The employment law framework in Israel is derived from the following sources:
- Legislation: statutes and regulations provide employees with certain minimal rights. Israel lacks a constitution and has basic laws instead, which are superior to regular laws, including the Human Dignity and Liberty and Freedom of Occupation Law.
- Collective bargaining agreements: either specific or general. The latter may be extended by an order of the Minister of Economy to additional groups of employers and employees, or to all employers in the economy.
- Employment contracts: provisions of employment contracts will not be enforceable if they are inferior to those prescribed by law. If several legal sources apply to an employee, the one that is most beneficial governs.
The primary means for resolving employment disputes are the labour courts, parity committees (mostly established by collective bargaining agreements), internal courts that exist in several fields, arbitration and mediation.
The enforcement of employment laws may be conducted by several organisations and mechanisms, such as the Enforcement Unit of the Ministry of Economy, specific legislative authorities, state authorities and the courts.
II YEAR IN REVIEW
i Amendment to the Hours of Work and Rest Law 5711–1951
Working on weekly rest days
In the past, the right to refuse to work on the weekly rest day was afforded only to employees who could not work because of their religious beliefs. However, as of 1 January 2019, employees may refuse to work on the weekly rest day or religious holidays for any reason.
Therefore, employees who do not wish to work on the weekly rest days are no longer required to provide an affidavit regarding their religion or declare that they observe the Jewish religion. Employees can inform their employer, no later than three days from the date on which they are required to work on a weekly rest day, that they do not agree to do so.
In general, employers are forbidden from turning away candidates for the sole reason that they informed the employer, when accepted for work, that they would refuse to work on the weekly rest days. Equally, an employer cannot require a candidate to commit to working on the weekly rest days as a condition of accepting a position.
The amendment does not apply to certain workplaces, such as safety organisations, the electricity, health and hotel industries, etc. Note that, in any case, requiring an employee to work on the weekly rest days is subject to obtaining a permit from the Ministry of Labour, Welfare and Social Services.
ii Amendment to the Employment of Women Law, 5714-1954
Absences resulting from fertility treatment
Previously, employees were entitled to be absent from work to receive fertility treatment, in accordance with their entitlement to sick leave. Since sick leave is paid only from the second day of absence, and even then the payment is partial until the fourth day of absence, the legislator wanted to bring the situation regarding absences for fertility treatment in line with that for absences for pregnancy examinations, for which there is a fixed entitlement to time off without deduction of pay, separate from the entitlement to sick leave. As such, from 31 December 2018, both male and female employees are entitled to up to 40 hours of absence per year for fertility treatment. Partial days are also taken into account for this purpose and employees are entitled to sick pay in this regard from the first hour of absence.
III SIGNIFICANT CASES
i Employer's responsibility to examine alternative positions prior to termination
The question of the extent to which an employer is required to conduct due diligence and find an alternative position for employees who can no longer fulfil their previous position was addressed in the recent case of Shmuel Vagman.2 In this case, an employee was transferred from his managerial position. The court determined that the company's decision to do this was reasonable and for relevant considerations, and did not amount to age discrimination. However, it found that under the circumstances, there was a 'duty to make an effort' to locate a relevant alternative role, and that the degree of effort required could vary from case to case. In this respect, according to a new and developing trend in recent labour court rulings, employers have a duty to make an effort to find alternative positions for certain groups of employees (such as disabled employees and those close to retirement), before proceeding with the termination of contracts.
In this respect, the court found that the duty derived from the obligation to act in good faith in the context of labour relations, which had both substantive and procedural aspects. The substantive aspect required the employer to examine whether there was a relevant alternative position, considering a wide range of matters, including the organisation's needs, the availability of vacant roles, the employee's suitability for the position relative to his or her qualifications and abilities, and the effects of staffing the position on labour relations, whether in the workplace as a whole or in the specific department, and more. From a procedural perspective, the court considered that employers must follow a proper and serious procedure to locate alternative positions, including the employee in the process and giving them the opportunity to suggest alternative positions that they may find interesting.
Under the circumstances, owing to the heightened duty of good faith that applies in employment relations, the employee's length of service (he was on the threshold of retirement) and the reason for his removal from the position, the employer was required to search diligently for an alternative position. This expectation was reasonable, in view of the duty to make an effort. Since the employer failed to do so, it was ordered to pay compensation of 100,000 shekels.
ii Disability discrimination
Who is disabled?
