National Labour Law Profile: The State of Israel
Contributed by Judge Stephen J. Adler, assisted by Adv. Ariel
Avgar
Stephen (Steve) Adler is the President of the National Labour Court of Israel. He is an adjunct lecturer at the law faculties of Hebrew University and Tel Aviv University. He is also the chairperson of the Israel branch of the Labour and Social Security Society. Judge Adler has lectured at the Cardozo Law School in New York and the Central European University in Budapest and was a visiting senior fellow at St Johns college in Oxford. He received a BS degree in Labor Relations from Cornell University and a JD degree from Columbia University law faculty in New York. E-mail address: StefanA@court.gov.il
Ariel Avgar is a graduate of the Hebrew University law faculty, a member of the Israel Bar Association and is currently studying for a masters degree at the Cornell University School of Industrial and Labor Relations.
I. GENERAL FRAMEWORK
Constitution
When the State of Israel was founded on May 14, 1948 it inherited
the British-model unwritten constitution, which it has been slowly
replacing with a written constitution. For a variety of political
and ideological reasons the first Knesset – Israeli Parliament –
decided that the written constitution would be passed chapter by
chapter. Till now the Knesset has enacted eleven Basic Laws,
which comprise the existing partial written constitution. The early
Basic Laws established the branches of government (executive
branch, parliament and courts), basic state institutions, such as
the president and army and basic elements of democracy, such
as elections. In 1992, the Knesset passed two important Basic Laws:
the Basic Law: Human Dignity and Freedom and the Basic
Law: Freedom of Occupation. The Basic Laws not only set out
constitutional rights but also include entrenchment clauses, which
make it difficult for the Knesset to abolish rights and also
enable courts to declare statutes “unconstitutional”. This was
considered a constitutional revolution and a significant departure
from the British model of parliamentary supremacy to the American
model of constitutional supremacy.
The Basic Law: Human Dignity and Freedom specifically
guarantees the rights to human dignity, life, property, freedom of
movement and privacy. The right to human dignity has been broadly
interpreted to provide an additional array of rights and liberties,
including equality, freedom of association, the right to equal
opportunity at the work place and other social rights.
Constitutional rights are not absolute and may be limited by
primary legislation, which furthers the values of the State of
Israel and is intended for a proper purpose. Moreover, such
legislations must also meet the proportionality test. This means a
balancing of the various constitutional rights. The Basic Law:
Human Dignity and Freedom do not have the power to nullify or
alter laws enacted prior to its’ enactment but such statutes are to
be interpreted in light of the Basic Law.
The Basic Law: Freedom of Occupation makes freedom of
occupation a constitutional right. This has been held by the
Supreme Court to restrict unreasonable or not proportionate
legislation to limit people from doing certain types of work, such
as a real estate agent or importer of non-kosher food. A recent
landmark judgment of the National Labour Court held that covenants
not to compete were not enforceable unless the worker revealed
trade secrets to his new employer. This judgment emphasized the
constitutional right of freedom of occupation, freedom of movement
for workers and their right to chose their workplace. 1
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The Government
The government, which is the executive branch, is compromised of a
Prime Minister and Cabinet Ministers, whose authorities,
obligations, and election process are all regulated by the Basic
Law: Government.
Until the 1996 elections voting was for political parties’
Knesset list, with the party receiving the most members proposing a
coalition headed by a Prime Minister of that party. Since 1996 the
vote was split, with a separate ballot for the Knesset members and
a direct election of the Prime Minister. Prior to the 1996
elections, the Basic Law: Government was reformed and a
direct election method was enacted. The two-ballot election process
was not successful and the Knesset passed a law reverting back to
the one ballot system, which is the method to be used
in the scheduled 2003 election.
The Prime Minister and the Knesset are elected for four-year
terms, but both have the power to force new elections.
Cabinet members are appointed and dismissed by the Prime Minister.
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The Head of State
The Head of State in Israel is the President, elected by the
Knesset for a single seven year term. This position is mainly
ceremonial and the President signs all laws enacted by the Knesset
and international treaties, which have been approved by the
Knesset. In addition, he swears in judges and has the
authority to pardon felons and reduce prison sentences.
The Knesset can remove the President from office with a majority
vote of eighty Knesset members. In the event that the President
cannot fulfill his/her duties, he is replaced by the Chairperson of
the Knesset.
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The Knesset, the Israeli legislature, derives its authority from
The Basic Law: The Knesset, which regulates its’
composition, election processes, and authorities. Knesset members
are elected for four year terms on the basis of general,
national, secret, and proportional elections.
As a rule, laws are passed in the Knesset on the basis of the
majority of members present at the time of the vote. Certain issues
demand a special majority such as the alteration or abolition of
some Basic Laws.
Prior to the enactment of a law, it must pass a preliminary
process. If the government or one of the Knesset committees submits
the proposed law, it must pass two initial votes in the Knesset
prior to the third and final vote. If a Knesset member submits a
private proposal, it must be approved by the Chairperson of the
Knesset and must also pass a preliminary vote, which sends it to
the relevant Knesset committee to be prepared for the first and
second vote.
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The Judiciary
The judicial branch, which receives its’ authority from the Basic
Law: Judiciary, consists of the general court system,
labour courts and religious courts. The general system and the
Labour courts are administered by the Courts Authority, which is
supervised by the Minister of Justice and the President of the
Supreme Court. The general courts have three levels: the Magistrate
Courts, which are trial courts, the District Courts, which hear
both trials and appeals and the Supreme Court, which hears appeals
and acts as the High Court of Justice. The latter hears
constitutional cases, protects individuals from government actions
and co-ordinates the court systems. Family Courts are a department
of the Magistrates Courts and Administrative Courts are part of the
District Courts. The Labour Courts have two levels: the trial level
are the Regional Labour Courts and the appeal level is the National
Labour Court.
Judges are appointed by a committee of three Supreme Court
justices, the Minister of Justice, another minister, two Knesset
members and two members of the Bar Association. Their appointment
continues until they reach the compulsory retirement age of 70.
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Key figures
Israel’s population in 2001 was 6,496,600, with a Jewish majority
and a Moslem, Christian and Druze minority of about 1,226,100. The
civilian labor force was approximately 2,500,000, which is 55% of
the population 15 years or older. There was about 200,000 migrant
workers, mainly from the Far East and Eastern Europe. The average
monthly wage per worker was approximately US $1,500..2
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II. LABOUR REGULATION
General
Employment relations in Israel are regulated by a number of
sources: constitutional rights, as determined by the Basic Laws
mentioned above; Statutory rights, as set out in statutes and
regulations; rights set by collective agreements and extension
orders of collective agreements; and individual labour contracts.
These legal sources are interpreted by the National Labour Court,
which is the main judicial body developing labour and social
security law. International standards, especially ILO conventions
adopted by Israel, but also EU standards, are used by the
government and courts as guidelines, even though they are not
binding.
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Early developments
and The formative years
Israel is the only country we know of which had labour unions prior
to industry. Jewish immigrants to Turkish occupied Palestine
arrived in the late 19th century, early 20th
century, to find an undeveloped land, with a small agricultural
economy. In addition to forming agricultural communes –
kibbutzim – they founded a union – the Jewish Worker’s Federation,
known as the Histadrut – which then founded union controlled and
owned factories and co-operatives, which provided work for union
members. The Histadrut was the Jewish population’s tool for
economic, social and employment development in the pre-state
period. Its’ activities continued after the state was founded in
1948 and, as late as the early 1980’s Histadrut companies were
about 25% of the Israeli economy.
The Histadrut was one of the most influential forces in pre-state
Israel. After the state was founded in 1948, the Histadrut
continued to play an important role, especially as an integral part
of the labour movement, which formed the government coalition until
1977. This influence and the ideology of the labour movement
resulted in the Knesset adopting a comprehensive system of
protective labour legislation. The Histadrut supported labour
legislation for all workers, not only its’ members. It also
organized most Jewish workers in the pre-state period and both
Jewish and Arab workers after the state was founded. As a result
about 85% of the workforce was organized in the early period of the
state and union density continued high until 1995. The Histadrut
was a federation of labour which provided direct membership to blue
collar and white collar unions, including professional unions. It
also provided social services such as health-care, pensions, and
insurance schemes, employment agencies, sports and cultural
activities and senior citizen housing.
