Practice Area Articles
Israel
February 05, 2024
By Paul Hastings Professional
Back to International Employment Law
KEY DEVELOPMENTS FOR 2024
Gig economy industry under disruption
In 2024, the National Labor Court in Israel is expected to issue its ruling in the appeal that Wolt has submitted to the regional labor court ruling that accepted a class action to recognize Wolt couriers as Wolt employees. Wolt is the largest Gig Economy player in Israel, and it engages its couriers through different mechanisms, and does not recognize them as its employees. This means that such workers receive full compensation and are responsible for their own social benefits. The regional labour court accepted the class action and ruled that Wolt is the employer of record for all Wolt couriers and is obligated to pay them all applicable social benefits. Wolt appealed this decision to the National Labor Court. If the appeal will be rejected, this means that all Gig Economy participants in Israel will need to reconsider their operation and possibly restructure. Engaging Wolt couriers and other gig participants as employees is technically complicated and may cause a significant reduction of the remuneration for such workers.
Employees on military reserve duty
As of November 2023, around 350,000 Israeli citizens were drafted for reserve duty on account of the current conflict in Israel. This puts a serious burden on the Israeli economy and Israeli employers. Employees on reserve duty are entitled to continue and receive their regular salary from their employers, and the employers can then subsequently request reimbursement from the State for such payments. The reimbursement is only for the base salary and does not cover the contributions made to pension funds that the employer is required to continue. Employees on military reserve duty are protected from termination of employment during their reserve duty (assuming it is for at least two days), and for a period of 30 days after returning from such duty. In addition, the period of the reserve duty and the 30 days protection period following it, cannot overlap with prior notice period employees are entitled to receive before termination. Such protection and restrictions also apply in case of reduction in force or economic layoffs.
Weapons in the workplace
Recent events in Israel are more challenging to international corporates having offices in Israel with different cultural practices. An example of this is the issue of carrying personal weapons in the workplace. Employees who serve on reserve duty are usually required to continue and carry their military weapon even when they are on leave and visit their place of employment. In addition, the Government has eased the requirements for a license to carry a personal weapon, and it encourages individuals to carry their personal weapons on them everywhere they go including their place of employment. With that said, many international employers have a policy of no weapons in the workplace. Employers find it challenging to amend their policies in Israel. Pursuant to the law, a personal weapon cannot be left in the car, and providing storage for a weapon upon entering the workplace is almost impossible due to strict security requirements by the police. In addition, forbidding employees from entering the workplace with their personal weapons might be considered a discriminatory act against employees on military reserve duty or against employees who commute from places that are less safe. Finding a common balance on this issue is very challenging for some international companies operating in Israel.
KEY DEVELOPMENTS FOR 2023
Contractor v. employee
A new National Labour Court decision ruled monetary compensation to an individual who was engaged as an independent contractor and was retroactively recognized as an employee.
Such claims of individuals who were engaged as independent contractors to be recognized as employees are not new. What is innovative in this ruling is that, besides the regular social rights and benefits that the court rules in favour of a person who was misclassified as an independent contractor, the court also ruled compensation for non-monetary damages in a relatively significant amount.
Companies should avoid engaging contractors in positions that are regularly performed by employees or in positions that are an integral part of the organization. When in doubt, the preference should be to engage individuals as hired employees.
Hi-tech industry in crisis
Downsizing of employee count requires a process of hearings before deciding on terminations. The reduction in force itself is not an acceptable enough reason for termination, and the employer is required to explain why each specific employee is being considered for termination.
The protection the law supplies to certain groups of employees from termination also applies in cases of a reduction in force or downsizing. This can make the process more complicated.
Employers should bear in mind that “downsizing” is not a magic word, and is a trigger to termination but should not be the excuse itself for termination.
New legislation
Recent new legislation forbids employers from asking or taking into account any public information regarding a candidate’s criminal record or asking to receive an employee’s actual criminal record.
The previous law prohibited an employer from asking an employee or job candidate for a copy of his or her criminal record. The new law also forbids taking into account any public information about the individual’s criminal record. The law states that no person shall demand criminal information from any individual, directly or indirectly, other than in accordance with the provisions of this law, including by way of an affidavit, statement or written questionnaire. Violation of this provision imposes criminal liability on the employer.
Employers should confirm that they are not asking and not checking, directly or indirectly, about a candidate or employee’s criminal background.
KEY DEVELOPMENTS FOR 2022
Increase in workplace bullying related claims
As part of the focus on employees' wellbeing and work satisfaction, there is an increasing trend of employees claiming "bullying" and other mistreatment at the workplace. Historically, the threshold for "bullying" in the workplace was quite high. Managers were expected to be strict while still maintaining a certain level of professionalism. The combination of Generation Y employees with a general increase in self-awareness and self-fulfilment rights has created a new environment in which most mistreatments are now being classified by employees as "bullying". While there is no specific labor court precedent for this trend, the labor courts are no longer dismissing such claims outright.
