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Global Employment Law Guide

Israel

(Middle East) Firm S. Horowitz & Co.

Contributors Ofir Pozner
Keith Shaw
Meytal Barak

Updated 04 Mar 2024
What are the different categories of employment status (for example, employee, worker, self-employed individuals, etc)?

The law does distinguish between different categories of employees.

"Self-Employed" status: Generally, employment laws per se do not apply to genuine independent contractors.

"Permanent" status: In Israel, permanent status means enhanced protection against dismissal. The specifics of the protection vary. Normally, the dismissal of an employee who enjoys permanent status may only be implemented for specified reasons and subject to a process involving the employees' representative body (committee or union). Permanent status is statutorily granted only in certain parts of the public service sector (such as to state employees). In other sectors, permanency may be granted by collective agreements/ arrangements.

"Foreign Worker" status: In accordance with the Foreign Workers Law, 1991, a foreign employee is defined as an employee who is neither an Israeli citizen nor an Israeli resident.

Generally, foreign employees are entitled to the mandatory entitlements to which local employees are entitled. However, the parties to an employment agreement may agree that the proper law (i.e. the applicable law) of the employment will be a foreign law, and such an agreement may be upheld if the employee's entitlements in accordance with the employment agreement are, as a whole, equal or better than he/she would receive under local law. This is, however, subject to judicial review and public policy.

"Manpower Contractor Employee" status: In accordance with the Employment of Employees by the Manpower Contractors Law, 1996, if an employee of a manpower contractor is employed for more than nine consecutive months with the same actual employer, the employee will be considered an employee of the actual employer, and not of the manpower contractor. This statutory provision does not apply to employees who fulfill computer-related positions.

Additionally, employees of a manpower contractor are entitled to the same employment conditions to which other employees in the workplace are entitled, taking into consideration the type of work and seniority of the actual employer. This provision does not apply to an employee whose terms of employment with a manpower contractor are regulated by a general collective agreement, provided that such agreement has been extended by an extension order. 

Monthly vs. Hourly Employment status: There are also differences in certain entitlements (such as leave and advance notice) and in the computation of such entitlements between employees employed on a monthly basis or on a different basis, such as hourly or daily. 

Are there different types of employment contracts (for example, fixed-term, indefinite)?

Yes. This is largely a contractual matter, except for in the public sector and organized enterprises in which the use of fixed-term contracts may be restricted. However, the labor courts are critical of the use of fixed-term contracts in essentially permanent positions and, though the passage of time may not award a permanent status if the requirements, therefore, have not been met, the employee may, nevertheless, be considered as being entitled to enhanced protection against dismissal.

What requirements need to be met in order for an employment contract to be valid?

The requirements are that the contract does not detract from the employee's rights under mandatory law, regulations, extension orders, and collective agreements, all as applicable. In certain sectors, the requirements are that the contract may not provide rights exceeding authorized rights. For example, in certain enterprises that are publicly budgeted, the rights may not exceed those of civil service employees unless authorized by the Treasury.

An employer must provide the employee with a notice, which sets out such employee's employment terms. The employment terms that should be included in this notice are set out in the regulations. An employer can fulfill this legal obligation by entering into an employment agreement, which contains all the employment terms as required by the law and regulations.

Are part-time employees afforded the same rights as full-time employees?

According to the Hours of Work and Rest Law, 1951 and Extension Orders pertaining to the length of the workweek and the workday, full-time work equals 42 working hours per week and 182 working hours per month, although a contract can provide for shorter working hours per week or per month. Hours worked over and above the said quotas are overtime. There is no statutory definition for part-time work. Part-time work – though not statutorily defined – is work below the said quotas.

Part-time employees are entitled to the same statutory rights pro-rated to their part-time employment.

Can employment contracts be assigned?

We assume the question refers to the employer. A change in an employer is a change in the terms of the employment contract since the identity of the employer is of the essence. According to case law, an employment contract cannot be changed unilaterally and, should the employees not agree to the proposed change, the employer must choose between retaining the employees on the agreed terms or dismissing them. This issue rises routinely in cases of mergers, takeovers or asset sales.