High union density resulted in collective agreements governing most
workplaces. Moreover, the Histadrut preferred to keep the courts
out of collective labour law, so that there was a model of state
non-intervention in this area. The statutes governing collective
labour law were the Collective Agreements Law - 1957 and the
Settlement of Labour Disputes Law - 1957. Until the early
1970’s there were no limits on strikes and the law gave unions and
strikers protection for strike activity.
By the early 1990’s union density had declined to about 60% of the
work force. A major cause of further decline was that until 1995, union
membership was a condition for eligibility for medical coverage. In January 1, 1995 this linkage was terminated by the
National Compulsory Health Insurance Law, which guaranteed every resident
medical coverage. Over night Histadrut membership declined from
about 1,250,000 to 600,000. From this time on union density has been
about 33%, with union density in the private sector declining to
about 10-15%. In addition the Histadrut severed its’ link with the
Labour Party, reducing its ability to influence labour legislation.
Today the Histadrut has been renamed “The New Histadrut.” It power
is mainly in the public sector but also has wide support from the
low income workers. The Histadrut continues to control the workers’
pension funds, which have about 700,000 members. It also has begun
to offer its affiliated unions and rank and file legal services. It
is still the most prominent union in Israel, but there are
important independent unions, such as The Grade School Teachers’
Union, the High School Teachers’ Union, the Doctors’ Union and the
Leumit National General Union.
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In its’ first decade as a State Israel adopted many protective
labour statutes, using ILO conventions and Western standards as a
guideline. The following laws were passed: Discharged Soldiers
(Reinstatement in Employment), 5709-1949; The Hours of Work and
Rest Law, 5711-1951; The Annual Leave Law, 5711-1951;
Apprenticeship Law, 5713-1953; Protection of Youth Labour Law,
5713-1953; The Employment of Woman Law, 5714-1954; and The Wage
Protection Law, 5718-1958. Among the main achievements of this
period was the prohibiting of dismissing pregnant workers, which
was strictly enforced. From the foundation of the state the
existing Mandatory period work safety laws were modernized.
During the second decade Israel continued to adopt both individual
and collective labour laws, such as: The Labour Inspection
(Organization) Law, 5714-1954; The Severance Pay Law, 5723-1963;
The Collective Agreement Law, 5717-1957; The Settlement of Labour
Disputes Law, 5717-1957; Male and Female Workers (Equal Pay) Law,
5724-1964.
In the following period, between the late 1960’s and the early
1990’s, the Knesset expanded individual labour protection, adopted
significant laws prohibiting discrimination at the work place and
established the Labour Courts, by the following statutes: The
Labour Courts Law, 5729-1969; The Work Safety Ordinance (New
Version), 5730-1970; The Sick Pay Law, 5736-1976; The Minimum Wage
Law, 5747-1987; Male and Female Workers (Equal Retirement Age) Law,
1987; The Employment (Equal Opportunities) Law,
5748-1988; Single Parent Family Law, 1992; Absence
Because of a Child’s Sickness Law, 1993; Absence Because of a
Parent’s Sickness Law, 1993.
Recent labour legislation, from 1995 to date, expanded equality at
the workplace and attempted to protect labour-only contractual
workers, workers in irregular work relationships and migrant
workers. Such statutes included: Employment of Employees by
Manpower Contractors Law, 1996; Amendment to the Foreign Workers
(Prohibition of Unlawful Employment and Assurance of Fair
Conditions) Law, 1991; Protection of Employees (Exposure of
Offences of Unethical Conduct and Improper Administration) Law,
1997; The Prevention of Sexual Harassment Law, 5758-1998; Equal
Rights for Persons With Disabilities Law, 1998; Absence Because of
a Spouses Sickness Law, 1998 . Recently laws were passed
concerning basic protections and labour rights, such as: The
Advanced Notice of Discharge and Resignation Law, 2001 and The
Notice of Basic Employment Terms Law, 2002.
From its’ first decade Israel adopted the progressive European
social security model. The National Insurance Institute was founded
in the 1950’s with basic branches of social welfare, such as
worker’s compensation. Today this social security legislation
encompasses the following benefits: maternity, disability, free
burial, medical insurance, unemployment and minimum annual income.
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In 1969 the Knesset passed the Labour Courts Law and thereby
formed a separate judicial system dedicated to individual and
collective labour disputes and issues. These Labour Courts have
played a significant role in the development of labour and social
security law in Israel.
Prior to the Labour Courts, disputes relating to labour and social
security were litigated in the general judicial system or
tribunals, which did not develop law relating to collective
disputes and handed down few cases relating to labour law and
social security. In the mid 1960’s the Histadrut and Manufacturers’
Association signed a collective agreement undertaking to request
the Knesset to establish a labour court. At this time strikes were
common, especially in the public sector and the employers and
unions hoped that labour courts would reduce the number of
industrial disputes. Among the purposes for establishing Labour
Courts were: [1] to settle labour disputes by legal means instead
of strikes, [2] to provide expertise in adjudicating labour and
social security disputes, [3] to have courts with simple and easy
to understand procedures, so that workers could represent
themselves and [4] to be more expedient and efficient than regular
courts. In a break from the general court system, in which judges
make all decisions without juries, the Labour Courts have lay
members, in equal numbers, one from labour and one from management,
sitting with professional judges. Labour Courts were, therefore,
regarded as a partnership between the State, unions and management.
The Labour Court System has a trial instance, consisting of five
Regional Labour Courts, and an appeals instance, the National
Labour Court, which sits in Jerusalem. The Regional Labour Court
bench is composed of one professional judge and two lay
members, one from labour and one from management. The National
Labour Court sits with three professional judges and two lay
members. In criminal cases there are no lay members and only the
judges hear these cases. In national wide collective disputes the
National Labour Court sits with three professional judges and four
lay members.
The judges are appointed by the same committee which appoints
general court judges; consisting of three Supreme Court justices,
the Ministers of Justice and Labour, two members of the Bar
Association and two Knesset members. The appointment is until
compulsory retirement at the age of 70. Today there are 55 judges.
The lay members are appointed by the Ministers of Justice and
Labour for terms of three years.
Labour Courts jurisdiction is very broad and includes individual disputes between workers and employers, protective labour laws, collective disputes, disputes between a union and its members or an employer and his association, pension matters, workplace equality, administrative matters relating to workers, such as job tenders, occupational safety and health, employment agencies, protection for migrant workers, social security and the State medical insurance. With regard to tort actions, the Courts have jurisdiction over the following actions where they are related to a labour dispute: trespassing, breaching of statutory duty, and inducing the breach of a contract. Approximately 30% of the cases filed in the Labour Courts relate to social security. Labour Courts hear cases concerning workers’ compensation, unemployment insurance, disability benefits, maternity benefits, death benefits, guaranteed annual income, senior citizens pensions, and children’s benefits. The Labour Courts also hear matters concerning ratifying or canceling arbitration decisions.
In addition to being the appeal instance the National Labour Court
also has original jurisdiction over nation wide strikes and
collective disputes. Regional Labour courts receive about 90,000
cases a year and the National Labour Court receives about 2,000 a
year. Judgments of the National Labour Court are not appealable;
however, a party may petition the Supreme Court sitting as a High
Court of Justice to hear petitions relating to constitutional
issues or important labour law or general law matters. In practice
the Supreme Court hands down one or two important judgments a year
on labour or social security law matters.
Regarding criminal labour law cases, such as work safety, only
judges sit. There is an appeal by right to the National Labour
Court and by permission to the Supreme Court.
Procedural aspects are regulated by the special regulations for the
Labour Courts and are much simpler and easier to understand than
those of the general courts. Section 33 of the Labour Courts
Law states that in any procedural matter not regulated by the
law or its regulations, the Court shall decide according to what
seems just and fair. Section 32 of the Labour Courts Law
states that the courts are not bound to evidence rules. In
practice, the basic principles of evidence apply in the Labour
Courts, but the judges may be liberal in admitting evidence.
The Labour Courts are developing alternate dispute resolution (ADR)
programs. Lay members do mediation and settled about 4,500
cases in 2001. All lay members acting as mediators are required to
take mediation courses. About 400 cases were settled in 2001 by
private mediators, to whom the courts referred the parties. The
courts also referred parties to arbitration. Mediation is not
compulsory, but actively encouraged by the courts.
