Travel Expense Reimbursement in Israel — Employee Rights Explained
Under Israeli law, most employees are entitled to travel expense reimbursement as part of their employment terms. This right is governed by extension orders issued by the Ministry of Labor and applies regardless of the type of transport used — including public transit, private car, and combinations of both.
This guide explains who is eligible, how the reimbursement is calculated, and what employers must include on the payslip. NETO — Licensed Manpower Contractor #1565 — ensures accurate calculation and payment of travel allowances for all workers placed through our platform.
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Travel Expense Reimbursement – Key Points
- Every employee traveling more than 500 meters to work is entitled to reimbursement
- Public transport: reimbursement equals the actual cost of the commute
- Private car: reimbursement based on public transport equivalent rate
- Maximum daily reimbursement: ₪26.40/day (public transport cap)
- Employer must reimburse travel expenses with the monthly salary
Overview: Travel Expense Reimbursement
Under Israeli labor law, every employee whose commute to work exceeds 500 meters is entitled to reimbursement of travel expenses. This right applies to all employees regardless of salary level or position.
Public Transport Commute
If the employee uses public transportation (bus, train, etc.), the employer must reimburse the actual cost of the cheapest available route. The maximum daily reimbursement is capped at the applicable extension order rate.
Private Car Commute
If the employee travels by private car, the employer is required to reimburse at the rate equivalent to the cheapest public transportation option for the same route — not necessarily the full cost of fuel or vehicle expenses.
Calculation & Payment
Travel reimbursement is calculated based on the number of actual workdays and paid together with the monthly salary. Employees who work from home on certain days are not entitled to reimbursement for those days.
Automate Travel Reimbursement with NETO
NETO automatically calculates travel expense reimbursements as part of the monthly payroll process — no manual tracking required.
FAQ – Travel Expense Reimbursement
Any employee whose commute to work exceeds 500 meters (about half a kilometer) is entitled to travel expense reimbursement. This applies regardless of the employee’s salary level or seniority. The entitlement covers both public transport users and private car commuters.
For private car commuters, reimbursement is calculated based on the equivalent cost of public transportation for the same route — not the actual fuel or car expenses. The employee is reimbursed as if they had used the cheapest available public transport option.
⚠️ Disclaimer: General knowledge only, not legal advice.
Summary: Travel Expense Reimbursement in Israel
Travel allowances are a mandatory employment benefit in Israel for most salaried workers. Employers must calculate and pay the correct amount based on the employee’s actual commute, and failure to do so can result in claims and penalties. Accurate payslip documentation of travel allowances is both a legal requirement and a best practice.
Using an automated payroll system ensures travel allowances are always calculated correctly, reducing errors and compliance risk.
Freelancers: Are You Getting Your Travel Allowance?
When you work through NETO, your travel expenses are calculated and paid automatically according to Israeli law — along with your salary, pension contributions, and all other mandatory benefits.