What rights do employees have (to object, to severance), if any, when the company they work for is transferred as a going concern?

If an enterprise is transferred as a going concern, the employees may demand that the protection of their interests be taken into account as part of the transaction by way of increased termination payments and/or securing their continued employment with the purchaser and the terms of such continued employment. If the workplace is unionized, consultation duties exist vis-a-vis the union, which may resort to industrial action to protect the employees' interests. If the workplace is not unionized, the employees may create an ad hoc representation.

 

Do you have statutory rights for employees on change of control of an employer? If so, please give the statute.

In accordance with the Collective Agreements Law of 1957, when an undertaking changes hands, the new employer will be considered to be the employer to whom the collective agreement applies.

Pursuant to the Wage Protection Law of 1958, in the event that an undertaking changes hands, is split (spun off) or merged, the new employer is also responsible for payments of salary and payments to provident funds which were the responsibility of the previous employer.

In addition, according to case law pertaining to the Severance Pay Law of 1963, in certain circumstances of an undertaking changing hands, not by way of a share transfer, the employee may be entitled to resign with entitlement to severance pay.

Mandatory statutes, regulations and extension orders pertaining to social benefits refer to the period of employment with the same employer or in the same place of employment, so that seniority in the same place of employment is maintained, notwithstanding an undertaking changing hands. There are differences in the financial consequences for the new employer, contingent upon whether the employment with the previous employer will be considered as having been terminated and the previous employer remitting all the employees' entitlements in respect of the period of their employment up to termination.

In what circumstances can employers unilaterally change the terms of employment, and what remedies (if any) are afforded to an employee?

According to case law, an employment agreement cannot be changed unilaterally and, should the employee not agree to the proposed change, the employer must choose between retaining the employee on the agreed terms and dismissing them. However, an employee's failure to object to the proposed or effected change and their continued work notwithstanding the change may be interpreted as consent to the change. 

There are certain exceptions to the above, one of the most important being such changes as are considered to be, in the absence of a specific provision stipulating otherwise, in the management’s prerogative. However, even when making such changes, the employer must take into consideration the ramifications on the employees. In organized places of employment, the employer has duties of notification and consultation with respect to changes that have ramifications on the employees. Should an agreement not be reached as to the ramifications, the union may resort to industrial action to coerce the employer into negotiating the employees' rights in such a situation. 

In certain circumstances, it is incumbent upon the employee to co-operate with a proposed change, for example: when the employee's position has become redundant and the employer offers the employee alternative employment. 

An employee whose employment conditions are adversely changed – even if lawfully – may be entitled to resign with severance pay. However, the employee's entitlement to severance pay may, in certain circumstances, be contingent upon the employee objecting to the change and giving the employer an opportunity to remedy it.

Is your jurisdiction an employment-at-will jurisdiction? What are the employer’s termination rights?

An employer is legally entitled to terminate the employment of an employee with notice or payment in lieu of notice in accordance with the Advance Notice for Termination or Resignation Law of 2001. This right is subject to statutory or contractual (collective or individual) restrictions on dismissal and to conducting a due process hearing. The dismissal of an employee is also subject to the good faith principle.

Statutory restrictions apply to certain sectors of employees in the public sector. Contractual restrictions may apply under collective agreements or arrangements. Contractual restrictions on termination of employment may also include restrictions arising from an obligation to employ an employee for a fixed term, in which case the dismissal prior to the end of the term in question could entitle the employee to compensation.

There are statutory restrictions applicable to all employees in Israel, such as the prohibition on dismissing a pregnant employee, an employee on sick leave, or an employee due to his activities as a representative of the employees or due to criteria prohibited by the Equal Opportunities in the Workplace Law of 1988.

According to case law, in certain circumstances an employer wishing to dismiss an employee is obliged, in fulfillment of the duties of good faith and fairness, to attempt to find such employee an alternative position with the employer. Such obligation to attempt to find an alternative position for the employee applies where a long-standing employee is on the verge of retirement age and the reason for his/her intended dismissal is not due to a personal complaint having been levied against him/her (e.g. for want of work ethics, breach of discipline, etc). It is important to stress that the obligation lies in the good faith attempt to find an alternative position for the employee, but there is no absolute duty to succeed in finding the same nor a duty to create a job for the employee.