The Labour Courts are developing a case management program, run by
lawyers employed by the courts. Registrars and judges conduct
pre-trial hearings to settle cases or prepare them for trial.
The National Labour Court created Israeli collective labour law. It
also developed individual labour law and social security law. Only a few judgments of the Supreme Court were published until 1969 when the National Labour Court was establishedpublishes an annual volume
each year and is beginning to publish two annual volumes. The
Labour Courts have made significant contribution to the
stabilization of labour relations and settlement of collective
disputes thru negotiating and adjudication. Their most important
role is to stop a strike or lockout and return the parties to the
bargaining table, which is accomplished by the judge suggesting a
temporary compromise or giving a court order. The Labour Courts
also interpret collective agreements and decide cases involving
workers’ rights when there is a transfer of ownership,
privatization, collective dismissals, or violation of freedom of
association.
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A. Legislative reform
Recent statutes have mainly related to current problems in the
Israeli labour market. Such problems are labour-only employment,
irregular/non-traditional work relationships and migrant workers.
Other legislation continues the policy of ensuring equality at the
work place. Finally, a few laws have been passed expanding general
protective labour legislation.
i. Labor- only -contracting
It is estimated that irregular and labour-only work relationships
currently comprise 10% of the workforce. About a third of
government workers are manpower agency employees. Such triangular
work relationships are expanding. There is also a trend towards
outsourcing. These models created problems concerning employment
conditions and job security for workers.
Originally Labour Court cases held that the manpower agency was the
employer of a worker in a triangular work relation, the receiver of
work having no contractual relationship with this worker. Since the
mid 1990’s the National Labour Court has changed this policy and
held that in certain circumstance the manpower agency and work
receiver were joint employers, responsible jointly or separately to
the worker. The National Labour Court said that “formal”
contractual relationships in triangular work relationships should
not be the only or main factor in determining whether the work
receiver is responsible to the worker. Social policy considerations
were given a significant role in determining the obligations of the
work receiver. The real roles of each party were given weight, with
the court examining who actually received the worker’s work and not
only who the worker had a labour contract with. For example, in a
recent judgment handed down by the Tel-Aviv Regional Labour Court,
it was decided that stenographers employed by the court system for
long periods of time have become government employees. The National
Labour Court and the Supreme Court also expanded the type of people
doing work who were defined as “workers”, thereby extending the
scope of protective labour legislation.
As a result of Histadrut and public pressure the Knesset passed in
1996 the Employment by Labour-Only-Contracting Law, which has
thereafter been amended. Regulations were issued to make the law
more effective. This made into law some of the legal theories which
the National Labour Court had developed and enumerated for the purpose of futhering
rights of workers in triangular work relationships. The law
requires labour-only contractors to obtain a license and deposit a
substantial sum of money as a bond to ensure they can fulfill their
obligations to their workers. According to this law contract-only
workers are entitled to most of the terms granted to workers at
their workplace by the collective agreements applying at the
workplace. It did not, however, include protection from dismissal.
This law was criticized by the unions and social interest groups
for not granting workers adequate protections. In 2000, the Knesset
revised the law, significantly improving protections granted to
employees in these irregular work relationships. The triangular
relationship is now limited to a nine-month period after which the
worker becomes an employee of the employer at whose workplace he is
working. Also, the contracted employee is entitled to the
protection of either the collective agreement applying at his
workplace or a collective agreement with the labour-only
contractor.
This reform went into effect as of the 28.7.2001. There has been
speculation as to the implications that this law will now have on
the workforce in general and on the public sector in particular.
The nine month period was recently extended a few months and as
this period ends there is employer pressure for another extension.
A heated public debate is taking place on this issue and the
movement for improvement in labour-only employment conditions
has played a significant part in the Histadrut’s public campaign
both against the government, employer organizations and competing
unions.
ii. Migrant workers
In the late 1990’s migrant workers increased from an insignificant
part of the workforce, less than 1%, to about 10% of the workforce.
3 Approximately
half of these workers entered Israel illegally and have no work
permit. According to statutes and case law, migrant workers are
entitled to all the protective labour law rights, such as minimum
wages, hours of work, severance pay and vacations. However, they
have difficulty achieving these rights in the courts because of a
language problem, unfamiliarity with Israel law and courts and lack
of union or legal representation.
In 1991 the Knesset passed the Foreign Workers’ Law (Unlawful
Employment and the Guarantee of Decent Conditions), which was
amended in 2000. The purpose of this law is to guarantee that
migrant workers obtain their rights under protective labour
legislation and to compel employers to provide migrant
employees with decent employment conditions, Employers are
obligated to provide the employee with a written contract
specifying the precise employment terms and conditions. Limits were
placed on the expenses employers can compel workers to pay for
housing. Employers are required to contribute a percentage of the
migrant worker’s wages to a government fund which will grant them
certain social benefits, including social welfare benefits.. The
law encourages employers to sign collective agreements regulating
working conditions of migrant workers.
iii. Freedom of association
Recent National Labour Court judgments guarantee
workers’ right to organize and prohibit an employer from
dismissing striking workers. Such protection had not been granted
by statute. These decisions were based upon the constitutional
freedom of association. Where a collective agreement existed and
the employer attempted to oust the union or dismiss workers for
participating in a strike the court based its judgment upon the
long term obligation to maintain a collective relationship in good
faith. After these decisions the Knesset amended the Settlement of
Labour Disputes Law and guaranteed these protections by statute.
iv. Expanding the definition of worker
In judgments handed down in late 2001 and 2002 the National Labour
Court held that certain freelancers are workers and
entitled to protective labour law rights, if the purpose of such
laws is applicable to their situations. The most important of these
judgments is Tzadka v. Gallai Tzahal, the Army Radio
Station. 4
Other recent National Labour Court decisions held that work
performers, defined as “independents” in their contracts for
services, were nevertheless workers, because they were an integral
part of the work receiver’s business and did not conduct private
businesses of their own. This expanded the existing integration
test and multiple factor test used to determine who is a worker.
These judgments also dealt with the question of what benefits the
person who was considered an independent but became an employee by
court judgment was entitled to. The general rule is that he
or she is entitled to all rights granted by protective labour law,
which are to be calculated at the salary which would have been
received if he or she had been defined as a worker. In general
there was to be no restitution, ie. the payments received during
the period the worker was considered an independent, were not to be
recalculated so that the worker would return the excess funds paid
because he or she was an independent. There were, however,
exceptions to this rule, when the worker compelled the employer to
enter into the contract for service and refused to work as an
employee; and when it was stated in the contract for services that
the payments would be recalculated if the court determined he was
an employee.
The trend of current case law is to expand
the definition of who is entitled to benefits granted workers so as
to cope with current social problems and protect weak groups. A
National Labour Court judgment held that even prostitutes are
entitled to rights granted by protective labour legislation. 5
v. Workers’ rights on transfer of enterprise –
While there are no laws regulating workers’ rights upon transfer of
enterprise or ownership the National Labour Court has ruled that
the union must be informed of the transaction, the employer must
negotiate with the union on this matter and workers’ have a certain
quasi-property right in their workplace. A recent judgment dealt
with workers’ rights when their workplace is privatized. 6
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III. CONTRACT OF EMPLOYMENT
General
There is no labour law governing individual labour contracts and,
therefore, the Contracts (General Part) Law, 1973 and the
Contracts Law (Remedies for Breach of Contract), 1970 apply
to labour contracts, as they apply to general contracts. Thus, such
issues as how a contract is formed, that a contract need not be in
writing, remedies for violation of contract and the good faith
performance requirement are determined by general contract law.
The
National Labour Court has developed a body of case law suitable to
the particular characteristics of the labour contract. In doing so
the court took into account the imbalance of power between the
worker and the employer. Such case law has developed the special
obligations and rights concerning the good faith requirement for
the negotiation and performance of labour contracts. The employment
contract may be either written or oral. 7 The Supreme Court held that an employer
cannot unilaterally change important terms and conditions of the
employment contract. 8
One particularly disputed issue was whether the court could
reinstate an employee discharged in violation of his labour
contract or collective agreement. In the 1970’s the National Labour
Court decided in the affirmative and was overruled by the Supreme
Court. In the 1990’s the National Labour Court again ruled that
specific performance was an acceptable remedy and the Supreme Court
has not overruled these judgments.
