The employment law framework in Israel derives from several 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. Where several legal sources apply to an employee, the one that is most beneficial governs.
The primary means for resolving employment disputes are through 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 by the Enforcement Unit of the Ministry of Economy, specific legislative authorities, state authorities and the courts.
II YEAR IN REVIEW
i Parental rights
In March 2017, an amendment was made to the Employment of Women Law 1954, extending paid maternity leave from 14 to 15 weeks for eligible mothers. The total period of leave for an employee having at least one year’s service, remains unchanged at 26 weeks. In addition, according to the amendment, an employer is required to grant an employee whose wife or partner gave birth, a week off during her maternity leave, provided that the mother agrees in writing to waive her maternity pay for the 15th week. The employee’s week off work is paid for by the National Insurance Institute and can be taken simultaneously with the mother’s maternity leave.
Under a further amendment to the Employment of Women Law, which came into effect in July 2017, an employee is permitted to be absent from work for one hour a day, without reducing the employee’s pay, whilst his or her spouse or partner is on military reserve duty (as defined in the Military Reserve Duty Law 2008). This is subject to certain conditions, including that (1) the reserve duty is for at least five consecutive days; (2) the employee has a child under 13 years of age; (3) the employee is employed full-time (in accordance with the practice at the workplace); and (4) the employee notifies the employer and provides a certificate confirming the reserve duty.
ii New guidance on the use of surveillance cameras at work
The Protection of Privacy Authority at the Ministry of Justice (the Authority) has issued new guidance regarding the use of surveillance cameras in the workplace. The Authority clarified the rules regarding their use and emphasised that the basic principles upheld by the National Labour Court in the Issakov2 case regarding employee privacy in the workplace (mainly in respect of the monitoring of employees’ emails) also applies to the use of surveillance cameras. The Authority clarified that, similar to the known rules regarding employees’ email correspondence, with regard to the use of surveillance cameras, the employer’s managerial prerogative is also subject to the requirements of reasonableness, proportionality, good faith and fairness.
The Authority outlined a number of principles and guidelines that the employer must act upon when installing surveillance cameras on its premises. Three of the important principles for employers to follow are (1) the need to have a transparent and clear policy; (2) that the cameras may only be installed for a legitimate purpose, essential to the employer’s interests and consistent with its business purposes or to fulfil a legal obligation; and (3) that the legitimacy of the installation of the camera is influenced by the proportionality of the action, and in particular, whether there is an alternative, less harmful way of achieving the desired goal.
iii The provision of payslips by electronic means
After years of debate, new regulations came into effect in July 2017 allowing for the issue of payslips to employees using technological means in place of printed payslips. According to the new Wage Protection Regulations (Special Ways to Submit Pay Slips) 2017, an employer is permitted, within certain parameters, to provide an employee with payslips via a secure internet site, private email or the employer’s email, all subject to the employee’s written agreement.
In order to preserve employee privacy and the authenticity of the information transferred, reasonable means must be used to ensure that access to and viewing of the payslips will only be by the employee, or with his or her permission, using at least encrypted information and after the employee has given his or her consent. Specific obligations are imposed on the employer with regard to each of the methods that may be used. According to the Regulations, an employee is permitted to withdraw consent at any time and go back to receiving printed payslips.
III SIGNIFICANT CASES
i The limits of semi-political striking
In Israel, the High Court of Justice stipulated over two decades ago3 that in cases of a semi-political strike where employees take action on issues that have no direct bearing on their employment conditions, but influence their conditions, the employees can only take minor action, limited in time and scope, to express their opposition. However, a recent judgment of the National Labour Court permitted the Israel Electric Company’s union to begin unlimited sanctions against the Israel Electric Company in connection with the intention of the state of Israel to implement major structural changes in the electricity sector. Although the union undertook its action against the Israel Electric Company, the National Labour Court refrained from categorising it as a semi-political strike.
The state of Israel and the Forum of Private Electricity Producers from Natural Gas have submitted a petition to the High Court of Justice against this judgment. During an initial hearing at the High Court of Justice, the court clarified that the National Labour Court judgment raised difficulties. Following the hearing, the High Court of Justice issued – in a rare and exceptional manner – conditional orders against the National Labour Court’s judgment whereby the union was required to present justification for not voiding the judgment of the National Labour Court. We await the outcome of the final decision.
ii Age-related criteria and the use of chauvinistic assumptions when terminating employment amounts to unlawful discrimination
In the recent case of Rivka Rosenbaum,4 the Regional Labour Court held that although efficiency and reduction procedures are within the employer’s managerial prerogative, the employer must carefully examine the specific implications for an employee it wishes to retire, including the effect on his or her accrued pension rights. In this case, the employee, at the age of 65, after 22 years of employment with the company, was dismissed as part of a reorganisation and reduction in manpower. The employee contended that the decision was made in view of her age and amounted to unlawful age discrimination.