Are there remedies for dismissal without cause or wrongful termination?

Yes. The remedies range from reinstatement, if the breach is related to a statutory prohibition against termination, such as the termination of a pregnant employee or due to an employee's activities as a representative of the employees, to monetary damages, liquidated or unliquidated, in addition to or in lieu of reinstatement or as a stand-alone remedy, the sum of which is determined taking into account the circumstances of the termination. Unless a statutory prohibition has been breached, the courts are hesitant to reinstate and the general rule is that damages are the preferred remedy. 

In the past, the monetary remedy for unliquidated wrongful termination damages was measured in multiplications of the employee's salary and usually ranged between 1-2 salaries to 24 months in very severe cases. In a relatively recent ruling, the National Labor Court ruled that the injury should not be measured according to the earnings of the employee but in a sum relating to the severity of the breach.

Are there protections for whistleblowers?

Whistleblowers are protected by the Protection of Employees (Exposure of Offenses and Unethical Action or Improper Administration) Law of 1997 ("the Whistleblower Protection Law"). Under the Whistleblower Protection Law, it is forbidden for an employer, or any representative of the employer, to terminate the employment of a whistleblower employee or any employee who assisted the whistleblower, or otherwise impaired their employment conditions, including promotions, professional training or other benefits granted at termination or retirement – in retaliation for submitting a whistleblowing complaint against the employer or a representative of the employer or assisting the submission of such a complaint.

This protection is granted subject to the whistleblowing complaint being submitted in good faith to the proper body authorized to receive the complaint or investigate the matter. Also, the complaint must be based on a breach of a statute concerning the business of the employer or relating to the work performed. In a public administrative body – the complaint can also concern unethical action or improper administration.

Exclusive jurisdiction on this matter is granted to the Labor Courts. The Labor Courts may award relief in the form of non-monetary damages up to NIS 50,000 (approx. US $13,500); as well as up to NIS 500,000 (approx. US $135,000) as exemplary damages if the breach is severe in light of the circumstances, including the defaulter's behavior or recurrences of the breach. In a public administrative body or a private employer with over 25 employees – the Labor Court may also grant any order or injunction, if it is of the opinion that the damages awarded are unjustly insufficient, including an order of reinstatement (annulling termination) or an order to reposition the employee. In addition to being a tortious (civil) cause of action, breaching the provisions of the Whistleblower Protection Law may also lead to criminal charges.

If the employee proves that they were terminated or that their conditions of employment were harmed, while the employees’ behavior or actions did not constitute a reason to harm them as such – the burden of proof shifts to the employer to prove that these actions taken against the employee were not done in breach of the employer's duty to protect the whistleblower employee.

The statute of limitations under the Whistleblower Protection Law is one year.

We note that there are also protections for public service employees under the Civil Service Regulations and that employees in bodies overseen by the State Comptroller may also file complaints to the State Comptroller (in his capacity as Ombudsman) who has the authority to give administrative orders to protect the whistleblower employee.

Do employees have a right to privacy? If so, what are the remedies for a breach?

The employee in Israel has a right to privacy which is a constitutional right, protected by Article 7 of the Basic Law: Human Dignity and Liberty and by the Protection of Privacy Law of1981 and by the requirements of good faith. This right applies to employees notwithstanding the employer's constitutional proprietorial rights.

Common examples of breach of privacy prohibited by the regulator or case law include:

  1. The placing of hidden cameras in the workplace. The placing of cameras in areas where the employee can expect privacy (bathrooms, an angle which monitors their computer screen or work station, etc.);
  2. The monitoring or accessing of personal usages on the workspace (a drawer labeled "personal", internet browsers open on their personal Facebook account even if left unattended, etc.);
  3. Monitoring or accessing of the employee's personal phone;
  4. Usage of a biometric work-clock and the employee's fingerprint without their freely given consent, or without a statutory provision allowing for it;
  5. Monitoring or accessing of an e-mail inbox: completely forbidden if it's a personal e-mail account and, in a work account subject to certain conditions. 

