies. Remote work may also influence future compensation strategies, broadening access to talent and adjusting salary expectations based on location.

Employees in Palestine are entitled to minimum annual leave of 14 days, increasing to 21 days after five years of service. Leave must generally be approved by the employer and taken within the year, with possible postponements. Public holidays include New Year's Day, Eid al-Fitr, Eid al-Adha, Islamic New Year, Prophet Muhammad's Birthday, and Christmas, with varying dates and durations.

Palestinian labor law provides paid sick leave up to 60 days annually, with pay decreasing over time: full pay for 15 days, three-quarters for the next 15 days, and half for 30 days. Maternity leave is 10 weeks fully paid, paternity leave is 3 days fully paid, and adoption leave generally aligns with maternity leave. Additional leave types include bereavement (3 days), and some employers may offer study or sabbatical leave based on policies.

Employee benefits in Palestine are governed by the Palestinian Labor Law, establishing mandatory provisions such as social security contributions, paid annual leave (minimum two weeks), public holidays, sick leave, maternity leave, and severance pay. Employers are required to contribute to the Palestinian Social Security Corporation (PSSC) for contingencies like injuries and pensions. Additional benefits like cost of living allowances, family, transportation, and housing allowances, as well as professional development opportunities, are often offered voluntarily to enhance employee attraction and retention.

Health insurance is a key benefit, with many employers providing employer-sponsored plans covering medical services, while the government offers limited public health coverage. Employee contributions may be required, and coverage levels vary. Retirement benefits primarily come from the PSSC's old-age pensions, with some employers offering supplementary pension plans or end-of-service benefits for long-term security.

Benefit packages differ by organization size and sector, with larger firms and NGOs typically offering more comprehensive perks, including health insurance, retirement plans, and allowances. Employers must consider benefit costs, legal compliance, and employee expectations, often benchmarking against industry standards to remain competitive.

Employment agreements in Palestine are governed primarily by Labor Law No. (7) of 2000, which mandates clear contracts outlining key terms to ensure legal compliance and protect both parties. There are two main contract types: fixed-term, which ends on a specified date and suits seasonal or project-based work, and indefinite-term, offering ongoing employment until termination. Essential clauses include details about parties, job description, start date, working hours, compensation, benefits, work location, termination conditions, and applicable law.

Probationary periods are limited to three months, during which either party can terminate with notice, and employment terms generally remain consistent with regular contracts. Confidentiality clauses are enforceable if reasonable, while non-compete clauses are scrutinized and must be narrowly tailored in scope, duration (up to one year), and geographic area to be valid. Contract modifications and terminations require written agreement; employers must provide notice and severance pay for legitimate dismissals, with employees entitled to file complaints for unfair dismissal.

Remote work is increasingly adopted in Palestine, driven by technological trends, though specific legal frameworks are limited. Current regulations emphasize clear employment contracts, adherence to standard working hours, health and safety obligations, social security coverage, and equal termination rights for remote employees.

Key legal considerations include:

Flexible arrangements prevalent in Palestine include telecommuting, flextime, compressed workweeks, job sharing, and part-time work, allowing customization of schedules and locations to meet organizational needs. This flexibility aims to enhance productivity and employee satisfaction while complying with existing legal frameworks.

In Palestine, employment termination must comply with the Palestinian Labor Law to avoid legal disputes. Employers should adhere to specific notice periods based on employee category and service length, with minimum durations as follows:

Severance pay, calculated based on the employee's last wage and service duration, is typically:

For example, a 7-year employee earning $1,000/month would receive $4,500 in severance pay.

Termination grounds include "cause" (gross misconduct, breach of contract, incompetence, criminal conviction) and "without cause" (redundancy, economic reasons, closure). Terminations with cause require proper documentation and a hearing, while those without cause trigger severance pay obligations. Employers must follow procedural steps such as issuing written notices, respecting notice periods, and settling dues to ensure legality. Employees are protected against wrongful dismissal, discrimination, and have rights to fair hearings, severance, and potential reinstatement if unlawfully terminated.

The shift towards freelancing and independent contracting in Palestine is driven by global trends favoring flexible work arrangements and the region's economic conditions. This shift allows both local and international businesses to access a diverse talent pool. However, engaging independent contractors requires understanding legal distinctions, such as differences in control, integration, economic dependence, and payment methods, to avoid misclassification and potential legal issues.

A comprehensive contract is essential for defining the relationship between businesses and independent contractors. Key contract elements include scope of work, payment terms, confidentiality, intellectual property rights, and termination conditions. Intellectual property rights are particularly crucial, requiring clear clauses to ensure clients retain ownership of work produced. Contractors must manage their own tax obligations, including income tax and VAT, and are advised to secure their own insurance.

Freelancing is prevalent in sectors like IT, creative and media, consulting, construction, education, and professional services. These industries benefit from the specialized skills and flexibility that freelancers offer, enabling businesses to meet project-specific needs without long-term commitments.

Obtaining a work permit in Palestine involves selecting the appropriate visa type based on employment purpose and duration. The main visas include:

Foreign nationals must first secure an entry visa, then obtain a work permit for employment. The process can be complex, requiring compliance with regulations for legal employment. Employers should ensure proper sponsorship and permit issuance to avoid legal issues. The system emphasizes adherence to regulations, with work permits tied to specific employment agreements and requiring approval from Palestinian authorities.