In connection with reductions in the workforce, the National Labour Court recently examined the question of who is a 'person with disabilities' and how an employer is required to know of the disability. In this context, the National Labour Court in Tircovot Brom3 determined that the definition of a 'person with disabilities' – as in the Equal Rights of Disabled People Law 5758-1998 (the Disabled People Law)4 – must be interpreted broadly and flexibly. This means that there is no obligation that people be defined as having 'severe' disabilities, and the determination of any 'percentage disability' by the National Insurance Institution is not relevant. Furthermore, there is no requirement to present a medical certificate explicitly stating that the individual has a disability; it is sufficient that the disability affects one main area of life, which does not have to be employment.
In addition, limitations that are apparent are not the only limitations that may be considered severe, as even those with a 'slight' degree of disability can experience harm occasioned by societal norms. However, it was also held that the definition as determined by the legislator cannot be completely ignored, and that not every health problem seriously interferes with an individual's routine functioning.
In this case, the Labour Court added that it was justifiable to apply the provisions of the law only to those who indeed fulfilled the conditions of the definition, thus preventing abuse or artificial use of the law. The law was intended to protect a person whose disability may have caused him or her, without the protection of the law, difficulty in integrating, working or making a living and progressing, or would otherwise harm the individual's realisation of his or her potential or full and equal participation in various areas of life. A critical mass of physical, sensory, mental, cognitive, intellectual or social dysfunction, including stigmas and prejudices, is required to conclude that a person's functioning is indeed substantially limited.
How is the employer to know?
As a rule, and except where circumstances justify a different conclusion, an employee who wishes to receive the protective provisions of the law is required to notify his or her employer (especially if the disability is not apparent). Generally, if the employee wishes to have adjustments made or benefit from affirmative action (or other protection) under law, he or she should inform the employer that he or she is a 'disabled person' and provide the facts reasonably required for implementing the adjustments, and so on.
The National Labour Court emphasised that an employer should not be required to examine historical medical documents that may be in its possession (such as sick leave or periodic examinations) or attempt to identify a medical problem that the employee may have, even theoretically, to determine whether the person has 'disabilities' according to the law.
We note that at the end of the ruling, the National Labour Court incidentally commented on a link between the employer's obligation in respect of the fair representation of employees with disabilities, and its duty to find an alternative position for an employee when downsizing. The court noted that it may be argued that the duty to find an alternative position applies as long as the employer cannot prove that the workplace already has full and adequate representation of persons with disabilities, even after the downsizing. However, this remains an open issue.
iii New 'hearing procedure' rules
There is a requirement in Israel to arrange a hearing with employees when considering the termination of their employment, prior to making a final decision in their regard. The purpose of the hearing is to hear the employees' thoughts on the matter, and wholeheartedly take them into account before reaching a final decision. This requirement has recently been broadened by case law, to include candidates for employment.
In the Nir Ephraim case,5 a candidate was accepted for a temporary position at the Ministry of Health to provide cover for an employee who was due to go on maternity leave. The candidate, who was not otherwise employed at the time, was willing to wait until the employee began her maternity leave, between two and three months later. A mere three days after completing the screening process, the candidate was informed that there was a headcount problem, and therefore they could not hire him after all.
The plaintiff filed a claim against the Ministry of Health, claiming that he had been employed by the Ministry and unlawfully dismissed without an opportunity to share his thoughts on the decision, in violation of the agreement between the parties.
The Ministry claimed that he had not been employed at the time, and therefore his employment had not been terminated; there was no breach of contract; he did not suffer any damages; and had no entitlement to severance pay. It further claimed that because of the circumstances, there was no requirement to hold a hearing, and in any case, the outcome of such a hearing would have been known, in view of the headcount issue. Finally, the Ministry claimed that in any case, its mistake was made in good faith and did not cause any damage to the plaintiff, who should have continued his search for work because of the temporary nature of the position and the delay in its commencement.
The court ruled that, under the circumstances, and since the parties had entered into a binding contract, the plaintiff should be viewed as having been hired and fired, and that, therefore, the hearing rules applied to him, even if his employment had not yet begun. The court based this on, among other things, the notion that employees should be provided with a genuine opportunity to demonstrate their skills and abilities before employers make definitive decisions in their regard. The plaintiff was therefore awarded 25,000 shekels as compensation for the Ministry failing to conduct a hearing with him, which was deemed unacceptable conduct in bad faith.
IV BASICS OF ENTERING INTO AN EMPLOYMENT RELATIONSHIP
i Employment relationship
Generally, Israeli law does not require a written employment contract, though there are some exceptions.
However, employers are required to provide new employees (and existing employees upon their request) with a written notification form regarding certain employment terms and to update them in writing regarding any changes to those terms, as detailed in the Notice to Employee and Job Candidate Law (Employment Conditions and Candidate Screening and Selection) 5762-2002 and the relevant regulations.
