Sources of regulation
A major source of regulation in relation to termination at the initiative
of the employer in Israel is the
collective agreement which is legally binding and enforceable. Until the
early 1990s, a vast majority of workers in Israel were
covered by such collective agreements. However, due to various global and
local reasons, there has been a drastic decline in union membership and substantial
erosion in trade unions’ power. [1]
The contracts of employment of the many workers who are no longer covered
by collective agreements are governed by contracts law and employment standards
legislation. There is no general or comprehensive statute requiring that
dismissals be fair or mandating specific procedures to ensure fairness where
dismissal is contemplated. There are, however, statutory provisions regulating
severance pay at the time of dismissal (the Severance Pay Law, 1963) and
advance notice of dismissal (the Advance Notice of Discharge and Resignation
Law, 2001). Employment security is thus inextricably linked to the strength
of unionization and the collective agreement.
In the absence of such collective agreements, the underlying rule is employment
at will, except where the employee can establish a claim of breach of contract
or a lack of good faith. However, a growing number of statutes provides for
some basic provisions on certain aspects of employment security. These include:
the Apprenticeship Law, 1953; the Employment of Women Law, 1954; the Labour
Inspection (Organisation) Law, 1954; the Employment Service Law, 1959; the
Equal Opportunities in Employment Law, 1988; and Prevention of Sexual Harassment
Law, 1998. As well, the decisions of the Labour Court provide an increasingly
important source of regulation in the context of termination of employment
especially through judicial interpretation of the duty to act in good faith
to include procedural and substantial duties of employers.
Consequently, the rule of employment at will is rather limited. That is,
the employer is free to terminate the contract for any cause, except where
a certain statute, collective agreement, the contract of employment or the
case law indicates otherwise.
Scope of legislation
Under the Severance Pay Law only employees with one year or more of continuous
service are covered by the legislative provisions (sec. 1). The Advance
Notice of Discharge and Resignation Law covers all waged and salaried employees
(sec. 2).
Contracts of employment
A variety of contracts are possible in Israel.
These include contracts of indeterminate duration, fixed-term contracts and
temporary contracts. There are no statutory provisions preventing or regulating
the use of temporary or fixed-term contracts.
Termination of employment
The contract of employment can be terminated, without initiative of the
employer, in certain circumstances, including by:
- the
expiry of a fixed-term contract; and
- the
completion of the task for which the contract was concluded.
Termination of employment at the initiative of the employer
Termination of a fixed-term contract prior to the end of the term specified
in the contract is a breach of contract. As for indefinite term contracts,
the underlying rule is employment at will. That is, the employer is free
to terminate contracts for an indefinite term at any time without having
to provide any reason except for reasons prohibited by specific legislation,
collective agreements, the contract of employment, and the case law.
Indeed, in the unionized setting, a generally accepted concept stipulated
in collective agreements is that of tenure whereby a worker who successfully
completes his or her probation period cannot be dismissed without a valid
reason and in accordance with the specified procedure (for example, the duty
of consultation or to establish parity committees or other labour dispute
settlement mechanisms in case of disputes over individual or collective dismissals).
Collective agreements usually contain provisions that require employers to
have a just cause for dismissing employees. Such justifiable reasons would
relate to the worker’s incapacity for the job or serious misconduct.
Where the employee is not covered by a collective agreement requiring justification
for dismissal, he or she may base a claim of wrongful dismissal on the general
principles of the law of contract. Where the employment contract makes no
provision for dismissal, it may be terminated at any time for any reason.
Thus, the concept of employment at will is recognized. [2]
However, employers in both public and private sectors are subject to the
duty to act in good faith when facing termination. Recently, the Labour Court
has interpreted this duty in a broader sense. Yet, the scope and implications
of this duty on employment at will in the private sector is not clear. [3]
Furthermore, certain types of discriminatory treatment leading to dismissal
are prohibited by statute. For example, under sec. 9 of the Employment
of Women Law, women may not be dismissed for reasons connected to their gender,
such as maternity or pregnancy. Similarly, the Equal Opportunities in Employment
Law proclaims the broad principle of non-discrimination in employment. This
means that employees may not lawfully be dismissed on discriminatory grounds
such as sex, race, religion, nationality, age [4] and
other similar categories (sec. 2). It applies to any workplace of
six or more employees (sec. 21). Dismissals of disabled employees
or other members of his or her family on discriminatory grounds are also
prohibited under sec. 8 of the Equal Rights of People with Disabilities
Law, 1998. Further, sec. 30 of the Contracts Law (General Part), 1973,
has been interpreted to mean that the reason given for dismissal must not
violate public policy. [5]
Moreover, the Labour Inspection (Organisation) Law grants special protection
from arbitrary and discriminatory dismissal to employee representatives on
safety committees or other safety delegates, where the dismissal is based
on reasons connected to their activity (secs. 17(a)(2) and 24). More
recently, the Collective Agreements Law, 1957 was amended to include protection
from dismissal of employees due to their union membership, affiliation or
activity (sec. 33J). Regional labour courts have jurisdiction under
this Act, and may issue an injunction against dismissal and award compensation
even when actual damage was not proved (sec. 33K).