Another recent development is the view of certain Supreme Court
justices that an employee – employer relationship can exist without
an employment contract. The Chief Justice indicated, obiter dictum,
that there may be a need to rethink the contractual requirement for
establishing an employment relationship. 9 Another Supreme Court judgment held
that a prisoner could be considered a worker in certain
circumstances, without specifying which and denied the petition for
minimum wages.10
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Employment contracts may be for fixed or unlimited periods of time.
If an employment contract specifies a fixed period of employment,
the contractual relationship is automatically terminated at the end
of this period, without being considered a resignation or a
dismissal.
An employment contract, which does not specify a fixed period of
duration, is considered to be for an unlimited period of time, but
can be terminated by notice of either party. However, in the
organized sector of the work force collective agreements which give
workers tenure limit the employers’ ability to discharge and end
the employment contract. Other limitations on terminating an
individual labour contract are the duty that it must be done in
good faith and not for a discriminatory reason. In the public
sector civil servant laws limit the government’s ability to civil
servants.
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As mentioned above, Israeli labour law joint employers in certain
instances of triangular work relationships. In such cases
a labour contract of employment is deemed to exist between the manpower company and the
worker and between the labour receiver and the worker. Sometimes they are considered joint employers.
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Trial periods
Israeli statutes do not relate to trial periods for individual
labour contracts. However, collective agreements generally
establish a trial period, after which the worker receives tenure.
Trial periods range between 6 months and 5 years. Often they are 6
to 12 months, with the employer empowered to extend them for
various time periods. Such tenure limits the employers’ power to
discharge the worker, which can only be done by following a
procedure set out in the collective agreement. Government workers
receive tenure according to the requirements set out in the
Civil Servants Law (Appointments) and the Civil Service Rules,
which are determined by the Civil Service Department of the
government.
An employer may dismiss the worker during the
trial period or at its’ conclusion, depending on the contract
terms. This must be done in good faith. When the dismissal is
unfair or causes the worker unusual injury the court may award him
compensation of a month or two salary.
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Under the Collective Agreements Law the labour contract is
suspended if a worker participates in a strike or is locked
out. Therefore, the employee does not violate his contractual
obligations to his employer when he participates in a strike.
Likewise, lockouts do not terminate the employment relationship.
When the labour contract is suspended by
worker participation in a strike, the employer is not required to
pay wages, since no work has been performed. National Labor Court
judgments have held that an employer is not required to pay wages
when the labour contract is suspended because of a strike.
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Various statutes prohibit the employer from discharging a worker
for discriminatory reasons, such as gender, race, religion, age,
sexual preference and disability. 11 If an employee has revealed
corruption in the workplace, his/her termination is limited as
well.12
Since 1954 Section 9 of the Employment of Women Law has
prohibited discharge of pregnant workers. Discharge shortly after
the women worker has given birth is also restricted. The statute
does, however, allow the Minister of Labour to permit discharge of
pregnant women if he is convinced that the discharge is unrelated
to the pregnancy. 13 Such permits are infrequent.
Following National Labour Decisions the
Knesset amended the Settlement of Collective Disputes Law and
reiterated that employers are prohibited from discharging workers
for joining a union and participating in union organization or a
strike.
Collective agreements regulate and limit the employers’ ability to
discharge workers. Grievance procedures and special dismissal
procedures enable the union to represent the workers’ interest and
negotiate the employers’ intent to make an individual or collective
dismissal. When agreement is not reached the dispute is often
settled in arbitration. Some collective agreements grant the
employer the prerogative to dismiss a worker after the consultation
and negotiation requirements have been met.
Two thirds of the work force, which is unorganized and not
protected by collective agreements, has limited protection against
dismissal. If the dismissal is not discriminatory the only
protection the worker has is his individual labour contract with its
good faith requirement. The labour contract generally allows
dismissal if advance notice is given or at the conclusion of the
contract term. The National Labour Court has begun to develop case
law which expands the good faith requirement, holding that the
dismissal cannot be arbitrary and the employee must be informed of
the reasons for his dismissal and given a fair hearing and chance
to relate to these reasons.
The labour contract can, of course, be terminated by the worker
resigning, subject to the requirement to give advance notice.
It may also be terminated when the worker
retires. Most collective agreements compel retirement at the age of
65.
iv. Advance notice of dismissal or resignation
The Advanced Notice of Discharge or Resignation Law, 2001, requires the employer and worker to give advanced notice of discharge and resignation. The advance notice period is one day for every month worked during the first year of employment, 14 days during the second year, 21 days during the third year and 1 month after 3 years of work. If an employer or worker terminates the contract of employment without giving advanced notice the law requires him to pay the other party a sum equivalent to one month's salary. The employer is entitled to terminate the employment relationship when notice is given if he pays the worker the equivalent of one month's salary. If the worker is discharged for a serious disciplinary violation the employer is not required to give advance notice or pay in lieu thereof. Prior to this law many collective agreements required advanced notice of discharge or resignation. This was so prevalent that the National Labour Court declared it to be a custom, which became a contractual obligation and, therefore, obligated employers to give advance notice, during which workers continued to work, and received their salary, or alternatively the employer could immediately terminate the employment relationship and pay the worker one month's salary.
v. Severance pay
Under the Severance Pay Law, 1963 a discharged worker is
entitled to severance pay of one months’ salary for each year
worked. Such severance pay can be reduced or denied when the worker
is discharged for a serious disciplinary violation.
When the worker resigns he is not entitled to severance pay, unless
he meets one of the specific provisions in the statute, such as
resignation because of giving birth, serious illness, or a
significant worsening of employment conditions. When a worker dies
his dependant survivors are entitled to severance pay. A worker is
entitled to severance pay when his employer dies.
When a collective agreement requires the employer to contribute to
a pension plan the worker is not entitled to severance pay.
This law’s purpose is unclear. Severance pay can be seen as giving
the worker funds to live on until he finds another job, or as
payment for his contribution to the workplace, or to live on when
retired or to make it economically not worthwhile to dismiss the
employee or for him to quit. These are contradictory purposes and
some legal scholars have criticized the differentiation between the
discharged worker and those who quit. There have been movements to
replace the Severance Pay law with a compulsory pension law
covering all workers.
vi. State employees
Civil Service Laws and rules regulate the discharge of civil
servants. These laws and collective agreements create a
complex procedure for dismissing government employees, which
greatly limit the dismissal option. The dismissal of state
employees for disciplinary reasons is regulated by the State
Employees (Discipline) Law, 1970. Serious discipline of civil
servants is governed by a special disciplinary tribunal, whose
judgments may be appealed to the Supreme Court..
Israeli legislation does not deal with collective dismissals.
Collective agreements generally require the employer to inform,
consult and negotiate with the union prior to making a collective
dismissal. The common procedure is that the employer determines the
need for a collective dismissal and the number of workers to be
dismissed. The employer must then submit a list of the candidates
for dismissal to the union, who can suggest an alternative list. If
there is no negotiated agreement an arbitrator determines who shall
be dismissed. Under some collective agreements the arbitrator also
determines the number of workers to be dismissed. Collective
dismissals are uncommon and generally involve limited numbers of
workers. When an employer decides to make a collective dismissal
there are often strikes and petitions to the Labour Courts by the
union.
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Under Israeli contract law the general remedy for breach of
contract is compensation, but the court may also grant specific
performance or rescission. According to National Labour Court case
law the preferred remedy for breach of an individual labour
contract is damages but, when special circumstances warrant, the
court may return the discharged worker to his workplace. As
mentioned above the specific performance remedy has been a
controversial issue with a serious disagreement in the 1970’s
between the National Labour Court and the Supreme Court. The former
held that it had the power to reinstate a wrongfully discharged
worker while the Supreme Court said this was not possible because
of a provision in the Contracts (General Part) Law
prohibiting specific performance of personal work or service
contracts. Labour Court judgments interpret “personal work”
narrowly, not including workers who have no “personal” relationship
with their employer. Wrongful termination in the public sector has
been viewed as allowing reinstatement even when dealing with
personal work. In the 1990’s the Supreme Court indicated in a
number of judgments that it accepts the National Labour Courts’
interpretation that it has the power to reinstate a wrongfully
discharged worker if special circumstances warrant..