An employer is not obliged to provide this type of notification if the employee is provided with a written employment agreement that includes all the required details.
Employment contracts may be for a fixed term or an indefinite term, at the parties' discretion. The termination of a fixed-term contract prior to its expiry by one party (the employer) may entitle the other party (the employee) to damages in the amount of the salary for the remaining term.
ii Probationary periods
Probationary periods are permitted by Israeli law, but during such a period, an employee would still be considered a regular employee for all intents and purposes. The minimum statutory written prior notice for a monthly employee6 is one day for each month during the first six months of employment, and two-and-a-half days for every additional month. A monthly employee who has worked for a year or more is entitled to one month's notice.
According to a Labour Court ruling, during a probationary period, the reasons for termination of an employment agreement may be examined in a more lenient manner.7
iii Establishing a presence
In general, a foreign company can hire employees directly in Israel without being required to officially register a subsidiary company or have a registered branch in Israel. However, it will be required to be registered with the tax authorities as an employer.
A foreign company can also engage individuals as independent contractors or as service providers through manpower companies or service contractors. In principle, a foreign employer who employs employees directly is required to comply with local employment legislation. In addition, the foreign company has withholding obligations to the tax authorities as the employment income is subject to income tax, social security contributions and health tax.
Generally, the engagement of individuals by a foreign company (whether as independent contractors or as employees) may expose that company to the risk of being regarded as a permanent establishment in Israel. The main outcome of this would be that general income attributed to an Israeli permanent establishment will be subject to Israeli corporate tax.
V RESTRICTIVE COVENANTS
Non-compete restrictions during and after a employment relationship are a common feature of employment agreements.
During the employment period, limitations imposed by an employer on an employee's freedom of work are likely to be enforced, if the employee is in a full-time position.
However, post-termination non-compete restrictions are rarely enforced. An employee would be prohibited from competing with a former employer only if it may harm a legitimate interest of the employer.8 According to case law, non-compete covenants will not be enforced except in the following circumstances:
- the former employer owns a trade secret that is unlawfully used by the employee;
- the former employer has invested unique and valuable resources in the employee's training;
- on termination of the employment, the employee has received special consideration in return for his or her non-compete undertaking; or
- when balancing the employee's conduct and good faith in taking the new position and his or her obligation of fidelity towards the former employer, the non-compete covenant can be justified.9
Even if the court decides to enforce a non-compete covenant, the enforcement would only be with respect to an obligation that can be considered reasonable given the scope of the employee's position, the period of the restriction, the field in which the employer operates, and the relevant geographical limitation. Accordingly, the court can redraft the non-compete obligation to make it reasonable.10
i Working time
The issue of working hours and overtime is governed by the Hours of Work and Rest Law and additional legislative sources, such as extension orders.
The Hours of Work and Rest Law was amended in April 2018, the effect of which was to shorten the working day, which now consists of 8.6 hours per day on four weekdays and 7.6 hours a day on one working day of the employer's choice (which should take into account the employee's request), amounting to 42 hours per week and 182 hours per month.
According to this Law, night work is defined as a minimum of two hours' work between 10pm and 6am. Night work must not exceed seven hours per day (not including overtime) and an employee must not carry out night work for more than one week in every two.
There are limits to the amount of overtime that may be performed in a given period, other than for employees who are excluded from the Hours of Work and Rest Law (under exceptional circumstances).
Overtime compensation must be paid after working 8.6 hours per day (or 7.6 hours on the relevant shortened day) or 42 hours per week. For the first two hours of overtime, an additional 25 per cent is paid per hour, and for the third hour of overtime and thereafter, an additional 50 per cent per hour.
When a business operates a six-day working week, employees may work up to 12 hours' overtime per week, and when a business operates a five-day working week, employees may work up to 16 hours' overtime per week.
VII FOREIGN WORKERS
An Israeli employer may employ a foreign employee in Israel provided that:
- the employee has an unrestricted visa allowing him or her to work in Israel regardless of the employer's identity; or
- the employer has a permit to employ a foreign employee who has a visa based on this permit.
The permit is usually issued for 12 months and can be extended, subject to the discretion of the relevant authorities, for additional 12-month periods, up to a maximum of five years and three months. Permits can also be issued for periods of up to 45 days, three months or two years.
In general, permits are granted in five sectors: construction, agriculture, nursing, services and industry. A common type of B-1 permit is a permit to employ 'foreign experts' in which:
- the foreign expert must demonstrate a high degree of expertise or unique and essential knowledge to the service provided by the employer, which is absent in Israel; and
- his or her monthly salary shall not be less than twice the average salary in Israel (for 2020, 20,856 shekels).11
An employer may employ an unrestricted number of foreign employees who do not require a permit. There is no limit on the number of permits that can be applied for by an employer. However, the authorities will take into consideration the number of foreign employees employed by an employer as compared with the total number of its employees.