The Court found that the reason for selecting the employee was that on the date of her dismissal she was entitled to a pension, a consideration that is, naturally, a function of her age. The employer had also referred to the fact that the employee’s husband was a pensioner of the Israel Electric Corporation in considering the dismissal. The Court held that the employer’s assumption that the employee’s economic situation was reasonable could not itself constitute grounds for dismissal. Furthermore, it held that the employer had no right to assume that a woman could be financially dependent on her husband’s income, that such a perception was chauvinistic and anachronistic, and amounted to unlawful discrimination.
iii Disability discrimination and the termination of employment
In Yosef Cohen v. Tel Aviv,5 the Regional Labour Court held that the failure to consider possible reasonable adjustments for a disabled employee to enable him or her to continue working amounted to unlawful discrimination. In this case, an agronomist working as the manager of the Tel Aviv-Jaffa municipality’s plant nursery was diagnosed with multiple sclerosis and since 1997, had been confined to a wheelchair. An occupational physician determined that the employee could only deal with ‘handicapped occupations’. The municipality considered that there was no job for him and referred him to an occupational physician to be declared disqualified for work. The Regional Labour Court rejected the employee’s claim for monetary compensation after it found that there was no defect in the municipality’s conduct in terminating his employment with a view to him receiving a disability pension.
On appeal, the National Labour Court noted that the municipality, and the Regional Labour Court itself, did not examine whether the employee was capable of performing the essential requirements of the position after possible reasonable adjustments. It held that when a disability is acquired during the period of employment, and especially where the employee has worked for the employer for a long period, the employer should allow the employee to continue working by virtue of the employer’s increased duty of good faith within the employment relationship. Although the National Labour Court did not reverse the ruling of the Regional Labour Court, it held that the failure of the employer to consider possible reasonable adjustments at all constituted a breach of the Equal Rights for People with Disabilities Law 5758-1998.
IV BASICS OF ENTERING AN EMPLOYMENT RELATIONSHIP
i Employment relationship
Generally, Israeli law does not require a written employment contract, subject to certain 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 them, 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 obligated to provide such 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 expiration, may entitle the other party 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 time, 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 prior notice.
According to Labour Court ruling, during the probationary period the reasons for a termination 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 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 (whether as independent contractors or as employees) by a foreign company may create a permanent establishment exposure to that company in Israel. The main outcome of such exposure is that amounts attributed to the Israeli permanent establishment will be subject to Israeli corporate tax.
V RESTRICTIVE COVENANTS
Non-compete restrictions during and after the employment relationship are common in 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 other than in specific circumstances, when:9
- 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.
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
VI Working hours and overtime
i Working time
The issue of working hours and overtime is governed by the Hours of Work and Rest Law 5711–1951 (Hours of Work Law), and additional legislative sources, such as Extension Orders.
By virtue of an Extension Order, effective as of July 2000, in general the workday in Israel consists of 8.6 hours per day, 43 hours per week and 186 hours per month.
According to the Hours of Work Law, ‘night work’ is considered as work during a period of not less than two hours between 10pm and 6am. Night work must not exceed seven hours (not including overtime), and an employee must not carry out night work for more than one week in every three.
Following the signing of a general collective agreement, there might be a shortening of the workweek from 43 to 42 hours, as well as changes to the night work limits and other working time rules, in the near future. For further details, see Section XIV.ii.
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 Law (under exceptional circumstances).
Overtime compensation must be paid after working 8.6 hours per day or 43 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.
Where a business operates a six-day workweek, employees may work up to 12 hours’ overtime per week; and where a business operates a five-day workweek, employees may work up to 15 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 a 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. Permits can also be issued for periods of up to 45 days, three months or two years.
In general, permits are granted in five areas: 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, that is absent in Israel; and
- his or her monthly salary shall not be less than twice the average salary in Israel (approximately US$5,000 per month).
An employer may employ an unrestricted number of foreign employees who do not require a permit. There is no limitation on the number of permits that can be applied for by the employer. However, the authorities will take into consideration the number of foreign employees employed by the employer compared to 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 employers employing foreign workers include providing medical insurance for the foreign employee, 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 which apply to any employee, except in certain cases, such as where the employee earns more than double the average salary in Israel.
VIII GLOBAL POLICIES
There is no mandatory requirement for applying disciplinary rules. However, such 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 the 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, in order for disciplinary rules to apply to employees, the employees should consent to them, either explicitly or implicitly. It is recommended that the employer’s rules be accessible to the employees (such as on the employer’s 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.