According to statute and case law the Labour Courts have the power
to reinstate workers discharged for discriminatory reasons, such as
gender, age, religion, nationality, sexual preference, disability
or revealing corruption at the workplace. There are specific
statutes which enable the Labour Courts to reinstate her or him,
such as the Prevention of Sexual Harassment Law, 1998 and
the Revealing corruption in the Workplace Law, both of which
include provisions empowering the court to reinstate the wrongfully
discharged worker.
In such instances the court sometimes regards reinstatment as the
best method of discouraging discrimination.. Some judgments
considered discharge in violation of a law as void, having no legal
effect on the termination of the labour contract. The Labour Court
has held that termination, which constitutes a breach of
fundamental human rights, such as the right to unionize, justifies
reinstatement as the preferred remedy. On the other hand, when a
worker is discharged for theft, with the unions’ consent, but later
acquitted because the crime was not proven “beyond a reasonable
doubt”, a recent National Labour Court judgment declined his
request for reinstatement. 14 It was felt that the employer had reasonable
cause for losing confidence in the worker’s loyalty, especially
since as a truck driver he was often alone with costly merchandise
and damages was an adequate remedy.
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Resignation
Workers have the right to resign and end the work contract. However, if
the workers’ resignation violates a contractual obligation to work
for a specified period he may be liable for damages his resignation
caused his employer. Such cases are few and difficult to prove.
Courts will not grant the specific performance remedy to an
employer, ie, they will not compel an employee to work, the
employers’ only remedy being damages.
As mentioned above, according to the recent Advanced Notice
(Discharge and Resignation) Law the worker is obligated to give
his employer a month’s notice of his resignation and continue to
work for that period. Violation of this obligation requires the
worker to pay damages equal to a month’s salary to his
employer.
In general, when an employee resigns he is not entitled to
severance pay. For details, see the section on the Severance
Pay Law.
The Labour Courts have jurisdiction over disputes relating to
restrictive covenants in labour contracts. Until recently such
covenants were enforced if they were reasonable. However, in the
Radguard - Checkpoint judgment 15 the National Labour Court held
that such covenants were not enforceable unless there were trade
secrets which the worker would reveal to his new employer. The
worker was head of research and development for Radguard and
resigned to work for Checkpoint. These were competing companies,
but Radguard failed to prove that the worker’s trade secrets were
still “secret” or useful to Checkpoint when the case came to the
court, which was about six months after his resignation. The basis
of this judgment was the importance of freedom of occupation, free
flow of labour and services as an important principle of the modern
economy, the workers’ human dignity as expressed by his right to
fulfill himself and the importance of the free flow of information
in developing the economy.
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IV. PROTECTIVE LABOUR LEGISLATION
Soon after gaining independence Israel made the policy decision of
establishing a comprehensive protective statutory system. The
Knesset turned to the ILO and progressive European countries as
models for these laws. It also relied on the customs existing in
the organized sector of the economy. This protective legislation
provided mandatory minimum working conditions, which could be added
to by rights achieved in collective agreements or individual labour
contracts.
Before describing this legislation we should note certain
characteristics of protective labour legislation.
First, rights created by protective labour laws are cogent and
cannot be waived by the worker. Thus, section 12 of the Minimum
Wage Law states that "a right of an employee
under this Law cannot be made conditional or waived."
Therefore, collective agreements and individual labour contracts
can add to
a worker’s rights but cannot detract from them. Recent National
Labour Court judgments have suggested that there may be rare instances
when a worker’s lack of good faith can justify
canceling cogent provisions of protective labour law, but this
minority opinion has met with much criticism and is held by only
a few judges.
Second, protective legislation provides for both civil remedies and
criminal punishment. Thus, failure to meet the statutory
requirements is often punishable as a criminal offense, resulting
in a monetary fine.
Third, many important protective labour laws have not been amended
so as to adapt them the new economy. Therefore, the National Labour
Court has been compelled to interpret them in a liberal and
progressive manner in order to achieve their purposes. This
approach has drawn some criticism from employers but is respected
and admired by the public.
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The Hours of Work and Rest Law, 1951 was one of Israel’s
early protective legislation. It determines the maximum hours of
daily and weekly work and grants all workers a weekly day of rest.
As of today, 2002, the maximum weekly work is 45 hours and the
maximum hours of work for a day is 8. However, when the work week
was reduced from 6 days to 5 days a Regulation was issued by the
Minster of Labour which extended this work day to 9 or 10 hours,
depending on the economic branch. The day of rest for Jews is
Saturday (the Jewish Sabbath), for Christians Sunday and for
Moslems Friday. The law guarantees workers a 36 hour weekly
rest period. Employment on the rest day is prohibited unless
authorized by the Minister of Labour where working is deemed in the
interest of the general public due to security, safety, and
economic considerations (Section 12 of the Work and Rest Law).
There is considerable controversy whether a Jewish worker can
choose his day of rest or is prohibited from working on the Jewish
Sabbath. Also, an exceptional provision of this law prohibits self
employed from working in their factories or stores on the day of
rest. The law defines hours of work as the time in which the
employee is at the employer’s service including short authorized
breaks.
The law grants workers additional compensation when they work
overtime, ie, more than 8 hours a day. This compensation is 125% of
the hourly wage for the first two overtime hours and 150% for
additional hours. For Sabbath work the law grants the worker 150%
of his hourly wage for all hours worked. Employment for more than
the legal amount of hours is a criminal offence by the employer.
Section 30 of the law exempts certain branches of the economy and
employers from the law, such as police, air crews and sailors. The
most litigated exception is for “persons employed in
administrative duties or duties requiring a special degree of
personal confidence” or “employees, the conditions
and circumstances of whose employment render it impossible for the
employer to control their working hours and hours of
rest.” In a controversial recent case the National
Labour Court held that this section exempted mobile television
cameramen from the Hours of Work and Rest Law.
The law also guarantees the worker at least one 45-minute meal
break. Section 20 of the law also entitles religious employees to
short prayer breaks.
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Annual Vacation
Another early protective labour law, the Annual Leave Law,
1951 guarantees workers paid vacation, for periods set in the
law. During the first four years of work – 14 days; in the fifth
year – 16 days; sixth year - 18 days; seventh year – 21
days; more than seven years – an additional day per year to a
maximum of 28 days..
The dates of the annual vacation must be approved by the employer,
who is entitled to require all workers to take their vacation at
the same time.
Absence because of army reserve duty, official holidays, maternity
leave, is not considered annual vacation. When the annual leave
includes the weekend, one weekend day is calculated as a part of
the annual leave.
The law prohibits workers from accumulating more than 4 years of
annual leave, so as to compel them to take annual leave. Upon termination of employment, the employee is entitled to
compensation for annual leave not taken in the previous
four years.
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The Sick Pay Law, 1976 entitles employees to paid sick leave
in the case of absence from work due to illness. According to the
law, employees are granted one and a half-sick days for each month
of employment up to a maximum of 90 days. The law does not
guarantee a minimum number of sick days. It should be noted that in
most cases collective and personal agreements provide for
substantially improved sick leave benefits. The law serves to
protect employees who are not covered under such agreements.
Full sick leave pay is paid as of the fourth day of sickness. The
employer pays 37.5% of the workers’ regular wage for the second and
third days of illness and 75%, thereafter.
The employer may relieve himself of the obligation to give sick pay
by insuring the employee with a benefit fund.
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An indication of progressive labour law is that over 40 years ago
Section 9 of the Employment of Women Law, 1954 prohibited
discharging a pregnant worker or reduce her hours of work because
of her pregnancy. While the law allows the Minister of Labour and
Welfare to give an employer a permit to discharge a pregnant worker
if the discharge is unrelated to her pregnancy, this is rarely
done. Discharge in violation of this law is void and considered a
criminal offence. The employer cannot discharge the worker during
maternity leave and for a period of 45 days after the employee’s
return to work
Section 1 of the law permits the Minister of Labour to prohibit or
restrict, by regulation, the employment of women in positions and
conditions, which may be harmful to their health. Recent
regulations specify positions and employment conditions prohibited
or restricted to women during their fertile years. Special concern
is given to the employment conditions of pregnant and breast
feeding employees. The majority of these restrictions are concerned
with the exposure to hazardous chemicals and work conditions. In
addition, Section 10 of the law restricts the employer from
employing a pregnant employee from her fifth month of pregnancy
during night shifts and on the weekly rest day, even if such
employment was allowed prior to the pregnancy.
