Quick Answer: When an Israeli manpower company (*chevrat koach adam*, חברת כוח אדם) places you with a client business, you are an employee of the manpower company from day one — and you have the same statutory rights as any Israeli employee: minimum wage, sick leave, annual leave, pension, and overtime pay. Under Section 12A of the Employment by Manpower Contractors Law 5756-1996, if you work continuously at the same client site for more than 9 consecutive months, the client business (the "user company") must absorb you as a direct employee on terms at least equal to comparable direct staff. Foreign nationals — including workers on B/1 permits — are fully covered by this law. The manpower company and the user company are jointly and severally liable for unpaid wages and benefits.

Manpower companies — called *chevrot koach adam* or *kablani koach adam* — are a substantial part of the Israeli labor market. They operate in every sector from hi-tech and finance to cleaning, logistics, construction support, and elderly care. For foreign nationals working in Israel, they are often the first employer of record. Yet the rights that apply to agency workers placed through these companies are widely misunderstood, and violations — particularly around equal pay and the 9-month absorption rule — are routinely discovered in Ministry of Labor inspections.

This guide explains the full legal framework, what rights you hold from your first day of placement, what happens when the 9-month clock runs out, how the law protects you from the user company using the arrangement to pay you less than comparable direct employees, and what steps you can take when either employer fails to comply.

The primary statute is the Employment by Manpower Contractors Law 5756-1996 (*Chok Haskamat Ovedim al Yedei Kablanim*, חוק העסקת עובדים על ידי קבלנים, 1996), commonly called the Manpower Contractors Law. It governs the triangular employment relationship that arises when a staffing company (the manpower contractor) hires workers and places them with client businesses (user companies) to perform work under the client's day-to-day direction and control.

The law has been significantly amended over the years. The most important change — Amendment 5 in 2009 — introduced Section 12A, the 9-month absorption rule. Amendment 6 in 2012 strengthened the equal treatment provisions and tightened the licensing requirements for manpower contractors. The Ministry of Economy and Industry (through its Employment Enforcement Authority) has wide inspection and sanction powers.

A manpower contractor must hold a license issued by the Ministry of Economy under Section 3 of the law. Operating without a license is a criminal offense. Before accepting work through an agency, check that it appears on the Ministry's licensed contractor list, which is available on the Employment Enforcement Authority website.

The law defines two parties who bear obligations toward you as a placed worker:

  • The manpower contractor (*kablani*) — the staffing company that hired you, pays your salary, and handles NII contributions. They are your legal employer of record.
  • The user company (*maa'sik befoal*, מעסיק בפועל) — the client business where you actually perform work, under whose management and instructions you operate daily. They bear specific direct obligations toward you, even though they did not formally hire you.
In Practice: The Ministry of Economy's Employment Enforcement Authority (Rashat Achinat Zchuyot) conducts unannounced inspections of user companies and their manpower contractors. In 2025, the Authority levied administrative fines totaling over NIS 28 million for Manpower Contractors Law violations. The two most common breaches: failing to absorb workers at the 9-month mark, and paying below what comparable direct employees earn. User companies — not just the agency — are fined directly. If you believe your employer is violating the law, you can file a complaint at any regional Employment Enforcement office: the Tel Aviv office is at 5 Bank of Israel Street; the Jerusalem office is at 44 Kanfei Nesharim Street. Complaints are handled confidentially and complainants are protected from retaliation under Section 18A of the law.

2. The 9-Month Absorption Rule: What Section 12A Requires

Section 12A of the Manpower Contractors Law sets a firm time limit on how long a manpower worker can be placed at the same user company: 9 consecutive months. Once you cross that threshold, the law treats you as the user company's direct employee, with full seniority from the date your placement began, unless one of a narrow set of exceptions applies.

The rule works as follows:

  • From day 1 through month 9: you are the manpower company's employee; the user company bears the obligations in the law but does not directly employ you.
  • On the day after 9 continuous months: the user company must choose one of three paths:
    1. Absorb you as a direct employee on terms at least as good as comparable direct staff (the most common outcome);
    2. Require the manpower contractor to transfer you to a different user company site so the 9-month clock restarts; or
    3. Terminate the placement, in which case the manpower contractor owes you any applicable notice pay and severance.

Option 2 — rotation to a different client — cannot be used as a revolving-door tactic to indefinitely extend the placement at the same site. Courts have held that a brief transfer followed by immediate return to the original user company does not reset the clock. The National Labor Court has interpreted "continuous placement" broadly to include short breaks, scheduled absences (sick leave, annual leave), and brief periods at another site if the intent was always to return to the original user company.