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, where 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 on whether or not 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 impact the employer’s ability to enforce them.
X EMPLOYEE REPRESENTATION
Employees are permitted, but not required, to establish a union if none currently 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 – 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 the following main rights with respect to unionisation:
- 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 in order 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.11 However, the Regional Labour Court in Tel Aviv has ruled in the McDonald’s case,12 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 such allegations in good faith;13 and
- the trade union can also potentially declare a work dispute and initiate a strike (see below).
The law stipulates that the 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. The law, however, emphasises that this requirement does not obligate the employer to sign a collective bargaining agreement with the trade union, but rather solely requires the employer to negotiate with the union.
In workplaces in which collective relations are already established, the employer is obligated to negotiate with the representative trade union with respect to various specific employment matters, including the 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.
XI DATA PROTECTION
i Requirements for registration
The Privacy Law 5741-1981 (the Privacy Law) regulates the matter of databases and their registration. The Privacy Law defines a ‘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 if, inter alia, it:
- contains information on more than 10,000 individuals;
- contains sensitive information (see below);
- contains information about persons, which was not provided by them, on their behalf or with their consent; or
- is used for direct mailing.
Human resource databases in workplaces are generally considered to include sensitive information and, consequently, should be registered according to the Privacy Law. In addition, no person may use the information in a registered database except for the purposes for which it was established.
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. In May 2017, Protection of Privacy Regulations (Data Security) 5777-2017 were enacted and they will come into force on 8 May 2018. These Regulations establish a broader and more comprehensive arrangement regarding the physical and logical protection of databases and their management than applied until now under the Privacy Law and the regulations of 1986.
ii Cross-border data transfers
The export of data outside of Israel from a database within Israel is regulated by the Protection of Privacy Regulations (Transfer of Information to a Database Outside the State Borders) 5761-2001. The regulations prohibit the transfer of data from a database in Israel 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 a database in Israel to a database abroad, even when the overseas law provides a level of protection that falls below that which is provided under Israeli law. The conditions include, for example, obtaining the individual’s consent to the transfer of the data and that the data is transferred to someone who has agreed to fulfil the conditions laid down in Israel.
In addition to the conditions, the regulations state that the owner of the database must ensure (by way of written obligation), that the recipient takes steps to ensure privacy of data subjects, and that the data shall not be transferred to any other person. Accordingly, onward transfer of information to a third party is not permitted, unless the owner of the database entered into a direct agreement with such third party, which includes, inter alia, the above requirements.
iii 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, as encompassing types of personal information that are not specifically mentioned in the definition of ‘data’ or ‘sensitive data’, all depending on the specific circumstances of the matter.
If the company maintains sensitive data by electronic means for processing, it is required to register a database.
iv Background checks
Candidate background checks must respect the individual’s right to privacy and be reasonable, relevant, proportionate and carried out in good faith.
For publicly available information, there is no specific requirement for obtaining an individual’s consent. For 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 which type of offences or investigations it requires information on, and demonstrates that this is relevant for the position in the circumstances.
According to the Credit Information Services Law 5762-2002, an employer is entitled to receive a report regarding a candidate’s ‘credit information’ from a licensed authority, for employment purposes where relevant to the position. There is only a need to notify the candidate if the employer decides, based on the credit report, not to hire him or her. However, it is expected that at the end of 2018, a new Credit Data Law (which was enacted in 2016) will come into force (the New Credit Law), which completely prohibits the employer from requesting or obtaining information regarding credit data and credit rating for purposes of employment, including through a questionnaire or declaration from the candidate. The New Credit Law also provides that the courts will have the power to oblige a person who requested or received credit data information in violation of the provisions, to pay the candidate compensation without proof of damage. The New Credit Law is expected to replace the 2002 law.
It is forbidden to request information regarding military and genetic profiles.
XII DISCONTINUING EMPLOYMENT
As a general rule, employers must exercise their right to terminate an employee’s employment in good faith, for valid reasons,14 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 the 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.15 Israeli law prohibits the termination of certain groups of employees, such as pregnant employees; 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;16 employees on army reserve duty;17 and employees on sick leave.18
In workplaces where collective relations 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 to a social plan or rehire rights by law.
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 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 request 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 owing to coercion by the employer.
As a general rule, Israeli case law requires an employer to inform and consult with employees with respect to redundancies. However, Israeli 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, for example, general information regarding the financial situation of the employer when the redundancies need to take place due to lack of profit.
In practice, the obligation to inform and consult with employees is only practical where an employee representative body exists and can therefore be consulted.
The obligation to inform and consult with employees does not detract from the employer’s general obligations with respect to the termination of employment, including holding personal hearings with each employee.19 Thus, employees whose contracts are terminated by reason of redundancy each have the same personal rights as any other employee whose employment is terminated.