This law also requires employers to give women, and in some limited
circumstances, the father, a 12-week paid maternity leave. A
maximum of six weeks may be taken by the woman prior to giving
birth and the remaining weeks can be taken after the birth. The
woman can also choose to take all the maternity leave after the
birth. If the woman was hospitalized during pregnancy she may
extend the leave to up to 16 weeks. If the baby is hospitalized,
the maternity leave may be extended to a maximum of four additional
weeks. Section 7 of the law allows the pregnant worker to be absent
from work with a doctor’s authorization if her medical condition
requires. The law also allows the woman to extend her maternity
leave for up to 6 months after birth, but without the right to
payment for the extension period. After birth, the employee is
granted an hour of paid leave each day for a period of four months
after her return to work. The law also allows for sick leave on
account of fertility treatment and in the case of residence in a
battered women’s shelter.
The Employment of Women Law requires the employer to give
women maternity leave; however, her income during this period is
from the National Insurance Institute.
Under certain circumstances an employee whose wife gave birth the
use up to six weeks of the maternity leave. The prerequisites for
such leave are that: the employee’s wife is entitled to maternity
leave, she utilized at least six weeks of leave after birth, and
she waived her right to the remaining weeks.
The Sick Pay (Absence Due to Child Illness) Law allows for 8
paid parental sick-leave days a year, in the case of the illness of
a child under the age of 16. In the case of a child’s terminal
illness, the employee is entitled to 30 sick leave days.
The Sick Pay (Absence Due to Pregnancy and Childbirth of a
Partner) Law, 2000 provides for a seven days of paid leave per
year for medical treatments or exams connected with the partner’s
pregnancy or for the birth of a child.
Legislation furthering women’s equality will be discussed in the
“equality and the workplace” section.
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Youth employment is governed by The Youth Work Law, 1953,
which prohibits employment of children under the age of 15.
During the period of compulsory schooling, which in Israel is up to
tenth grade, a child may be employed only as an apprentice. During
the summer vacation, youth over the age of 14 and under the age of
15 can be employed in positions which are relatively undemanding
and which will not prove hazardous to their health. The Minister of
Labour may impose additional age restrictions for certain types of
employment. Youth work requires proper medical permission.
The Youth Work Law establishes a 40-hour workweek for
employed youth (instead of 45 for adults). Night work is
prohibited, unless authorized by the Minister of Labour. Employed
youth are entitled to a minimum of 18 days annual leave (instead
of 14 for adults). The Ministry of Labour and Welfare is required
to
provide training programs for youth working and the employer is
obligated to release him for one day a week in order to
participate in the training, without deducting those hours from his
monthly salary.
Employers are obligated to keep a written record of all youth
employees.
Failure to meet the obligations imposed by this law is a criminal
offense.
Another law protecting youth is the Apprenticeship Law,
1953, which requires all employees under the age of 18 working
in a trade to be registered as apprentices. Each trade has specific
training requirements such as a mandatory period of apprenticeship,
which must be met in order to certify the employee. Employers are
bound by the Apprenticeship Law to employ the youth until
the completion of the mandatory training period, as well as, to
insure proper training and supervision (Section 14).
The Ministry of Labour is responsible for publishing the minimum
wage, which must be paid in each profession to the employed youth,
during the period of his/her apprenticeship.
The law also regulates the specific circumstances under which such
an employment relationship may be terminated. Thus, employment can
only be terminated during the first six weeks of employment or if
approved by the Ministry of Labour or if the employee
resigns.
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V. EQUALITY AT THE WORKPLACE
The Declaration of Independence proclaimed equality a guiding
principle of the State, As shall be described below, later
legislation has prohibited discrimination on the basis of race,
religion, sex, personal status, marital status, nationality or
country of origin, sexual orientation, age, disability, political
affiliation, or army reserve service. Equality at the workplace
began in the early 1950’s with prohibition of discharging pregnant
workers, received a significant impetus in the mid-1970’s with a
National Labour Court judgment invalidating a section of a
collective agreement which discriminated against women flight
attendants and blossomed in the 1980’s and 1990’s with
comprehensive legislation.
The sources of workplace equality are described below.
In 1951, three years after Israel’s independence, the Knesset
passed the Women’s Equal Right Law, which declared that “a
man and a woman shall have equal status with regard to any legal
proceeding; any provision of law which discriminates, with regard
to any legal proceeding, against women as women, shall be of no
effect.” This law, amended in 2000, expresses a policy of
guaranteeing equality to men and woman. Section 6 of the amended
law proclaims that every woman and man have equal right to a
dignified existence, which includes equal treatment in the areas of
employment, education, health, housing, and social welfare.
In 1964 the Knesset passed the Male and Female Workers Equal
Pay Law, which guaranteed equal pay to women and men workers for
equal work. Few cases were brought under this law. It was replaced
in 1996 by another law of the same name, which increased the
ability to achieve its’ goals, by defining equivalent work, allow
appointment of job evaluation experts, compel employers to give
information and allow class actions
In the mid 1970”s the National Labour Court handed down the first
judgment furthering womens’ equality in the workplace. 16 This decision
invalidated a provision of the El Al airlines collective agreement,
which discriminated against women flight attendants. In 1995 the
court handed down another important judgment, guaranteeing
homosexual flight attendants equal rights to airline tickets given
airline employees. 17
The Employment (Equal Opportunities) Law, 1988, which
replaced the Employment (Equal Opportunities) Law, 1981,
prohibits discrimination on the basis of age, race, religion,
personal (marital) status, country of origin, nationality, personal
opinions, military service, political affiliation or sexual
orientation. Discrimination against employees or prospective
employees is prohibited regarding hiring; employment conditions;
promotion; training; dismissal and severance pay; and retirement
benefits. Non-relevant discriminatory conditions are illegal.
Protection is granted labour contractor employees. Workers are
protected from sexual harassment at the workplace. The Labour
Courts are authorized to award damages without demanding proof of
actual economic injury and may also reinstate an employee
discharged in violation of this law. These remedies are unusual in
Israeli law. Compensation is the common remedy in Israeli law and
is also possible in these cases. The law transfers the burden of
proof to the employer after the worker has proven prima fascia
discrimination. Prior to the law’s amendment the National Labour
Court’s judgments had awarded monetary damages to employees
discriminated against. This was later incorporated into the law.
Section 3(b) of the Law allows affirmative action laws, collective agreements and
labour contracts which grant women advantages and privileges, not
granted men, which are aimed at giving them equal status at the
workplace.
The Equal Rights for Handicapped Persons Law, 1998 protects
the dignity and liberty of physically or mentally handicapped
individuals and insures their equal and active participation in all
areas of life, including work. This law expands the protection
granted in the Equal Opportunities Law. Only a few cases
have so far been brought under this law and it is still unclear
whether it will be able to achieve its’ goals.
The Male and Female Workers (Equal Retirement Age) Law, 1987
prohibits discrimination with regard to mandatory retirement on the
basis of gender, which was common in collective agreements.
Section 9c of the Hours of Work and Rest Law, 1951,
mentioned above, forbids discrimination on religious ground. An
employer may not discriminate against an employee who objects to
working on the day of rest for religious reasons.
In the year 2000 the Collective Agreement Law was amended so
as to prohibit discrimination because of participation, or lack of
participation, in union activity or union organizing efforts.
Both the Government Companies Law, 1975 and the Civil
Service (Appointments) Law were amended during the 1990’s to
allow and encourage affirmative action favoring women as a means
of furthering equality at the workplace. The amendments require the
civil service to take positive measures to insure fair
representation at the workplace. The Supreme Court has also stated
that affirmative action is an acceptable means to abolish
discrimination between the sexes. In 2001, these laws were amended
to extend affirmative action to minority (Arab, Druze)
employees.