A 'harmful publication' in breach of the Protection of Privacy Law may entitle the wronged party to non-monetary damages of up to NIS 50,000 (approx. US $13,500), and double that amount if the claimant proves the breach was maliciously intended to harm. Breach of privacy may also entitle the wronged party to unliquidated damages in respect of mental anguish.

The statute of limitations for civil claims based on the Protection of Privacy Law of 1981 is 2 years from the day the cause of action was created.

Are employees afforded any anti-discrimination protection?

The Equal Opportunity in the Workplace Law of 1988 ("the Equal Opportunities Law") prohibits discrimination against employees on the basis of the following criteria: sex, sexual preference, personal status, pregnancy, fertility treatment, IVF treatment, parenthood, age, race, religion, nationality, country of origin, place of residence, world views, [political] party affiliation, and service or anticipated service in the security forces. Discrimination includes adding requirements that are not necessary to the job or position.

The law also established the Equal Opportunity in the Workplace Commission which has a broad scope of authorities to act in order to promote equal opportunity in the workplace.

Additionally, the Equal Rights for Persons with Disabilities Law of 1998 similarly prohibits the discrimination of persons with disabilities and also provides for certain requirements with respect to workplaces being accessible. A 2010 amendment to this law also requires affirmative action with respect to persons with disabilities in the workplace.

Discrimination is forbidden with respect to hiring, employment conditions, promotion, professional training, termination and benefits related to the termination of employment.

The prohibition on discrimination applies to subcontractor employees working for the employer though not formally employed by the employer.

Differential treatment which is necessitated by the nature or character of the assignment or position is not regarded as (unlawful) discrimination.

If an employee or job applicant proves that an employer has taken into consideration a prohibited criterion, or that there was no default in their own actions or conduct, the burden of proof shifts to the employer to prove that it did not act in breach of the Equal Opportunities Law.

Discrimination contrary to the Equal Opportunities Law constitutes a civil tort and, in certain circumstances, may amount to a criminal offense.

The statute of limitations for civil claims based on the Equal Opportunities Law is 3 years from the day the cause of action was created.

The Labor Courts have exclusive jurisdiction to hear claims based on the Equal Opportunities Law and have the discretion to award monetary relief. The Labor Court may also grant any order or injunction if it is of the opinion that the damages awarded are unjustly insufficient.

Are there statutory rights to vacation, medical leave and parental leave? Have there been any changes to leave benefits in the past 12 months? Is there any proposed legislation that employers should be aware of that will impact leave benefits?

The Israeli labor law provides employees the right to vacation days, medical leave, and parental leave, in accordance with the Annual Leave Law of 1951, Hours of Work and Rest Law of 1951, Sick Pay Law of 1976, Sick Pay Law (Absence because of a Child's Sickness) of 1993, Sick Pay Law (Absence because of a Parent's Sickness) of 1993, Sick Pay Law (Absence because of a Spouse's Sickness) of 1998, Employment of Women Law of 1954, and some executive regulations stemming from these.

There have not been changes in this respect in the past 12 months. 

Are restrictive covenants recognized and, if so, what are reasonable restrictions as to geography, duration and scope of activity?

A restrictive covenant is lawful only if it protects the legitimate interests of the employer and only to the extent that it is reasonable and proportionate in terms of geography, duration or activity, for the protection of such legitimate interests, while also taking into account the employee's rights, including the constitutional right to freedom of occupation. Prevention of competition in itself is not considered to be a legitimate interest which in itself can validate a restrictive covenant; whereas, protecting trade secrets and confidential information is. Remuneration payable to the employee for the restrictive covenant may be a factor in its whole or partial validation.

There is no general rule as to what should be considered reasonable and proportionate in terms of geography, duration or activity, and each case must be examined on its merits.

Can employees be terminated for refusing to sign a restrictive covenant? What serves as consideration for a restrictive covenant?

The question assumes that the restrictive covenant was not included in the initial employment agreement and amounts to a request to change the employment contract and the answer to the question depends on the circumstances.