XIII TRANSFER OF BUSINESS
There are no regulations in Israel in the style of the Transfer of Undertakings (Protection of Employment) Regulations 2006. 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 such 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 recently issued an important ruling, 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.20
As is clear from Sections II and III, employers in Israel are facing a range of new challenges as a result of increasing regulation, whether introduced by way of legislation, the extension of collective agreements to the entire Israeli market, or from the impact of judicial decisions.
i Increase in shared parental rights
As reflected in recent amendments to legislation on parental rights, the evolution of laws to advance and protect women in the workplace is continuing in Israel. There is a clear move away from ‘mother-only’ rights to parental rights. Even the terminology used within the law has been officially changed – from ‘maternity leave’ to the ‘birth and parenting period’, and from ‘breastfeeding hour’ to ‘parenting hour’. We have no doubt that this trend will continue to grow and develop in the coming years.
ii Shortening the workweek
There might be a shortening of the workweek in the near future and a new general collective agreement was recently signed in this regard. The new collective agreement (which will take effect when it is extended by way of an Extension Order to all employees in Israel) provides, among other things, that:
- the length of the workweek is to be shortened from 43 to 42 hours, to be implemented by reducing one hour’s work on a specified day of the week;
- employees asked to work during the ‘deducted’ hour because of work requirements will be paid for this hour in accordance with the usual overtime provisions;
- an employee’s hourly rate of pay will be calculated on the basis of 182 working hours per month (rather than 186 hours per month as currently);
- the total permissible number of overtime hours in an ordinary working week will be 16 hours (instead of 15 hours); and
- night work will be allowed for an accumulative period of seven out of 14 days.
The provisions will only take effect once the relevant minister gives the necessary approvals and an extension order is issued in respect of the entire market, which has not occurred to date. In June 2017, a notice was officially published by the Minister of Labour, Welfare and Social Services regarding his intention to issue an extension order, which may cautiously indicate that the implementation of the collective agreement is approaching. This initiative replaces a previous initiative to grant several Sundays off work each year as additional rest days. However, it is not yet clear which initiative, if either, will ultimately come into effect. It is apparent that the last word on the matter has yet to be said and we await developments in this regard.
iii Increase in minimum wage
The monthly minimum wage is to be increased from 1 December 2017 to 5,300 shekels per month for a full-time employee. As such, the hourly minimum wage shall increase from 26.90 shekels to 28.50 shekels and the minimum wage for a full day from 231 shekels to 245 shekels.
iv Changes to the voluntary retirement age for women
While the age of compulsory retirement is the same for both men and women, the age at which an employee is entitled to retire voluntarily from work is 62 for women and 67 for men. However, there is a lively discussion on the issue of retirement age in general, and the voluntary retirement age for women in particular. The Retirement Age Law 2004 provides for a mechanism by which, if not determined otherwise by the Finance Committee of the Knesset by the date fixed by law (following recommendations of the Minister of Finance, based on recommendations of a public committee), the retirement age for women would automatically increase in stages, up to the age of 64. However, the Minister of Finance has not made recommendations, and no decision has been taken by the Finance Committee on the matter. As such, the voluntary retirement age for women will not increase, and remains at age 62. It is clear though that the issue is far from closed and we anticipate further developments.
1 Orly Gerbi is a senior partner, Maayan Hammer-Tzeelon is a partner, and Nir Gal and Marian Fertleman are senior associates, at Herzog Fox & Neeman.
2 L.A. 90-08, Issakov Inbar v. State of Israel - Appointee over Employment of Women Law, given on 8 February 2011.
3 HCJ 1074/93 Government Legal Counsel v. National Labour Court PDI 49(2)485.
4 SK 36973-11-13 Rivka Rosenbaum v. Dubek (28 September 2017). An appeal has been submitted.
5 ASK 12264-10-13 Yosef Cohen v. The Tel Aviv-Jaffa Municipality (21 August 2017).
6 Under the Prior Notice of Termination Law 5761-2001, a monthly employee is an employee whose remuneration for his or her work is mainly paid on a monthly basis.
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 See Pelephone decision, supra footnote 2.
12 See McDonald’s decision, supra footnote 4.
13 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).
14 Valid reasons for dismissal may include poor performance, redundancy and disciplinary action.
15 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 (e.g., the employee being pregnant).
16 Employment of Women Law 5714-1954; Ministerial approval is required for all the above-mentioned groups.
17 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.
18 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 utilising his or her accumulated sick leave.
19 See Section XII.i.
20 LA 28597-03-11 Dabush v. Yardeni Locks Holdings (2005) Ltd (11 February 2015).