Employment of foreign employees in Israel is subject to local labour legislation, including collective agreements (when applicable) and extension orders.
The duties of enterprises employing foreign workers include providing medical insurance and, in some cases, accommodation. In addition, the employment can be subject to a special tax in which the employer should pay up to 20 per cent tax in addition to the taxes that apply to any employee, except in certain situations, such as when the employee earns more than twice the average salary in Israel.
VIII GLOBAL POLICIES
There is no mandatory requirement for applying disciplinary rules. However, these types of rules are quite common in unionised workplaces (as part of a collective agreement with the employee representative committee) and in companies that are subject to global policies in light of being part of a group of companies. Disciplinary rules are regarded as part of an employee's terms of employment.
There are mandatory rules and policies that an employer is required to adopt, such as the model rules for the prevention of sexual harassment according to the Prevention of Sexual Harassment Regulations 5758-1998.
In general, disciplinary rules are not required to be filed with or approved by any government authorities, but they should comply with applicable law and general legal principles.
Generally, for disciplinary rules to be applicable to them, employees should consent to the rules, either explicitly or implicitly. It is recommended that the employer's rules be accessible to the employees (such as on a bulletin board or intranet site) to reduce claims that the employees were not aware of them (or any amendment to them).
Disciplinary rules are not required to be written in the local language. However, they should be in a language that the employees understand.
IX Parental leave
The Employment of Women Law 5714-1954 and its regulations sets out the rights of women and their partners in the workplace, including during fertility treatment, pregnancy and after giving birth.
Employees are entitled to statutory maternity leave (now known as birth and parenting leave (BPL)), which may be taken by the mother or shared between both parents.
In general, payment is for 15 weeks of BPL, made by the National Insurance Institute (NII), subject to certain entitlement criteria, as determined by the National Insurance Law [consolidated version], 1995. The rest of the BPL (i.e., 11 weeks) is unpaid.
An employee is entitled to 26 weeks of BPL if she has worked for the same employer or at the same workplace for at least 12 months (otherwise, the entitlement is 15 weeks). The BPL may be extended in certain circumstances, such as hospitalisation of the employee or the child, or a multiple birth.
According to law, an employee whose partner has given birth is entitled to BPL, to be paid by the NII, as of the end of the first six weeks following the delivery, so long as certain conditions are met. These include that he has provided a written waiver from his partner, waiving her entitlement to the remainder of her BPL, and that she returns to work for the remainder of this time. In certain cases, usually when the employee has sole custody of the child or is the sole carer (e.g., because of the mother's medical condition), he will be entitled to the entire BPL.
An employee, or in certain circumstances, her partner may be entitled to statutory unpaid leave after the completion of BPL, which may equate to a quarter of the employee's length of service (less the period of the maternity leave exceeding 15 weeks that was actually taken by the employee), though in no case longer than a year following the birth.
There are a number of other employee entitlements in this area, such as time off for antenatal appointments, the right to work one hour less per day (without reduction in pay) for a limited period after returning from BPL, and time off for fathers around the time of birth, all of which are subject to requirements and conditions.
Pregnant employees, those undergoing fertility treatment, and employees on BPL, statutory unpaid leave and for a certain period thereafter, are all protected from dismissal (subject to conditions). Note that specific ministerial approval may be obtained to allow such a termination in certain circumstances if the employer can show that the termination is not occasioned by the special circumstances of the employee (for example, the employee being pregnant). See also Section XIII.i.
There is no requirement that employment contracts be written in any specific language, as long as the employee understands the language (except with regard to foreign employees, for whom the Foreign Employees Law 5751-1991 expressly provides that the employment contract should be written in a language the employee can understand). In this respect, it is common for global companies to provide employment-related documents (including employment contracts and confidentiality agreements) in English, mainly for them to be understood by the company's management abroad.
There is no clear recommendation as to whether to provide employment documents in Hebrew, and the decision usually depends on the employees in the company and the extent of their knowledge of the foreign language.
Providing employees with employment-related documents in a language they do not understand may result in employees claiming that they are not subject to their terms (as they did not understand them), and may affect the employer's ability to enforce them.
XI EMPLOYEE REPRESENTATION
Employees are permitted, but not required, to establish a union if none exists. The right of unionisation is regarded as a fundamental right of employees.
