The Israeli National Labor Court has issued a new ruling that expands the responsibilities of employers who use contractors in specific fields of services (cleaning, guarding, and security). The ruling ensures employers’ accountability for the treatment and conditions of contract workers on their premises.

The ruling involves the case of two contract workers assigned to cleaning positions at two different branches of a large Israeli supermarket chain through a contractor that entered liquidation proceedings. As part of a debt settlement, the workers received partial compensation from the National Insurance Institute, but sued the supermarket chain for the remainder of their unpaid rights. They invoked the Law for Increased Enforcement of Labor Laws, which requires employers using contract workers to verify that workers receive their due rights.

In its ruling, the Israeli National Labor Court clarified the obligations of recipients of services from contract workers on their premises and significantly reduced the protections available to recipients of services by virtue of the Law for Increased Enforcement of Labor Laws.

The Clarifications

Mechanism for clarifying contract workers’ grievances

Service recipients must establish a grievance mechanism in the workplace to address potential violations of contract workers’ rights. Service recipients in the said fields of services must make contract workers aware of this mechanism and guide how to file a grievance. They must also provide information on filing grievances to employees in a language they understand, whether through workplace signs or information sheets. The information should also inform employees that grievances can be submitted through accessible channels like email or WhatsApp. Service recipients cannot pass the responsibility onto the contractor to inform the contract workers about the mechanism for clarifying grievances regarding rights violations.

Periodic reviews by a salary inspector

Service recipients in the said fields of services must retain salary inspectors to perform real and effective audits in order to identify violations in real time and provide tools for service contractors to rectify violations. If an audit reveals a violation of the contract workers’ rights, service recipients must ensure the service contractor rectifies the violations. If the contractor continues to commit rights violations, the service recipient must terminate their engagement with that contractor.

The engagement agreement between the service recipient and the service contractor

The engagement agreement should stipulate the minimum wage cost per worker and the contractor’s declaration regarding additional costs, including profit. The Law for Increased Enforcement of Labor Laws places the responsibility for contract workers’ rights violations on service recipients in cases of loss contracts, where payment to the service contractor does not cover the full cost of performing the work and their profit margins. This incentivizes contractors to make up the difference at the expense of their employees, making it essential for service recipients to ensure fair compensation for contract workers.

A change in trend for debt claims

Prior to the new ruling, service recipients contended that employees must pursue their debt claims through the National Insurance Institute before seeking additional compensation. Regional labor courts occasionally upheld these arguments. However, the new ruling fundamentally alters this approach, requiring service recipients to take more proactive measures in ensuring fair compensation for contract workers. From now on, contract workers’ claims will no longer be dismissed solely because debt claims were submitted to the National Insurance Institute.

In light of this ruling, we can expect employees of service contractors in the said fields of services to submit an increased number of claims regarding violations of their rights. We recommend that companies develop innovative work methods with service contractors and their employees to mitigate the risk of violating workers’ rights. Additionally, we recommend reviewing engagement agreements and revising them to comply with relevant labor laws. In addition, certified salary inspectors should conduct periodic audits to monitor the rights of contract workers.

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