Employer of Record services in Israel are an excellent solution for people who are working for foreign companies, especially for US citizens who will be charged 15% for Social Security if they are considered self-employed.
An EOR serves as the intermediary between the company you work for and Israeli payroll. You are officially an employee of the EOR. The company you provide services to pays the EOR and the EOR passes that salary on to you, after deducting the necessary amounts for income tax, Bituach Leumi, pension and mandatory health tax.
If you have a set salary, the EOR can invoice the company each month for that amount and once payment is received, it will be translated into a salary for you. If your salary is different every month (for example, if you’re paid hourly or by commission), there’s one extra step in the process. You need to send billing instructions to the Employer of Record toward the end of the month and they will then invoice the foreign company.
It’s important to know when the foreign company takes care of payroll, when the EOR pays your salary and what the deadline is for payments received to be taken into account for that month’s salary. If your company pays on the fifth of every month but the EOR processes salaries on the first, you’ll be getting each salary more than a month late. You may be able to solve this by sending invoices earlier, giving the company more time to get payment in before the first.
So yes, you can use an EOR if your salary is different every month. In fact, this is a common scenario for EOR employees, as many of them have unconventional employment arrangements. This issue is not a factor in the decision to work with an EOR in Israel.
Trying to figure out if an Employer of Record service is the right fit for you? Contact us at info@route38.co.il to book a consultation and discuss your personal circumstances.