If the user company absorbs you as a direct employee under Section 12A, your seniority for all statutory purposes — severance pay under Section 2 of the Severance Pay Law 5723-1963, sick day accumulation, annual leave entitlement, and pension contributions — runs from the date you first started at that site through the manpower company, not just from the formal absorption date. This is one of the most significant protections in the law.

In Practice: Track your 9-month clock from your first day at the client site — not from when you signed the agency contract, and not from any contract renewal dates. The law counts calendar months of continuous work at the same user company. Keep a personal record: note the start date, any absences longer than a week, and whether you were ever temporarily placed elsewhere. If month 9 approaches and the user company has not offered direct employment, contact an employment lawyer immediately — the Regional Labor Court can issue an injunction confirming direct-employee status and ordering absorption with full back-dated seniority. The NII's records of where your employer pays contributions (filed monthly by the manpower company) will be a key exhibit in any such proceeding.

3. Equal Treatment and Pay Rights from Day One

The 9-month rule is the most prominent protection, but equal treatment rights apply from your very first day of placement, not just after the threshold is crossed.

Section 13 of the Manpower Contractors Law (as strengthened by Amendment 6) requires that a manpower worker placed at a user company receive working conditions and pay at least equal to those of a comparable direct employee at that user company. "Comparable" means a worker in the same or a similar role with similar seniority. The comparison is done employee-by-employee, not position-by-position in the abstract.

The conditions covered by the equal treatment obligation include:

  • Basic wage rate, including increments for seniority;
  • Overtime pay rates;
  • Travel expense reimbursement (*dmei nesiya*);
  • Meal allowances or meal vouchers (*shekim*) where provided to direct staff;
  • Night-work supplements;
  • Collective-agreement or extension-order benefits applicable to the user company's workforce;
  • Any direct-employee benefits tied to the workplace (canteen access, parking, etc.).

Benefits that are genuinely employment-relationship-specific — such as pension contributions structured as an employer's contribution rate above the statutory minimum — are assessed against what the user company's own comparable employees receive. If the user company pays its direct production workers 7.5% employer pension contributions above the statutory 6%, and you are working alongside them as a manpower worker in a comparable role, you are entitled to the 7.5% rate through the manpower company.

In Practice: The most common equal-treatment violation found by the Ministry of Labor's Employment Enforcement Authority is the pay gap between manpower workers and directly employed colleagues doing the same job. To assess whether you are being treated equally, you have a right under Section 13A to request from the user company a written statement of the working conditions applicable to comparable direct employees. The user company must respond within 30 days. If they refuse or the response reveals a gap, you can file a complaint with the Employment Enforcement Authority or bring a claim directly to the Regional Labor Court in your district. Claims for underpaid wages under the equal-treatment provisions carry a 7-year limitation period under the Prescription Law 5718-1958.

4. Joint and Several Liability: Both Companies Are Responsible

The Manpower Contractors Law makes both the manpower contractor and the user company jointly and severally liable for the worker's core employment entitlements. This is not a theoretical protection.

Under Section 10 of the law, the user company bears direct personal liability — not secondary or guarantee liability — for any failure to pay:

  • Minimum wage (under the Minimum Wage Law 5747-1987, currently NIS 5,571 per month / NIS 32.30 per hour as of January 2026);
  • Overtime pay under the Hours of Work and Rest Law 5711-1951;
  • Annual leave payments under the Annual Leave Law 5711-1951;
  • Sick pay under the Sick Pay Law 5736-1976;
  • Pension fund contributions under the Expansion Order for Comprehensive Pension 2008;
  • Keren Hishtalmut (advanced training fund) contributions where applicable by extension order.

Joint and several liability means you can sue either company — or both simultaneously — for the full amount owed. You do not have to first exhaust your claim against the manpower company. If the agency has disappeared, gone insolvent, or simply refuses to pay, the user company steps in as primary debtor. The user company can then seek contribution from the manpower company in a separate proceeding, but that is not your problem.

In Practice: The joint liability provision is especially valuable for foreign workers placed by small or fly-by-night manpower companies. In cases where an agency closes overnight — a pattern the Employment Enforcement Authority has documented repeatedly in sectors like elderly care and construction support — the user company remains fully liable for outstanding wages, pension arrears, and annual leave balances. File a claim in the Regional Labor Court (Beit Din Avodah Ezioni) naming both the manpower company and the user company as defendants within 7 years of the underpayment. Bring your pay slips, NII printouts, and any written communications with the agency. If the manpower company is in formal insolvency, also file a proof of debt with the Insolvency Authority within 90 days to preserve your claim against the insolvent estate.

5. Manpower Company vs. Genuine Contractor: A Critical Distinction

Not every company that places workers is a manpower contractor for the purposes of this law. Israeli courts draw a sharp distinction between a genuine services contractor (*kablan shirut*) and a manpower contractor (*kablani koach adam*) — and the distinction matters enormously to the workers involved.

