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The employment relationship

Country specific laws
What laws and regulations govern the employment relationship?

Israeli labour legislation provides for minimum mandatory requirements, which cannot be waived by employees. This legislation includes:

  • the Minimum Wage Law, which stipulates the minimum wage and is regularly updated;
  • the Wage Protection Law, which regulates the timing and methods of payment of salaries and permitted deductions therefrom, as well as providing penalties for breach;
  • the Hours of Work and Rest Law, which regulates employees’ working hours, overtime, night labour and rest days, as well the payment for each category of work;
  • the Annual Leave Law, which stipulates the minimum annual leave quota and regulates vacations generally;
  • the Sick Pay Law, which stipulates the minimum requirements with respect to paid sick leave;
  • the Severance Pay Law, which stipulates the entitlement for severance pay and the calculation thereof; and
  • the Advance Notice for Dismissal and Resignation Law, which stipulates the minimum requirements for notice before termination by the employer or employee.

Generally applicable expansion orders provide for four additional mandatory benefits, which also cannot be waived by employees:

  • reimbursement of travel expenses to and from the workplace;
  • national holidays;
  • convalescence pay; and
  • a pension scheme.

Who do these cover, including categories of worker?

These provisions cover all types and ranks of employee.

Misclassification
Are there specific rules regarding employee/contractor classification?

Rules (stated in case law), not choice, determines the status of employment.

The main relevant rules cover the following considerations:

  • whether the employee’s function is an integral and regular part of the employer’s business;
  • the extent of control over the employee;
  • whether the employee has his or her own business, takes economic risks, hires employees or maintains a list of clients;
  • the extent of the employee’s financial dependence on the employer;
  • who supplies the means to work (ie, whether the employer or the employee supplies the equipment, vehicles, materials and tools);
  • the place of work (ie, whether work takes place at the premises of the employee or the employer);
  • the length of employment;
  • the method of payment;
  • the method of payment of taxes by the employee; and
  • whether the parties believe that they are entering into an employer-employee relationship and how this is presented to third parties. 

Contracts
Must an employment contract be in writing?

In general, Israeli law does not require an employment contract to be in writing and an oral agreement is legally binding. However, the Notice to Employee (Terms of Employment) Law obliges the employer to provide each employee with a notice of his or her main employment terms using a stipulated form. In addition, the Foreign Employees Law requires a foreign employee’s employment contract to be in writing, in a language known to the employee and including specific terms and conditions.

Are any terms implied into employment contracts?

All statutory rights and mandatory benefits are implied into all employment contracts and supersede contractual stipulations. The provisions of any applicable collective bargaining agreement or extension order may also be implied into an employment contract.

Are mandatory arbitration/dispute resolution agreements enforceable?

Arbitration and dispute resolution mechanisms are common in collective bargaining agreements. However, they are not common in personal employment contracts, as mandatory employment rights and benefits cannot be subject to arbitration (only contractual benefits can be subject to arbitration).

How can employers make changes to existing employment agreements?

The employer must provide the employee with written notice of any change to the terms of employment. Any change is subject to the employee’s consent.  

Foreign workers
Is a distinction drawn between local and foreign workers?

Foreign workers in Israel are entitled to all rights and benefits afforded to employees under Israeli labour law; in addition, they are entitled to special benefits under foreign workers legislation (eg, written employment, medical insurance and accommodation).

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