Employers should facilitate targeted training for managers on how best to conduct themselves with employees to help mitigate the risk of any bullying allegations. Employer should also consider setting up an internal investigation procedure and complaint mechanism, to try and settle these types of disputes in-house without a need for formal litigation in court.
Steps to address challenges posed by remote working (particularly monitoring employees’ working hours)
Remote working has become a standard due to COVID-19 and has presented many challenges for employers including those relating to the monitoring of employees' work and rest hours. This is particularly problematic as Israeli law requires employers to keep an exact record of their employees' working hours on a daily basis.
Employers should consider applying new and innovative sets of rules for homeworking employees to report working hours as clocking in and out at the office may no longer be feasible and a regular working day may no longer be continuous. Employers should also put in place strict protocols to ensure that employees report their actual working hours on a daily basis even when working remotely. It is important to ensure that employees' hours do not exceed the maximum permitted by law as this could result in the employer facing criminal liability.
KEY DEVELOPMENTS FOR 2021
Israeli equal pay law for male and female workers
In August 2020 an amendment to the Israeli Equal Pay Law for Male and Female Workers (5780–2020) was approved.
This amendment applies only to employers, with more than 518 employees; in the public sector; which are subject to specific government funding; and government companies with certain reporting requirements.
Prior to this amendment, employers did not have specific requirements to offer equal pay and were only required to present details about salary and terms if an employee claimed that he/she was specifically discriminated
Pursuant to this amendment, all applicable employers are required to prepare three types of reports including (i) an internal report, (ii), an individual report and (iii) a public report.
The first reports under this new amendment must be published by no later than 1 June 2022. The applicable Minister may in the future impose regulations to apply these new requirements to additional employers.
Hearing requirement for workers engaged through a contractor placement arrangement
Current Israeli case law requires a certain hearing procedure before an employer may elect to terminate the employment of an employee. According to a recent ruling of the Israeli National Labour Court, such hearing might be also required when ending the placement of a worker who is engaged through a contractor placement arrangement (such worker shall be referred to herein as the "Contractor"). In this specific case, the court ruled that due to the nature and purpose of the right to a hearing, in certain circumstances, where the cessation of the placement of the Contractor might result in the termination of the employment of the Contractor by his actual employer, the contracting company should hold (usually jointly with the employer of the Contractor), a hearing for the Contractor, before electing to terminate the services being provided by such Contractor.
In the specific case that was brought in front of the court, due to the lengthy placement (23 years) of the Contractor with the contracting company (the Israeli Electric Company "IEC") as well as for the reason surrounding the termination of his placement (i.e., accusation of fraud), the court ruled that the IEC, (a) was obligated to conduct a termination hearing for the Contractor, (b) present its suspicions, and (c) allow the Contractor an opportunity to address the claims and to challenge the termination. We note that this case is an extreme case and may not be applicable to all future contractor termination scenarios.
Disclosure of terms of employment
The regional labour court in Israel recently denied a claim submitted by an employer, claiming that a former employee has breached his confidentiality undertaking by disclosing his salary to a third party outside the employer.
The court ruled that the salary and employment terms of an employee salary is not proprietary to the employer and may not be treated as a trade secret. The court ruled that this information belongs to the individual and therefore an employer may not share this information, subject to its obligations under any law, without the consent of the employee. With that said, an employee is permitted to share this information with any third party. Furthermore, employers may not impose confidentiality undertakings on an employee with respect to the terms of employment.
KEY DEVELOPMENTS FOR 2020
Changes to the working environment
Israel has been without a functioning Government for some time now and as such, no new legislation has been implemented. However, there has been more focus and awareness on the following trends:
- Increased awareness regarding a proper working environment — specifically, more focus on preventing sexual and other harassment claims, bullying, etc.
- More openness to "alternative" lifestyles in the workplace—increasing interest and use of parental time off (rather than just maternity leave), express policies being adopted about tolerance for
non-traditional family, gender issues, etc. - Increased interest and thought going into alternative working arrangements (including remote working) and what this means from an employer's perspective in terms of compensation, reimbursement of infrastructure costs, supervision and monitoring, and working hours.
KEY DEVELOPMENTS FOR 2019
Increased paternity/spouse rights
Under Israeli law, mothers have traditionally been provided with protection and paid maternity leave on the birth and adoption of a child. Parental and paternity rights have also been introduced and there has been significant interest by companies and employees in such rights in recent years.