A genuine services contractor is a company that undertakes to provide a complete service using its own methods, tools, and management — think of a catering company managing a company canteen, or a security firm running a site's guarding operation. The contractor decides how the work is done, disciplines its own staff, and carries independent operational risk. Workers of a genuine services contractor work for the contractor, not the user company, and the Manpower Contractors Law does not apply.

A manpower contractor, by contrast, simply supplies labor. The user company directs the day-to-day work, decides the pace and method, integrates the worker into its own operational structure, and exercises supervisory authority. The manpower company's only function is recruitment and payroll. Israeli courts applying the "economic reality" test look at who actually controls the work — not what the contracts say.

If you believe your arrangement is in substance a manpower placement disguised as a services contract — a structure sometimes used to circumvent the 9-month rule — the National Labor Court and Regional Labor Courts have consistently recharacterized such arrangements. Indicators courts consider include: whether you wear the client company's uniform, whether client managers give you daily instructions, whether you use client equipment, whether you appear in the client company's internal org chart, and whether the "contractor company" in fact has no independent business operations beyond staffing.

In Practice: A common evasion technique involves dividing a workforce into small groups and labeling each group as an "outsourced service" from a different shell company. Each group is terminated just before the 9-month mark and re-engaged through a new shell. The National Labor Court has consistently treated these arrangements as a single continuous employment relationship at the user company for the purpose of the 9-month clock. If your employer has done this to you, document the continuity: same manager, same premises, same work, same time schedule. A Regional Labor Court claim for recognition as a direct employee can be filed at any time during the employment relationship and carries interim-order powers that can require the user company to treat you as a direct employee while the case is heard.

6. Foreign Workers and B/1 Permit Holders

Foreign nationals working in Israel through a manpower company are covered by the Manpower Contractors Law on exactly the same terms as Israeli employees. The law makes no distinction based on nationality or visa status. Whether you hold a B/1 work permit, an A/5 temporary residency, or permanent residency, your statutory rights as an agency worker are identical.

However, B/1 permit holders face a complication the Manpower Contractors Law does not itself resolve: the B/1 permit is typically issued in the name of the manpower company as the employing entity. When the 9-month absorption rule triggers and you become the user company's direct employee, the user company must apply to the Population and Immigration Authority (PIBA) for a permit transfer before you legally begin working as their direct employee.

The permit transfer application is filed by the new employer (the user company) at PIBA and typically takes 2 to 4 weeks. During that processing window, the manpower company's permit remains in force, so you continue working under the same permit. PIBA's practice is to allow continued work during a pending transfer application where the five-year cumulative cap has not been reached and no other disqualification applies.

A user company that absorbs a B/1 permit holder also becomes subject to the obligations of the Foreign Workers Law 5751-1991: providing health insurance equivalent to the Kupat Holim basic basket, suitable accommodation if required by the sector, and compliance with the specific conditions attached to the permit. Review your permit conditions carefully on absorption — sector restrictions (for example, a permit issued for hi-tech work cannot be transferred to a construction employer) may limit which absorptions are possible.

In Practice: A foreign worker on a B/1 permit approaching the 9-month mark should raise the absorption issue proactively with the user company at least 60 days before the deadline. Prepare the permit transfer file in advance: a copy of your current permit, your employment contract with the manpower company, a letter of intent from the user company confirming absorption, and a copy of the user company's existing employer registration with PIBA (if any). PIBA charges a permit-transfer fee of approximately NIS 390 per permit, payable by the user company. If the user company refuses to initiate the transfer application, the manpower company's permit continues to cover your work — but you can simultaneously file a recognition claim at the Regional Labor Court establishing that you are the user company's direct employee from month 9 onward.

7. Enforcement: Where to File a Complaint and What to Expect

The Employment Enforcement Authority (*Rashat Achinat Zchuyot Ha'Ovdim*) within the Ministry of Labor, Social Affairs and Social Services is the primary enforcement body. It has the power to conduct unannounced workplace inspections, demand records from both the manpower company and the user company, levy administrative fines, and refer criminal cases to the State Attorney's Office for prosecutions carrying penalties up to one year of imprisonment and fines up to NIS 226,000 per violation.

To file a complaint:

  • Call the ministry hotline at *3460 (available in Hebrew, Russian, and Arabic; an English translation service is available on request).
  • Submit an online complaint form at the ministry's Employment Enforcement Authority portal.
  • Visit any regional Employment Enforcement office in person.