The Protection of Employees (Exposure of Offences, of Unethical Conduct
or of Improper Administration) Law, 1997, provides protection from dismissal
for employees who file a complaint against their employer regarding a violation
of the law, unethical conduct or administration (sec. 2). Regional
labour courts have jurisdiction under this Act, and may award compensation
to dismissed employees, or, for public bodies or enterprises with over 25
employees, may issue an injunction against dismissal (sec. 3). Employees
are also granted protection against dismissal when they filed a complaint
against their employer for violation of employment standards statutes such
as Wage Protection Law, 1958 (sec. 28A) and Minimum Wage Law, 1988
(sec. 7A).
Finally, the National Labour Court has broadened employee protection against
dismissal to cases where termination of an employment contract is in violation
of constitutional rights, such as freedom of association, and ordered reinstatement. [6]
Notice and prior procedural safeguards
The requirement for prior notice or payment in lieu of such notice has been
established by custom and practice. Many collective agreements required advance
notice and this duty even applied to most workers through extension order
until explicitly solidified in the Advance Notice of Discharge and Resignation
Law in 2001.
Both employees and employers are obliged by the duty to provide written
advance notice of discharge and resignation (sec. 2). The length of
notice increases with the duration of employment (secs. 3-4). For
example, a salaried employee, who is employed for more than one year, is
entitled to one month’s notice. If the employee or employer terminated the
contract of employment without giving advance notice, they will have to pay
the other party a sum equivalent to the employee’s salary for the period
of the advance notice (sec. 7). The employer may exempt the employee
from attendance during the period of the advance notice if he or she pays
the employee a sum equivalent to the employee salary for the period of the
advance notice (sec. 6).
According to the Employment Service Law, sec. 37, where the employer
intends to dismiss ten or more workers he or she must also give prior notice
to the Employment Service Bureau.
As for other procedural requirements, many collective agreements contain
grievance procedures and other mechanisms ensuring that workers and their
union are informed of the reasons for the pending dismissal and are given
the opportunity to defend any allegations made against them by the employer.
When agreement is not reached the dispute is often settled in arbitration.
Several collective agreements contain provisions which require the employer
to inform, consult and negotiate with the employees’ representative when
contemplating redundancy. Further, the National
Labour Court has recently held that the duty of the employer to consult with the
employees’ representative in case of redundancy dismissal is derived from
the duty to act in good faith. It therefore applies to all employers in both
unionized and non-unionized sectors even if there is no specific provision
in the legislation or collective agreement on this matter.[7]
The National Labour Court has also held that employees are entitled to a
fair hearing before dismissal in both the public and private sectors. It
is also derived from the duty of the employer to act in good faith.[8]
Severance pay
Under the Severance Pay Law, 1963, all workers with at least one year of
service, and seasonal workers who have worked for two or more seasons, are
entitled to severance pay of one month’s salary for each year worked, regardless
of the reason for the cessation of employment. This is viewed as an award
for service.
Collective agreements may increase, but not decrease, the amount payable
when the employment relationship ceases. The severance pay sum is dependent
upon the employee’s length of service.
Avenues for redress
In practice, many unionized employment undertakings have their own internal
arbitration bodies which seek to reconcile employer/employee interests in
dismissal disputes. These are internal mechanisms set up pursuant to collective
agreements, which are independent of the national courts. Typically, representatives
of both the workers and the employer will be part of such arbitration committees.
Where the dismissal is taken up as an industrial dispute, the Labour Court
has jurisdiction to hear the matter and pronounce judgment.
Where the employee pursues an independent claim based on breach of contract,
he or she has recourse to the ordinary courts of law.