There may be circumstances in which the employer's request that the employee sign a restrictive covenant may be reasonable and even necessary. However, this does not mean that the employee must agree and the employee may negotiate the inclusion of such a covenant in the agreement. Should the parties not agree, the employer – subject to any restrictions under law or collective or individual agreement – and subject, of course, to both a due process hearing and the obligation to act in good faith – may be entitled to terminate the employment agreement and the employee will be entitled to termination payments. If the employer's request is unlawful, the employee may be entitled to damages for wrongful termination.

Does your jurisdiction require contributions to a pension or retirement scheme?

Pursuant to the Extension Order pertaining to comprehensive pension insurance in Israel, as of January 1, 2008, an employer must ensure every employee for pension by making contributions and deductions from the employee’s salary. The rate of contributions and deductions has increased gradually, in accordance with the Extension Order, and, as of January 2017, it is 18.5% – of which the employer’s contribution is 12.5% (6.5% in respect of pension and 6% in respect of severance pay) and the employee’s contribution is 6% deductible from the salary. The maximum contributions of the employer in respect of pension cannot exceed 7.5% of the salary.

In the event the employee does not choose otherwise, the Extension Order provides for a default pension fund, which includes insurance for disability and demise.

The pension insurance obligation applies to an employee after 6 months of employment, unless the employee was previously insured, in which case the obligation starts after 3 months of employment retroactively from the date of commencement of employment

Are certain benefits mandated by your jurisdiction?

Yes. The following benefits are mandated in Israel:

•    Social Security;
•    Overtime pay (per hour performed, or "global");
•    Paid leave;
•    Paid sick leave (including for a parent/spouse/child's sickness);
•    Paid holiday leave
•    Recreation pay;
•    Participation in commuting expenses;
•    Pension fund contributions;
•    Severance pay;
•    Notice for termination.

Is it permitted to have a mandatory retirement age in your jurisdiction?

The "retirement age" as defined in the Retirement Age Law of 2004 – that is the age at which an employee may choose to retire due to age and receive retirement benefits – is age 67 for men and age 62 for women. The "mandatory retirement age" as defined in the Retirement Age Law of 2004 – that is the age at which an employer may retire an employee due to age – is age 67 for men and women.

In the private sector, there are no general restrictions on the continuation of employment of employees who have reached the mandatory retirement age. In parts of the public sector, a continuation of employment is statutorily restricted and may be allowed only until the employee reaches the age of 70.

Is it possible to cease pension or insured benefits (income continuance/disability insurance, healthcare, life assurance, etc.) when work continues beyond retirement age?

In accordance with the Extension Order pertaining to comprehensive pension insurance in Israel, if an employee has commenced employment with the current employer before the employee reaches the age of mandatory retirement (67) – they are entitled to have their employer make payments towards their pension funds, even after they've passed the mandatory age of retirement.

The Extension Order does not apply to employees who retired from their employment at the pension age and receive a pension (excluding social security benefits).

Payments towards a pension fund are made in accordance with the Extension Order and usually include payments towards pension insurance, severance pay, and insurance for disability and demise.

Can an employer make the COVID-19 vaccine mandatory for its employees? Are there exceptions that an employer must make? If an employee simply does not want to get the vaccine (without another reason like disability or religious reason), can an emp...

Although these issues have yet to be regulated in specific legislation, it seems that an employer cannot make the COVID-19 vaccine mandatory for its employees since such a requirement would presumably constitute an unproportioned invasion and infringement upon the employees' basic rights for privacy, autonomy and freedom of occupation.

 

Can an employer require that employees return to work in the office (absent government order to shut down)? If an employee refuses to return to the office, can the employer terminate the employee’s employment?

Under the assumption that the employer follows the regulations and restrictions, and insofar as the employee does not have a medical certificate exempting him/her from physical presence at the office (or other legal justification), it seems as though the employer can obligate the employee to return to work at the office.

Refusal of the employee to attend work at the office without valid legal justification (such as a medical certificate) exempting him/her from doing so, may serve as the basis for considering termination of employment (of course, each case considered in light of its particular circumstances).

Global Employment Law Guide

Israel

(Middle East) Firm S. Horowitz & Co.

Contributors Ofir Pozner Keith Shaw Meytal Barak

Updated 04 Mar 2024