Complaints are handled confidentially. Section 18A of the Manpower Contractors Law prohibits retaliation against a worker who files a complaint or cooperates with an inspection. A manpower contractor or user company that dismisses, reduces hours, or worsens conditions in response to a complaint faces a separate criminal sanction and civil liability for the retaliatory act.

For monetary claims — underpaid wages, unpaid equal-treatment differentials, unpaid pension contributions — the Regional Labor Court (*Beit Din Avodah Ezioni*) has exclusive jurisdiction. The court has branches in Tel Aviv, Jerusalem, Haifa, Beersheba, and Nazareth. Claims can be filed in the district where the work was performed. Filing fees are modest (under NIS 200 for claims up to NIS 20,000) and there is a simplified procedure for claims under NIS 50,000 that typically produces a judgment within 4 to 8 months.

In Practice: The 7-year limitation period for wage claims under the Prescription Law 5718-1958 means you can claim underpaid wages from up to seven years back. However, evidence becomes harder to assemble over time. Collect and preserve the following during your employment: (1) pay slips for every month; (2) the written employment agreement with the manpower company; (3) any written communications from the user company's managers (emails, WhatsApp messages); (4) NII statements showing where contributions were paid — downloadable from the NII portal at btl.gov.il; and (5) a personal attendance log noting your hours if your employer does not provide one. The Regional Labor Court has held that once an employee establishes the fact of underpayment, the burden shifts to the employer to produce accurate records — if the employer has no records, the court accepts the employee's estimate.

Frequently Asked Questions

Yes, if you have worked continuously at the same user company for more than 9 months under a manpower contractor, Section 12A of the Manpower Contractors Law means the user company must have absorbed you as a direct employee from day 274 (the day after 9 complete months). If they did not, you can file a claim at the Regional Labor Court for recognition as a direct employee from that date, with full seniority running from your first day of placement. The court can issue an order confirming your status and requiring the user company to regularize your employment with back-dated pension contributions, annual leave, and any pay differential owed. Do not wait — there is no formal deadline for the claim, but the practical difficulty of enforcing increases the longer you delay.
Yes. Under Section 10 of the Manpower Contractors Law, the user company is jointly and severally liable for unpaid minimum wage, overtime, sick pay, annual leave payments, and pension contributions. You can file a claim against the user company in the Regional Labor Court without first pursuing the manpower company. Bring your pay slips (or proof that none were issued), your employment agreement, and any evidence of the work performed. Importantly, joint liability for minimum-wage and overtime arrears is unconditional — you do not need to show the user company was aware of the non-payment. For unpaid pension contributions, the user company is liable once 30 days have passed since the payment was due to the pension fund.
No. Section 13 of the Manpower Contractors Law requires the manpower company to pay you working conditions and wages at least equal to those of a comparable direct employee at the user company. If a direct employee doing the same or substantially similar work with similar seniority earns NIS 3,000 more per month, you are entitled to that same rate. You can demand from the user company a written statement of comparable employees' conditions under Section 13A. File a claim at the Regional Labor Court for the full pay differential going back up to 7 years. The gap between your pay and the comparable employee's rate is recoverable as an employment debt, and the court can add the linkage differential for the entire period as well.
When a manpower placement ends, the manpower company — as your employer of record — owes you statutory notice pay under the Notice to Employee and to Employee Candidate Law 5762-2002: one day's notice per month of work for the first 6 months, then 6 days per additional month up to 30 days total after one year. You are also entitled to severance pay under the Severance Pay Law 5723-1963 after one year of work (one month's salary per year). The manpower company must also release your pension fund (keren pensia) contributions, which remain yours. Regarding your B/1 permit: the permit formally expires when the sponsoring employer's engagement ends, and you must leave Israel or find a new employer to sponsor a new permit within the permitted overstay period. Contact PIBA promptly if you intend to remain and seek new employment.
No. The protections in the Manpower Contractors Law — including Section 12A's 9-month rule and Section 13's equal treatment obligation — are statutory minimums that cannot be contracted away. A clause in an employment or service agreement purporting to waive these rights is void and unenforceable regardless of what the worker signed. Israeli mandatory employment law operates as a floor: the employment contract or agency agreement can give you more, but it cannot give you less than the statute requires. This applies equally to contracts governed by a foreign law — where the work is performed in Israel for an Israeli user company, Israeli mandatory labor law applies regardless of the law chosen in the contract.

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Adv. Eli Shimony
Adv. Eli Shimony
Licensed Israeli Attorney · Founder, IsraelLaw.info

Eli Shimony Law Office · Editorial policy

Eli Shimony is a licensed Israeli attorney advising foreign nationals, overseas employers, and diaspora families on Israeli labor, employment, and civil law. He founded IsraelLaw.info to give English speakers accurate, practical guidance on navigating the Israeli legal system.