For the purpose of defining the representative organisation in the workplace, the general rule is that, in a specific workplace, there should be one 'bargaining unit', meaning that at least one-third of the total employees are members of the union. Splitting the natural bargaining unit can be done consensually by the bargaining parties – namely, the union and the employer.
The election procedures for representatives are set out in the articles of association of each union or employee committee. The length of the term of the representative committee may change from one committee to another, in accordance with its articles of association.
Employees have a general right to enrol as members of a trade union and to authorise the union to act on their behalf. The law defends this right by prohibiting the employer from preventing any trade union representative from entering the workplace to organise the employees and advance their interests, and revoking or reducing any employee rights, including terminating employment, on the ground of an employee's membership or activity within a trade union or on the grounds of his or her activity in establishing a representative body in the workplace.
The National Labour Court has also ruled that, during initial unionisation, the presumption is that the expression of the employer's opinion could exert pressure that may constitute an unjustified influence on the employees. Therefore, an employer is not allowed to publicly express its views against the organisation of its employees, let alone take any action in an attempt to avert it.12 In recent years, the regional labour courts have imposed significant compensation on employers that have acted to thwart initial unionisations by various means (such as putting pressure on employees to abolish their union membership, giving legitimacy to actions against the unionisation, discriminating against unionised employee; and acute expressions of opinion against the unionisation made by senior managers).13 In this regard, the National Labour Court has pointed out that attempts by employers to harm initial unionisation has become a 'common phenomenon', justifying increasing compensation in the future.14 However, the Regional Labour Court in Tel Aviv ruled in the McDonald's case,15 that if, during the unionisation process, representatives of the workers union deliver deceptive or misleading information that gives rise to false allegations, the employer will have a right to respond to those allegations in good faith.16
The law stipulates that an employer has an obligation to negotiate with the union in the initial stages of its formation in the workplace, with respect to any of the following: hiring and firing; termination of employment; employment terms and conditions; and the rights and obligations of the trade union. However, the law emphasises that this requirement does not require the employer to sign a collective bargaining agreement with the trade union, but rather only requires the employer to negotiate with the union.
In workplaces in which collective relations are already established, the employer is obliged to negotiate with the representative trade union with respect to various specific employment matters, including engagement, termination and terms of employment. To the extent that the employer does not respond to the employees' demands and refuses to sign a collective bargaining agreement, the trade union can potentially declare a work dispute and initiate a strike.
XII DATA PROTECTION
i Requirements for registration
The Privacy Law 5741-1981 regulates the matter of databases and their registration. The Privacy Law defines 'database' as 'a collection of data, maintained by magnetic or optical means and intended for computer processing'.
'Data' is defined under the Privacy Law as 'information about an individual's personality, personal status, intimate affairs, health condition, financial condition, professional qualifications, opinions or beliefs'.
Under the Privacy Law, it is necessary to register a database (in the databases' registry maintained by the Israeli Registrar of Databases) if, inter alia, it:
- contains data about more than 10,000 individuals;
- contains sensitive data (see Section XII.iii);
- contains data about persons that was not provided by them, on their behalf or with their consent; or
- is used for direct mailing services. 'Direct mailing' is defined under the Privacy Law as 'approaching a specific person based on his/her belonging to a group of the population that is determined by one or more characteristics of persons whose names are included in a database', and 'direct mailing services' is defined under the Privacy Law as 'providing services of direct mailing to others by way of transferring lists, labels, or data by any means'.
Human resource databases in workplaces are generally considered to include sensitive data and, consequently, should be registered according to the Privacy Law. In addition, no person may use the data included in a registered database except for the purposes for which it was established.
ii Data security
Under the Privacy Law, the owner of a database, the holder of a database and the manager of a database are each individually responsible for the protection of the data in the database. The Privacy Law defines 'data protection' as 'protection of the integrity of the data, or protection of the data against exposure, use or copying, all when done without due permission'. It is customary to limit access to a database to individuals who have reasonable needs to use the information included in the database.
The Protection of Privacy Regulations (Data Security) 5777-2017 establish a broad and comprehensive arrangement regarding the physical and logical protection of databases and their management.
iii Notice and consent
Section 11 of the Privacy Law provides that any request for data made to a person, with the intention of keeping and using it in a database, shall be accompanied by a notice indicating (1) whether that person is under a legal obligation to deliver that data or whether its delivery depends on his or her decision and consent, (2) the purpose for which the data is requested, and (3) the person or entity to whom the data will be delivered and for what purpose. Based on case law, employees are required to provide their explicit consent to such a notice.
iv Cross-border data transfers
The export of data outside Israel from a database subject to the Privacy Law is regulated by the Protection of Privacy Regulations (Transfer of Data to a Database Outside the State Borders) 5761-2001. These Regulations prohibit the transfer of data from an Israeli database to a database located abroad, unless the receiving country ensures a level of protection of data that is not lower than the protection provided for under Israeli law.
