Scope
This guide covers employment in West Bank areas under Palestinian Authority jurisdiction. Employment in East Jerusalem, and work in Israel or in Israeli settlements, falls under Israeli payroll rules. See the Israel payroll guide. Map each employee’s workplace before you choose a rule set.
Currency
There is no Palestinian currency. Salaries are mostly paid in Israeli shekels (ILS). Jordanian dinars (JOD) are common in some sectors, such as teaching and older contracts, and USD is used by NGOs and international employers. Tax brackets are set in ILS, so other currencies must be converted.
Palestinian banks face a chronic surplus of cash shekels and periodic uncertainty over correspondent banking with Israeli banks. Both can delay transfers.
Income tax
Salaries are taxed under Decree-Law No. 8 of 2011 on Income Tax, as amended. The tax year is the calendar year. Tax is calculated on annual bands and withheld monthly at 1/12.
| Annual taxable income (ILS) | Rate |
|---|---|
| 0 – 75,000 | 5% |
| 75,000 – 150,000 | 10% |
| Above 150,000 | 15% |
Allowances and deductions:
- residence exemption of ILS 36,000 a year;
- transport for private-sector employees: the lower of actual cost or 10% of annual salary;
- employee pension, provident fund and health contributions;
- either a one-off ILS 30,000 for buying or building a home, or mortgage interest up to ILS 4,000 a year for up to 10 years;
- university tuition of ILS 6,000 per student, for up to 2 students.
Social security
There are no social security contributions. The Palestinian Social Security Corporation was created by Decree-Law 19/2016, but a presidential decree halted its implementation in January 2019. PwC still reports no contributions in 2026.
Employers therefore fund end-of-service, work-injury and maternity costs directly. Voluntary government health insurance and private provident funds are common.
End of service
Under Labour Law No. 7 of 2000, Article 45, an employee earns one month’s last wage per year of service after completing one year.
On resignation (Art. 42), the gratuity is reduced:
| Service | Share of gratuity |
|---|---|
| Under 5 years | One third |
| 5 – 10 years | Two thirds |
| 10 years or more | Full |
Whether employer provident-fund contributions can be offset against the gratuity depends on the fund rules. Notice is one month in writing for indefinite contracts (Art. 46).
Wage payment rules
There is no wage protection system for private employers. Wages must be paid in a legally circulating currency and may not be delayed more than 5 days after the due date (Art. 82). Payroll is monthly.
Working time and leave
- Hours: 45 a week (Art. 68), with paid weekly rest of at least 24 consecutive hours.
- Overtime: 150% of the hourly wage, up to 12 overtime hours a week by agreement (Art. 71).
- Annual leave: 2 weeks paid per year (Art. 74). Sources indicate 3 weeks for hazardous work or after 5 years with the same employer; confirm against the law text.
- Maternity leave: 10 weeks fully paid, including at least 6 weeks after birth, with 180 days’ service before the birth (Art. 103).
- Bonuses: no statutory 13th month.
Minimum wage
The minimum wage is ILS 1,880 a month from 1 January 2022 (Council of Ministers Decision No. 4 of 2021). No increase was found for 2025 or 2026. Compliance is weak in practice.
Gaza
In Gaza, banking and cash supply remain severely disrupted after the war that began in October 2023. Normal payroll by bank transfer with tax withholding is largely not feasible. Labour Law 7/2000 applies in principle, but it is not enforced.
Gotchas for foreign employers
- With no social security fund, the gratuity is a direct employer cost. Accrue it monthly.
- Foreign staff need a work permit from the Palestinian Ministry of Labour. Entry and residence permits are issued by Israeli authorities, and these are often the main hiring bottleneck.
- Multi-currency pay and shekel liquidity at local banks complicate funding. Tax is computed in ILS.
- The week is 45 hours, not 48, and overtime is 150%. Templates copied from Jordan or Israel often get this wrong.