More companies are adopting express policies with respect to parental rights to paid and unpaid leave in connection with the birth or adoption of a child, and these rights also apply to same-sex families. From 1 August 2018, where there are multiple births, the husband is entitled to take up to two weeks of leave for each additional infant (of which at least seven days must be consecutive) in place of the mother, with her consent. However companies will often provide additional days in excess of the legal framework.
Reorganization of the work week
The standard work week in Israel is now 5 days, running from Sunday to Thursday, which is linked to the personal day of rest designated for the majority of the workforce (based on their personal status, by which they are designated as ”Jewish” regardless of their actual practice and beliefs). Since the Jewish religion forbids work or transport during the Sabbath, observant Jewish employees do not have a day off during which places of business are open.
Discussions are ongoing to rearrange the work week so that Sunday becomes a day of rest once a month or once every two months, and to add a short work day on Friday of that same week. In the context of this re-shuffling, a law has been passed to shorten the work week from 43 to 42 hours. However, since the weekly limitation of 15 overtime hours was increased to 16 hours, the change did not result in any significant change of work habits, but does provide a minor financial benefit for employees when their daily or hourly compensation is being calculated (for instance, for redemption of vacation days upon termination).
Proposals to amend work visa process
Currently, a work visa can be obtained for persons with special expertise, which can be difficult to establish, or for people who have the right to receive citizenship in Israel (i.e. have the right to emigrate to Israel because of their Jewish family connections). For the past few years there has been an increase in the number of Israelis relocating abroad for work, especially in the high-tech industry, but conversely a smaller influx of employees, mainly due to the complicated and adverse visa process. The Ministry announced an overhaul of the process at the beginning of 2018 with the aim of streamlining the process of granting visas, however there has not been a significant change in the actual practice so far. This is a matter of national concern as it impacts the viability of the talent scarce technology sector.
KEY DEVELOPMENTS FOR 2018
Privacy
The Privacy Protection Authority published guidelines in October 2017 restricting the operation of surveillance cameras in the workplace to use which complies with requirements of reasonableness, proportionality, fairness and good faith, and which is carried out for legitimate purposes. In addition, prior to the installment of the cameras, an employer must formulate a clear and detailed surveillance camera policy, present it to the employees and obtain their formal consent. Furthermore, an employer’s use of hidden cameras or obtaining footage of employees without their knowledge is strictly forbidden.
In another development, the National Labor Court ruled that due to privacy concerns, employers cannot require employees to provide their fingerprints for monitoring attendance on a biometric device and an employee must grant free and informed consent to its employer before an employee’s fingerprints are utilized for such purpose.
Increase to Minimum Wage
As part of the gradual increase in the minimum wage, on December 1, 2017, the monthly minimum wage in Israel was increased to NIS 5,300.
Extension of Paid Maternity/Paternity Leave
An amendment to the Employment of Women Law 1954 extended the term of paid maternity leave for female employees from 14 weeks to 15 weeks from the date of the birth. Pursuant to the Amendment, a female employee may allow her spouse/partner to take this 15th week of paid leave in her place.
KEY DEVELOPMENTS FOR 2017
Increase to employer and employee pension contributions
As of January 2017, employees will contribute 6% of their monthly salary to their preferred pension arrangement and employers will contribute at least 6.5% of the employee’s monthly salary to the employees’ pension arrangements in addition to the mandatory severance payment contributions.
Increase to annual vacation days
Following an Amendment to the Annual Leave Law, as of January 2017 the minimum vacation day entitlement for full time employees in their first four years of employment is 12 days.
Increase to national minimum wage
As part of the gradual increase in the minimum wage, as of January 2017 the minimum wage in Israel will be NIS 5,000.
KEY DEVELOPMENTS FOR 2016
New rights for parents to be paid when absent due to a child’s illness
In March 2016, an amendment to the Sick Pay Law (Absence due to Child’s Illness) 1993 changed the rules regarding circumstances in which an employee may be entitled to receive sick pay due to a child’s illness. As of April 2016, employees who are absent from work when their child suffers from a disease that requires routine dialysis treatment or when a child suffers from any other disease to be determined by the government will be entitled to sick pay.
In August 2016, another amendment was published pursuant to which employees are entitled to receive full sick pay on the first day of absence due to their child’s illness.
New rights for fathers regarding paternity leave
An amendment to the Employment of Women Law 1954 granted a male employee up to five days leave after the day his spouse/partner has given birth without the need to obtain the employer’s consent and a daily hour of paternity leave after their spouse/partner has given birth for a period of up to four months following the maternity leave.
Reduction of transportation allowance
In August 2016, the Minister of Welfare and Social Services issued an extension order pursuant to which the maximum daily amount that an employee is entitled to receive from an employer for transportation expenses was reduced from NIS 26.40 to NIS 22.60.
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