In addition, the Regulations lay down conditions that enable the transfer of data from an Israeli database to a database abroad, even when the overseas law provides a level of protection that falls below that provided under Israeli law. These conditions include, for example, obtaining the individual's consent to the transfer of the data, and the data being transferred to someone who has agreed to fulfil the conditions laid down in Israel.
In addition to the fulfilment of any of the above-mentioned conditions, the Regulations state that the owner of the database must ensure (by way of written obligation), that the recipient takes steps to ensure the privacy of data subjects, and that the data shall not be transferred to any other person, whether that person be in the same country or not. Accordingly, onward transfer of data to a third party located outside Israel is not permitted, unless the owner of the database entered into a direct agreement with that third party, which includes, inter alia, the above requirements.
v Data subject rights
According to Section 13 of the Privacy Law, every person is entitled to inspect, either by himself or herself or through a representative authorised by him or her in writing or by his or her guardian, any data about him or her that is kept in a database. In addition, under Section 14 of the Privacy Law, when a person who, on inspecting any data about himself or herself, finds that it is incorrect, incomplete, not clear or not up to date, he or she may request that the owner of the database or, if the owner is a non-resident, the holder of the database, amend or delete the data.
vi Sensitive data
Under the Privacy Law, 'sensitive data' is defined as 'data on a person's personality, intimate (i.e., private) affairs, state of health, financial conditions, opinions and beliefs'. Sensitive data is interpreted very broadly by the Israeli courts and the Israeli Protection of Privacy Authority, as encompassing types of personal information that are not specifically mentioned in the definition of sensitive data, all depending on the specific circumstances of the matter.
As stated above, if a company maintains sensitive data by electronic means for processing, it is required to register a database.
Any owner of a database who outsources services that involve the processing of personal data by a third party service provider, must enter into a written agreement with the third party service provider, which will determine certain security measures and safeguards, such as, for example, the purpose of the processing, the return or destruction of data upon termination of the services, supervision rights on the service provider's activities and a binding security document.
viii Background checks
Background checks on candidates must respect the individual's right to privacy, and be reasonable, relevant, proportionate and carried out in good faith.
In respect of publicly available information, there is no specific requirement to obtain an individual's consent. As regards non-public information, the need for prior written notice and informed consent depends on the circumstances.
Requesting information with respect to protected criteria under the Employment Equal Opportunities Law 5848-1988 (e.g., regarding race, gender, age, religion) will usually shift the burden of proof to the company in the event of a discrimination claim, to show that it did not unlawfully take into account any such protected criteria in making the employment decision.
Criminal background checks are generally not permitted. Even requesting a candidate to provide a declaration about his or her criminal history is regarded as unlawfully circumventing the legislation, unless the employer specifies the types of offences or investigations about which it requires information, and demonstrates that this is relevant for the position in the circumstances.
In April 2019, a new Credit Data Law (which had been enacted in 2016) came into force (the New Credit Law), which replaced the previous law on the matter from 2002. The New Credit Law completely prohibits an employer from requesting or obtaining information regarding an individual's credit data and credit rating for the purposes of employment, including through a questionnaire or declaration from the candidate (with an exception regarding credit data published in public databases according to law). The New Credit Law also provides that the courts have the power to oblige a person who has requested or received credit data information in violation of the provisions, to pay the candidate compensation without proof of damage.
It is forbidden to request information regarding military and genetic profiles.
XIII DISCONTINUING EMPLOYMENT
As a general rule, employers must exercise their right to terminate an employee's employment in good faith, for valid reasons17 and in compliance with applicable laws, any written employment contracts, workplace customs and collective bargaining agreements or extension orders, if applicable.
In addition, according to court decisions, all employers are required to hold a hearing prior to making a decision regarding a termination of employment. The purpose of the hearing is to inform the employee of the employer's reason and give him or her the opportunity to respond. A hearing is required in all circumstances, regardless of whether the dismissal is based on redundancy, poor performance or misconduct.
In certain circumstances, terminating employment may be prohibited or subject to obtaining ministerial approval.18 Israeli law prohibits the termination of employment for certain groups of employees, such as pregnant women, employees expecting to adopt, become foster parents or become parents with the assistance of surrogacy, employees undergoing fertility treatment, employees on maternity or paternity leave and for 60 days thereafter,19 employees on army reserve duty20 and employees on sick leave.21
In workplaces where collective relationship exist, or a collective bargaining agreement or extension order applies, the process of termination, which is often included therein, usually involves the participation of employee representatives.