Both the Supreme Court and the National Labour Court play an active
role in combating discrimination and inequality in the workplace.
The courts have stood up against discrimination based on sexual
orientation, age, union participation, and gender. An Israeli
Supreme Court judgment held that discrimination which gives women
preference in order to make them equal is permissible, so that a
government company was required to appoint a woman director, since
she was as equally qualified as the man which the Minister wanted
to appoint. A National Labour Court judgment granted damages to a
women who had not been hired as a microscope salesperson because
she was a women.
Case law has also held that public tenders for jobs must be based
on equal opportunity. Dismissal of public sector employees cannot
violate the principles of equal treatment of all workers. 18
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Sexual Harassment is a violation of human dignity and deprives
women equal status and opportunity at the workplace. It is,
therefore, prohibited. This began with the Equal Opportunities
Law of 1988,. which dealt with sexual harassment in an indirect
manner by making harming an employee on the basis of sexual
harassment a criminal offense.
In 1998, the Knesset, passed the Prevention of Sexual Harassment
Law, 1998, which significantly expanded protection against this
negative phenomenon. Sexual harassment was not only defined as a
criminal offense but also a ground for tortuous civil cause
of action. Soon afterwards the Employment (Equal Opportunities
Law) was amended to incorporate more comprehensive remedies to
prevent sexual harassment..
The Sexual Harassment Law prohibits all forms of sexual
harassment (verbal and physical) at the workplace. In addition, the
law places responsibility on the employer to take preventive
measures against sexual harassment in the workplace. An employer
who fails to meet these preventive requirements is liable both on
the criminal and civil level. Similar to the Equal Opportunities
Law, the Sexual Harassment Law establishes two stages of
proof. First, the employee must show that he/she was sexually
harassed by the employer, a supervisor, or another employee. If
this burden is met, the employer is then required to prove he/she
was not responsible and has taken all reasonable steps to prevent
this from happening .
The law allows for compensation of up to 50,000 NIS, which is
approximately $10,000, without proof of actual injury.
There have been a number of cases in which the Labour Courts have
required employers to pay damages to women who were sexually
harassed at the workplace. This law has significantly increased
employers’ awareness of their responsibility to prevent sexual
harassment.
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VI. WAGE PROTECTION
Payment on time
General contract law compels employers to fulfill their labour
contract and pay the wages agreed upon. The Wage Protection Law,
1958 compels the employers to pay wages on
time. Unless other better conditions are set by
the labour contract, the employer is obligated to pay monthly
salaried employees by the end of month he is being paid for. Hourly
or weekly workers must receive wages every two weeks. This law
creates a unique and draconic remedy for guaranteeing that wages
are paid on time – for the first week delay there is a penalty
of 5% and for every week thereafter a penalty of 10%.
Therefore, the employer who pays wages a month late must pay a 35%
delay penalty in addition to the wage. This is a powerful incentive
for employers to pay wages on time. Because this penalty is so high
the statute of limitations is much shorter than for other causes of
actions, one year instead of seven years. Also, the Labour Courts
may reduce the penalty when the wage was paid late due to a good
faith mistake on the part of the employer, a disagreement between
the parties as to the existence of the debt. There is extensive
Labour Court case law on when the penalty can and should be
reduced.
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Mode of payment
The Protection of Wages Law regulates the manner in which
payment can be made. Wages must be paid at the place of employment
or into the employees’ bank account. Payment other than money is
prohibited and the employer may not restrict the manner in which
the employee uses his/her wages by obligating the purchase of
products.
Payment for overtime work must be according to the hours worked and
cannot be part of the basic monthly wage.
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The law also protects workers from wage deductions which have not
been authorized by the worker or specifically required or allowed
by law. Permitted deductions include: income taxes, union
membership and agency fees, disciplinary fines agreed upon in the
employment contract or in a collective agreement, and debt to the
employer which may not exceed 25% of the salary during employment
and may reach the full salary after termination of
employment.
Section 8 of the law safeguards a proportion of the employee’s
salary from attachment, transfer, or charges. The amount protected
correlates to the guaranteed income, as determined in the Income
Guarantee Law, 1981. This protection does not apply to child
support and alimony
payments.
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Minimum wage
The Minimum Wage Law, 1987 provides for a minimum wage,
which is set at 47.5% of the average wage, the latter being updated
at least every year or when a general cost of living collective
agreement is signed.
There is no comprehensive definition for the term "wage" in Israeli
law. Thus, the term may include different components depending upon
the legislative intent. Case law has recognized two proposed
definitions for the term. A broad definition regards wages as any
and all monetary or in-kind compensation stemming from the
employment relationship. A narrow definition regards wages as the
basic pay, excluding fringe benefits and additional payments. The
Minimum Wage Law states that payments considered wages for
the purpose of determining whether the worker has received the
minimum wage include: the basic wage, cost of living allowance and
payments which are part of the regular salary (“permanent additions
to salary”). Additional supplementary payments
such as incentive pay, seniority and family increases are not part
of wages for calculating the minimum wage. At present, the minimum
wage is set at approximately US $650. Section 12 of the Minimum
Wage Law specifically states that the right to a minimum wage cannot
be waived.
All employees 18 years and older are entitled to the minimum wage.
Handicapped and youth are entitled to a lower minimum wage, so that
it will be worthwhile economically for employers to hire them.
If an employer does not pay the statutory minimum wage this is a
criminal offense and the worker also has a civil cause of action. In
such instance the Labour Courts are empowered to impose a failure
to pay wages penalty higher than the 40% per month imposed for
general late wage payment. This exaggerated penalty is because the
sums not paid are usually very small and the regular penalty,
although high, would not sufficiently deter employers.
If the parties to the employment relationship did not agree on the
wages prior to the employment, the employer is obligated to pay the
wage which the Labour Court thinks would be paid for similar work.
However, the minimum wage must be paid by the end of the month,
otherwise it is liable to a failure to pay wages penalty.
Finally, the level of the minimum wage is a politically sensitive
issue in Israel. The Histadrut is campaigning for a substantial
increase in the minimum wage to a fixed $1,000, instead of the $650
today. This is bitterly opposed by employers and many economists.
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Freedom of association has been recognized for many years as a
fundamental right by Supreme Court and National Labour Court
judgments. When constitutional rights were created in 1992 by the
Basic Law: Human Dignity and Freedom and Basic Law:
Freedom of Occupation, freedom of association was not
specifically mentioned. However, subsequent Supreme Court and
National Labour Court judgments held that freedom of association
was a constitutional right, derived from the right of human
dignity. National Labour Court judgments held that freedom to
strike and join, or not join, a union are part of freedom of
association. 19
Another National Labour Court case held that workers
discharged for joining a union and participating in a strike must
be reinstated since the employer’s action violated their
constitutional freedom of association right. The court also
referred to ILO conventions (87, 98) regarding freedom of
association as supporting its decision. Although these conventions
are not binding under Israeli law, the Courts have regarded their
provisions as proper norms and standards when interpreting statutes
and deciding constitutional issues. Shortly afterwards the Knesset
amended the Settlement of Labour Disputes Law to prohibit
such employer action, thereby expressing legislative approval of
the Labour Court judgment.
Israel does not allow the “closed shop” or “union shop”, since a
National Labour Court judgment said that workers have the right not
to join or not to join a union. However, in the organized sector of
the workforce non-members are obligated by collective agreement to
pay the union a service fee instead of union dues, thereby making
lawful the “agency shop”. Non-members are entitled to the all the
benefits set in the collective agreement.
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Trade unions
There is no special statute regulating trade unions.
Therefore, unions become legal entities according to the laws
regulating non-profit organizations, the first such law being the
old Ottoman law and the current one the Non-profit
Organization Law. These laws require registering the
organization, filing its’ by-laws, and filing an annual report and
important decisions of the governing bodies. Labour Court judgments
regard the union’s registered by-laws as the guidelines for union
activity.
