Workers' rights protest, photo by Oren Ziv (Activestills)On 12 December 2011, the Knesset passed a government-sponsored law that seeks to enhance the enforcement of labor laws, after two and a half years of deliberations. The law includes several instruments designed to enhance the enforcement of labor law; some of these instruments, such as the liability of the person ordering a service, are innovative in the field. The law was initiated after years of hard work by NGOs, which shed light on the difficulties in the enforcement of labor laws in general, and the conditions of contract employees in particular. With regards to contract employees, the NGOs further emphasized the need to develop an effective tool imposing liability on the client, in order to address the phenomenon.
The law includes several mechanisms: financial sanctions and liability of the person ordering the service, as well as liability of a CEO in a corporation or public authority, and restrictions on contracts between public bodies and those who have been convicted or sanctioned, and lastly – a mechanism of periodic reviews by an authorized salary examiner (a newly created profession).
During the Sixteenth Knesset, the Forum for the Enforcement of Workers Rights, of which ACRI is a member, began promoting legislation regarding the liability of the person ordering the service. In the Seventeenth Knesset, the NGOs managed to pass the bill in its first reading with the help of several Members of Knesset – Lia Shemtov, Dov Khenin, and Shelly Yachimovich. The government sponsored bill was subsequently tabled, including the above-mentioned provision and additional instruments.
Although the NGOs working in this field have some concerns and criticism regarding the law, it is nevertheless an important piece of legislation that adds several instruments for enforcing workers’ rights, including several significant and innovative tools. The following is a summary of the law (based on the summary prepared for the Knesset plenum by the legal adviser to the committee).
1. Financial sanctions – Imposition of financial sanctions instead of criminal proceedings; this will apply to all criminal offenses in the labor laws, as well as extension orders for pensions. Sanctions are imposed after prior notice; right of claim is provided, as is the right to appeal to a special committee, and thereafter to the labor court. In addition, the imposition of a financial sanction will be publicized on the website of the Ministry of Industry, Trade, and Employment. A further important aspect is that it will be possible to impose a financial sanction (in a reduced amount, but not coverable by indemnification or insurance) on the CEO of a corporation that is an employer and violates rights – if the CEO fails to prove that he or she did everything possible to prevent the violation. The financial sanction may be replaced by an administrative warning, in order to permit the correction of violations prior to the imposition of a financial sanction.
2. Liability of a person ordering a service – The law includes several instruments for imposing liability on a person ordering a service. These are restricted to the following sectors: cleaning, guarding, security, and catering. The liability is secondary to that of the contractor, and is limited to a sub-set of violations as established in the Third Addendum. This liability depends on notification to the customer regarding the presence of a violation.
In addition, the person ordering the service enjoys various defenses against liability:
(A) Financial sanction against a person ordering a service – if a financial sanction has been imposed on a contractor, the Competition Officer may warn a person ordering a service who employs the contractor’s workers of the violation, and if this is not corrected within 30 days, or if the contract between the person ordering the service and the contractor is not nullified in good faith and the guarantee given by the contractor confiscated, it is also possible to impose a financial sanction on the person ordering a service on account of the same violation. The law imposes numerous conditions on this provision. It is also possible to warn the CEO of a corporation who orders services that they must supervise the execution of the correction, or the nullification of the contract and confiscation of the guarantee, and, if this is not done and they fail to do everything possible to fulfill their obligation, the CEO will bear criminal liability.
(B) Civil liability of a person ordering a service – the proposed law enables an employee to file a civil suit against the person ordering the service if, during the period of employment, the employee’s rights in accordance with the provisions in the Third Addendum, or in extension orders in certain matters, including pension, recuperation and travel expenses, were violated. This is conditioned on prior notification, which may be provided by organizations assisting workers. The person ordering the service must determine the method by which notification is to be forwarded. Liability is also conditioned on the employment of at least 4 employees for a period of at least 6 months. However, all these conditions will not apply if the contract does not ensure a minimum hourly value as determined in the regulations, in addition to profit. The person ordering the service will enjoy various defenses against liability, unless they signed an agreement that does not ensure the cost of minimum wage: If the violation was fully corrected, or if they relied on periodical inspections by a qualified inspector of salaries who testified to the absence of violations, or in the event that that the said inspections revealed violations and they took action to correct these or to nullify the contract. In any case, an employee will still have the right to claim employer-employee relations, and so forth.
(C) Criminal liability of a person ordering a service – regarding certain violations of the Protection of Salary Law, the Minimum Wage Law, the Hours of Work and Rest Law, the Annual Vacation Law, and the Youth Work Law, it will also be possible to indict a person who orders a service and who fails to inspect in order to prevent these offenses by a contractor. This will be possible after the person has received notification of the violation, and provided an indictment has already been served against the contractor on account of the violation. The person ordering the service will enjoy the same defenses as above for this purpose.
(D) Signing a contract that fails to ensure the minimum wage – a person ordering a service who signs such a contract will bear criminal liability by virtue of the signature. The same will apply to the CEO of a corporation that orders a service.
3. Liability of the director-general of a public authority – The law establishes that, subject to the authorization of the Attorney General, it will be possible to instigate a criminal prosecution against the director-general of a government ministry, or of a secondary unit that is not a corporation, on account of the violation of the obligation to inspect in order to prevent violations and offenses, unless the person proves that they did everything possible to meet their obligation. This will apply in the following cases: (A) In the event of violation by an employer – provided that the director-general received a warning and failed to act by the date stipulated in the warning. (B) In the event of a violation by the person ordering the service – provided that the director-general received a warning and failed to act to correct the violation or to nullify the contract and confiscate the guarantee. (C) Due to signing a contract that fails to ensure a minimum wage equal, at least, to the value of the work hour as established in the regulations. These offenses will also constitute disciplinary offenses.
4. Amendment of the Transactions in Public Bodies Law – Regarding services in the field of guarding and security, cleaning, and catering, a prohibition has been established against associating with a body that incurs two or more violations relating to any of the provisions in the Third Addendum, or on which financial sanctions were imposed over the preceding three years due to six such violations by the contractor providing the service.
5. Amendment of the Employment of Workers by Personnel Contractors – In order to clarify that the provision against associating with an unauthorized service contractor, which will come into effect this coming January, will also apply to the state in its associations.
6. Qualified salary examiner – the law authorizes the establishment in regulations of provisions regarding a qualified examine – who may serve in this capacity, training, examinations, conflict of interest, the manner, scope and frequency of the examinations, and so forth. Pending the enactment of regulations in 12 months’ time, the law includes a temporary provision defining the manner of execution of the examinations.