In general, employees are not entitled by law to a social plan or the right to be rehired.
According to some court decisions, in certain circumstances, prior to making a decision regarding termination of employment, employers are required to consider whether they can offer the employee an alternative position within the workplace.
Under Prior Notice Before Termination Law 5761-2001, employers must provide the employee with prior written notice when ending the employment relationship. An employer may choose to pay the employee in lieu of notice. Payment in lieu is equal to the salary the employee would have received had the employee continued to work throughout the notice period.
Under the Severance Pay Law 5723-1963, an employee who is dismissed after completing at least one year's service is entitled to statutory severance pay. This is calculated based on the employee's monthly base salary multiplied by the number of years of service.
In general, employees can compromise contractual payments or benefits only if these entitlements are over and above statutory entitlements.
Furthermore, it is common for employers to ask employees to sign a letter of receipt of their final payments and a release of claims against the employer. According to case law, a release does not constitute a formal bar to future claims by employees. However, it may be enforced if certain conditions are met, such as:
- the employee was aware of the rights that he or she waived;
- the employee was presented with a clear and comprehensible account of the sums he or she received before signing the release;
- the release is clear and unambiguous; and
- the employee signed the release of his or her own free will and not as a result of coercion by the employer.
As a general rule, Israeli case law requires an employer to inform and consult employees with respect to redundancies. However, the law does not specify the form, timetable or content of these obligations. If a collective bargaining agreement, or any other binding legal document, applies to the affected employees, it may set out specific procedures for redundancies, including the bodies the employer must consult.
In the absence of specific provisions, there is a general duty to carry out consultation in good faith before any final decisions are made. In general, the employees should be provided with relevant information regarding the anticipated dismissals, such as general information regarding the financial situation of the employer when the redundancies need to take place owing to lack of profit.
In practice, the obligation to inform and consult employees is only practical when an employee representative body exists and can therefore be consulted.
The obligation to inform and consult employees does not detract from an employer's general obligations with respect to the termination of employment, including holding personal hearings with each employee (see Section XIII.i). Thus, employees whose contracts are terminated by reason of redundancy have the same personal rights as any other employee whose employment is terminated.
XIV TRANSFER OF BUSINESS
There are no regulations in Israel in the style of the UK's Transfer of Undertakings (Protection of Employment) Regulations 2006 (known as TUPE). In principle, an employee cannot be transferred to another employer without his or her consent. Therefore, if an employee does not consent to the transfer, the seller would either continue the employment of the employee or terminate the employee's employment.
In practice, there are two methods of transferring employees, for example, on the sale of a business:
- 'fire and rehire', in which the original employer terminates the employees' employment and the new employer rehires them; and
- 'continuity of rights', in which the buyer 'steps into' the seller's position as employer for all intents and purposes. In these circumstances, subject to the employees' consent to the transfer, the buyer assumes all the seller's obligations towards the employees while maintaining their rights and entitlements.
When there is an active union or works council at the workplace, employers need to inform employees about the forthcoming change, and consult and negotiate with regard to their employment terms after such change.
The National Labour Court issued an important ruling in 2015, stating that the original employer is required to provide its employees with prior notice of termination (or pay in lieu of notice), even if the new employer is willing to hire the employees and continue their employment immediately following the termination.22
Sexual harassment and other forms of bullying and abuse in the workplace
It is clear that employers no longer only consider the purely financial employment entitlements of employees (minimum wage, annual leave, pension, severance, etc.), but have a greater interest in creating a more holistic and accommodating working environment. This may be driven by increasing legal obligations, but also reflects our digital age, the 'war on talent' and the demands of a new generation of employees. In this context, we note that case law is increasingly involved with such 'environmental' issues as the prevention of sexual harassment and workplace abuse and the protection of employee privacy.
The prevention of sexual harassment was already well developed in Israel prior to the rise of the #MeToo movement, with extensive and detailed obligations applying to employers in this regard. However, the issue has received greater public attention since the creation of the movement, and there has been an increase in the number of claims (as well as awareness) in this area. We note that the courts may now be moving in the direction of highlighting the perspective and rights of those accused and their entitlement to due process.
Equally, the passing years have highlighted a growing trend to prevent general abuse in the workplace (as distinct from abuse relating to sexual harassment or to whistle-blowers, which was already lawfully recognised).
The legislature has raised several bills that aim to regulate the matter and ensure the prevention of workplace abuse, and is currently considering the adoption of the Law for the Prevention of Abuse in the Workplace. The pending law, which does not seem to be progressing in the enactment process, defines abuse in the workplace very widely, as 'recurring behaviour towards a person, on several different occasions, which creates a hostile work environment for such person'. According to the pending law, employers are obliged to take reasonable action to prevent abuse in the workplace, such as defining an effective way to submit complaints and effective treatments for such cases.