Until recently unions in Israel meant the Histadrut, which was a
labour federation, including workers from most branches of the
economy, and governed by a central body. Its national unions were
organized on the basis of industry, profession and trade. There
were also some unions for large companies. The largest union was
the Clerical Workers Union, which encompassed most white
collar workers. The Histadrut was more than a trade union, it was a
workers’ movement, including health services, pension funds, union
owned companies, sport and cultural activities, worker education,
book publishing, working women department, and international
department and workers co-operatives. In the mid-eighties the
Histadrut companies approached bankruptcy and were sold to private
companies. The sport clubs also became economically unstable and
many were sold. The Histadrut also lost control of most of the
co-operatives. For the past twenty years the Histadrut pension
funds have shown a huge actuarial deficit and have been attempting
to improve their financial situation. The Treasury, which regulates
the financial market, including the pension funds, has increased
its’ involvement and today the issue is whether the Histadrut will
retain control over these
funds.
When the Histadrut was very powerful, from 1948 to 1995, it wanted
no legislation to limit its activities and needed no laws to
protect the freedom to strike or organize. When such legislation
was needed by the Histadrut, in the late 1990’s, it lacked the
political power to convince the Knesset to pass such laws.
As mentioned above, from 1948 until the 1970’s approximately 75% to
85% of the work force was organized. During the period between 1980
to 1995 union density was slowly declining as new industries
emerged which were not organized, such as hi-tech and the media.
However, about 60-70-% of the workforce was organized. There were
two important explanations for the high union density: one – the
collectivist and labour movement views of much of the workforce;
two – health services were provided by the Histadrut Health Fund,
which was available for Histadrut members only. On January 1, 1995
the link between union membership and Health Fund services was
severed, when the Government Health Insurance Law went into
effect. Workers no longer needed to be Histadrut members to have
health insurance and, overnight, Histadrut membership dropped from
about 1,300,000 to 650,000, according to Histadrut statistics.
As of June 2002 union density is about 33%. However, in the
private sector union density is only 10-12%. The Histadrut remains
the largest union but there are also independent unions, such as
the Grade School Teachers Union, the High School Teachers Union,
the National (Likud associated) Union and the Doctors’ Union.
These non-Histadrut unions have about 250,000 members.
The Wage Protection Law allows the union and employer to
agree that union dues are deducted by the employer from the
workers’ salary and transferred to the union by the employer. This
is also the case for union service fees which are paid to the union
by non-members. Such agreements must be by a collective agreement.
Regulations enacted by the Minister of Labour allow for a maximum
1% deduction for union dues. Usually, deductions are .8% of the
employee’s wages up to a fixed ceiling. Israeli law recognizes the union security
arrangement in the form of an “agency shop”.
Recent issues relating to the legal status of unions have concerned
new problems which arose because of the decline in Histadrut
power and union density.
The Amit judgment 20 of the National Labour Court held that a rival
union could collect union dues from its’ members in bargaining
units covered by Histadrut collective agreements. This judgment was
overturned by the Supreme Court because the rival union was an
employer controlled union, not formed by workers and with no
by-laws for a union. This judgment discussed the definition of a
trade union. The Supreme Court described a number of basic
criteria that must be met in order to gain union status. For
example, collective bargaining and negotiation must constitute a
dominant part of the organization’s activity. In addition, the
organization must be independent and uninfluenced by the employer’s
interests and agenda. In this particular case, the organization
focused primarily on the individual level and was not independent
from unwanted employer influence. Additional criteria for union
recognition were that the union must be permanent, membership must
be personal and voluntary, the membership must be of
employees, the organization must be governed by regulations
and guidelines, and hold democratic elections for its key
positions. Furthermore, the Court required the union to prove that
it has an authentic role in representing employee interests. The
Supreme Court also emphasized the importance of unionization of
employees in the modern labour market.
A few recent cases have dealt with the definition of
bargaining units. The Tadiran judgment of the National Labour Court held that
an employer could not unilaterally change the bargaining unit.
The Raphael judgement of the National Labour Court held that
the research professionals at the Raphael research institute could
break away from the Histadrut, form their own union and sign a
separate collective agreement.
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There is no law regulating employer associations. As with the
unions, the employer associations are founded as non-profit
organizations. There are employer associations for many branches of
the economy, such as manufacturing, building, trade and
transportation. Regarding labour relations and nation wide
collective agreements the employer associations act together thru
the Coordination Chamber of Economic Organizations.
The Manufacturers’ Association, which is the largest employer
associations, is composed of both unionized and non-unionized
employers. However, since collective agreements signed by an
employer association bind its’ members few non-organized employers
became members. Recently, there has been an attempt to create a
separate part of the Manufacturers’ Association for non-organized
firms, which being separate from the organized section, will not be
bound by collective agreements. This has yet to be tested in the
courts.
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VIII. COLLECTIVE BARGAINING AND AGREEMENTS
1. Background
Until the early 1990’s, when the Histadrut had a dominant role in
labour relations and 65% - 85% of the labour force was organized,
collective bargaining and collective agreements played a key role
in Israeli labour regulation. Most subjects concerning personal
employment conditions were regulated by collective agreements at
the different employment relations’ level supplementing the rights
set in protective labour legislation. In collective labour law the
collective agreements and union power determined most aspects of
union organization, bargaining units, grievance handling and
collective dismissals. They had a significant role relating to
strike conduct, limited mainly by Labour Court case law. During
this period collective agreements were signed on three levels:
plant, industry and national. Each level of agreements added
further rights to the workers. The bargaining usually began on the
national level, resulting in a general wage rise applying to all
union members and often extended to the entire workforce by an
extension order. Then industry bargaining resulted in a collective
agreement with a wage increase and terms applying to that industry.
This agreement was often extended to the entire industry. Following
the national and industry agreements many plants signed plant
agreements, adding rights and wage increases specific to that
workplace. Additional collective agreements were often negotiated
at the industry and plant level by professional or trade unions,
such as the engineers or clerks union. This system resulted in a
large number of collective agreements with employers constantly
negotiating with one union unit or another. The Ports Authority,
for example, employed 1,400 workers but has about 500 collective
agreements. This system resulted in worker security and improved
conditions but also caused many labour disputes. On the other hand,
these agreements generally gave the employers generous flexibility
in transferring workers from one job to another suitable one.
The Collective Agreement Law, 1957 set a minimal of
general rules concerning collective agreements, the most important
of them being: [a] The definition of a collective agreement, which
is a written agreement signed by a union and an employer or
employers’ association, sent for registration to the Labour and
Social Welfare Ministry and dealing with hiring and dismissing
workers, terms of employment, labour relations and the rights and
obligations of the parties to the agreement. [b] Rights which
collective agreements give workers become part of their individual
labour contract. [c] Individual labour contracts can add to rights
set by collective agreements, but not detract from them. [d]
Workers cannot waive rights granted them in collective agreements.
[e] A collective agreement applies to the employer and members of
the employers’ association which was party to the agreement and to
the union signing it and its’ members working for those employers.
[f] The Minister of Labour and Social Welfare is empowered to
extend an industry wide collective agreement to apply to the entire
industry. [g] A collective agreement is valid for the period set in
it, but if neither party sends a termination notice it is valid
indefinitely, until a termination notice is sent.
Much law concerning collective agreements is Labour Court case law,
the most important of which are as follows:
[a] When a collective agreement was made but did not meet the laws
technical requirements, such as registration, it was generally not
enforceable. This policy was meant to encourage registration of
agreements and signing of collective agreements. Recently, however,
such agreements were enforced, so as not to deprive workers and
management of the fruits of their negotiation.
[b] Rules for the interpretation of collective agreements were
determined in case law, the most important of these being that
agreements are interpreted according to the purpose which is
inherent in them.
[c] Implied in the collective agreement are rights of the union and
workers regarding transfer of enterprises and
privatization. These rights revolve around the
employers’ obligation to inform the union of changes in labour
relations and negotiate concerning them. Furthermore, recent case
law stated that workers had a modified property right in their
workplace and unions had certain rights because the collective
agreement was a unique long term agreement.
[d] Employers’ prerogative to manage their businesses, unless
limited by obligations in a collective agreement, has been the
subject of much case law.
[e] Much case law discusses the relation between the collective
agreement and equality at the workplace.
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2 Collective
Bargaining
Collective bargaining is mainly relevant for 30% of the workforce,
which is organized. In this sector the collective bargaining
results in collective agreements, which determine the rights and
obligations of the worker, union and employer. Collective
agreements also have some relevance for the non-organized work
force, since certain industry-wide a | 