As the law of termination of employment is still founded upon the law of
contracts and the concept of employment at will, the primary remedy in the
private sector – whether in a unionized or non-unionized workplace – is compensation
in the form of damages, [9] except
for special circumstances such as dismissals that breach anti-discrimination
or other specific legislation, or violate constitutional rights. [10] In
all other cases the appropriate remedy, as in other cases of breach of contract,
is damages. These damages are for breach of contractual obligations, not
for any concept of unfairness of the dismissal. However, the Court held that
in extremely exceptional circumstances of unlawful dismissal, even when it
is not in violation of constitutional rights or specific legislation, the
Court may order reinstatement. [11]
The primary remedy for wrongful dismissal in the civil service is reinstatement.
The Court may also order reinstatement in cases of wrongful dismissal in
other workplaces in the public sector or quasi-public workplaces.
Further information
- Labour laws in the Ministry of Industry, Trade and Labour website
- Ruth Ben-Israel, "Wrongful Dismissal: Validity and Implication" (1980)
7 Tel Aviv Law Review (Iunie Mishpat) 345 (Hebrew).
- Guy Mundlak, "The Rule on Dismissals: Default Rules versus Mandatory
Standards, and Some Interim Options" (1999) 22 Tel Aviv Law Review
(Iunie Mishpat) 819 (Hebrew).
- Yitzhak Lubotzky & David A. Frenkel, "The Dilemmas Involved
in the Managers’ Prerogative to Dismiss in the Constitutional Revolution
Era" (2005) 5 Law and Business 161 (Hebrew).
[1] See
Yinon Cohen, Yitzchak Haberfeld, Guy Mundlak & Ishak Saporta, “Unpacking
Union Density: Membership and Coverage in the Transformation of the Israeli
IR System” (2003) 42 Industrial Relations 692. This is the most comprehensive
and recent survey on union density conducted in Israel.
According to this survey, union membership in Israel was
40 to 45 percent in 2000, while coverage was about 56 percent, down from
80 to 85 percent for both measures in 1981.
[2] Zori v. The National
Labour Court, 25 (Part
1) PD (Supreme Court Decisions), p. 372 (High Court of Justice Petition
No. 73/254).
[3] See e.g.
Bivas v. Shupersal Ltd., 36 PDA (National Labour Court Decisions),
p. 481 (Appeal to the National Labour Court No. 300178/98); The Economic
Company for Development, Manda Village v. Jabar, 35 PDA (National Labour
Court Decisions), p. 245 (Appeal to the National Labour Court No. 375/99).
[4] However, according to the Age of Retirement Law, 2004,
employers may dismiss employees at the age of 67.
[5] For example, in Workers’
Committee of EL-AL Air Stewards v. Chazin, 4 PDA (National
Labour Court Decisions), p. 365 (Appeal to the National labour Court
No. 1973/25-3), a provision in a collective agreement which discriminated
amongst women in promotion was held to be unlawful as a violation of public policy. This
was before the enactment of the Equal Opportunity in Employment Law,
which protects employees from dismissal based on their sex, marital and
parental status, among others.
[6] See Horn & Leibovitz
Transport Co. v. The Histadrut – The New General Federation of Labour,
35 PDA (National Labour Court Decisions), p. 145 (Appeal to the National
Labour Court No. 1008/00).
[7] See Levin
v. Israel Broadcasting Authority, 36 PDA (National Labour Court Decisions),
p. 400 (Appeal to the National Labour Court No. 359/99); The General
Federation of Labour in Israel (the Histadrut) v. E.C.I. Telcom Ltd.,
36 PDA (National Labour Court Decisions), p. 289 (Appeal to the National
Labour Court No. 1003/01).
[8] See Herman
v. Sonol Ltd. (not yet published; delivered on December 29, 2002) (Appeal
to the National Labour Court No. 300353/98).
[9] See Zori, supra note 2;
and sec. 3(2) of Contracts (Remedies for Breach of Contract) Law,
1970 which prohibits specific performance of personal work or service contracts.
However, the National Labour Court has interpreted the Zori decision
delivered by the High Court of Justice narrowly as though it has jurisdiction
to order reinstatement in several circumstances when there is no real personal
relationship between the employer and the employee (see Mifaley Tahanot
v. Yaniv, 33 PDA (National Labour Court Decisions), p. 289 (Appeal to
the National Labour Court No. 1996/3-209).
[10] See,
for example, the Equal Opportunities in Employment Law, sec. 10 and
the Collective Agreements Law, sec. 33K, which allow the Court to
decide on the remedies including reinstatement. See also Horn, supra note 6.
[11] See Bivas, supra note 3 at
para. 4 (Chief Justice Adler).
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