Despite the apparent halt in the enactment process, the labour courts (in a series of rulings) have found a way to adopt the principles of the pending law, and implement them, mainly on the basis of general principles, such as an employer's obligation to act in good faith and an employee's fundamental right to dignity.
It seems that the labour courts are trying to find the necessary legal framework to rule in such claims, regardless of the official adoption of the law. For example, a regional labour court has ruled in favour of a plaintiff, granting material compensation to an employee, on account of grief caused by an offensive work environment. The court stated that an employer is obliged to provide a suitable work environment for its employees. The court described a pressurised, disciplinary and generally violent work environment, in which the employees were often reprimanded and insulted, and ruled that this type of environment establishes the grounds for a claim of abuse in the workplace, despite the fact that the law has yet to be enacted. Additional aspects that contributed to this specific work environment becoming abusive were the fact that the employees did not have clear working hours and there was a high turnover of employees (owing to their inability to handle the work conditions).
1 Orly Gerbi is a senior partner, Maayan Hammer-Tzeelon and Nir Gal are partners, and Marian Fertleman and Keren Assaf are senior associates at Herzog Fox & Neeman.
2 Labour Appeal 67949-09-16, Shmuel Vagman v. Galil Engineering Ltd.
3 Labour Appeal 34784-10-16, Tircovot Brom (ICL Israel Chemicals Ltd) v. Yehudit Borochov (published in Nevo on 15 October 2018).
4 A 'disabled person' is defined in the Disabled People Law as a person with a permanent or temporary physical, mental or intellectual (including cognitive) impairment, due to which his or her functions are substantially restricted in one or more main spheres of life.
5 Labour Dispute 67436-06-16, Nir Ephraim v. State of Israel – Ministry of Health.
6 Under the Prior Notice of Termination Law 5761-2001, a monthly employee is an employee whose remuneration for work is mainly paid once a month.
7 See, for example, ASK 56412-01-17, Kobi Shimoni v. Israel Railways Ltd (6 September 2017).
8 LA 164/99, Frumer v. Radguard Ltd PDA 34, 294 (1999); CA 6601/96, AES Sys Inc v. Saar PDI 54 (3), 85 (2000).
9 LA 164/99, Frumer v. Radguard Ltd PDA 34, 294 (1999).
10 CA 6601/96, AES Sys Inc v. Saar PDI 54 (3), 85 (2000).
11 This amount is updated annually.
12 Pelephone decision: New General Workers' Union v. Pelephone Communications Ltd (2 January 2013) 25476-09-12. A motion to the High Court of Justice was rejected.
13 SK 49105-08-16, New General Workers' Union v. The Medical Rehabilitation Centre 'Ba'it Balev' Bat-Yam; ASK 61532-12-16, The Medical Rehabilitation Centre 'Ba'it Balev' Bat-Yam v. New General Workers' Union; SK 29252-04-18, New General Workers' Union v. Neto Melinda Trade Ltd; SK 52024-03-16, New General Workers' Union v. S. Shlomo Insurance Company Ltd.
14 ASK 11460-10-14, Hot Mobile Ltd v. The New General Workers' Union.
15 McDonald's decision; New General Workers' Union and other v. Alonyal Ltd and other – 31826-10-14 – 6 May 2015.
16 An appeal on the McDonald's decision served by the workers union was removed without prejudice, and without the National Labour Court expressing its opinion on the Regional Labour Court's decision (ASK 40548-05-15, New General Workers' Organization v. Alonyal Ltd (24 November 2015).
17 Valid reasons for dismissal may include poor performance, redundancy and disciplinary action.
18 Ministerial approvals for the termination may be obtained in certain circumstances if the employer demonstrates that the termination is not the result of the special circumstances of the employee (such as the employee being pregnant).
19 Employment of Women Law 5714-1954; ministerial approval is required for all the aforementioned groups.
20 The Discharged Soldiers (Reinstatement in Employment) Law 5709-1949. In general, unless a ministerial permit is granted in advance, the termination of an employee's employment during military reserve service is prohibited, as is termination within 30 days of reserve service lasting longer than two days.
21 Under Sick Pay Law 5736-1976, employers are prohibited from terminating the employment of an employee who is absent from work owing to an illness during the period in which the employee is using his or her accumulated sick leave.
22 LA 28597-03-11 Dabush v. Yardeni Locks Holdings (2005) Ltd (11 February 2015).