In June, 2012, a new law (i.e. the Law for the Enhanced Enforcement of the Labor Laws – 2011 – the “Enhanced Enforcement Law”) will come into effect with the objective of encouraging employers’ compliance with the current labor laws by penalizing employers who violate them.  While we assume that all of our clients and friends already comply with the provisions of the law, you may want to share with your colleagues the new ramifications for failing to do so.

1.         Sanctions Due to Violation of Labor Laws.  The Enhanced Enforcement Law sets forth three levels of fines corresponding to three levels of gravity of the violation.

(a)        “Class A” Sanctions. An employer is subject to a fine of NIS5,000 if, among other things, the employer: (1) fails to maintain records of employees’ hours and annual leave; (2) employs a minor without the minor’s having undergone a physical examination or submitted a medical certificate and certain other violations pertaining to the employment of minors; (3) fails to establish sexual harassment policy; (4) fails to display a notice containing an employee’s right to minimum wage; (5) requires job applicants to produce their army profile or otherwise violates the provisions intended to prevent discrimination in the workplace; (6) requires applicants to submit genetic information or submit to genetic testing; (7) does not provide employees with their statutory right to breaks during the workday including for meals, prayer, use of bathroom facilities and between work days; or (8) employs a woman who works in shifts for more than the statutory maximum or employing a woman who is at least four months pregnant for overtime or on weekends without medical certification or not in accordance with her medical certificate without her consent or who is required to work night shifts or on weekends during the four months after she returns from maternity leave and without her consent.

(b)        “Class B” Sanctions. An employer is subject to a fine of NIS20,000 if, among other things, the employer (1) fails to provide annual leave with pay; (2) employs employees for overtime or on weekends in contravention with the law and not in accordance with a permit; (3) does not pay compensation for overtime or for work during the weekly rest; (4) illegally employs a minor during school hours and other violations regarding the employment of youth; (5) failure to provide the statutory notice of employment terms within 30 days of commencement of employment and material changes thereto; (6) failure to provide certification of the period of employment as required upon termination of the employer-employee relationship; (7) failure to provide employees with paystubs which include the statutorily required information;  (8) violation of law with respect to utilization of manpower agencies or (9) violating an employee’s right to maternity leave.

(c)        “Class C” Sanctions. An employer is subject to a fine of NIS35,000 if, among other things, the employer (1) without a permit employs employees  for overtime or during weekly rest; (2) employs a minor below the age of 15 together with other violations with respect to the employment of minors; (3) failure to pay salary on time; (4) failure to pay at least minimum wage; (5) illegally dismisses a woman or man in maternity/paternity leave; (6) without a permit, dismisses an employee serving in reserve duty; or (7) failure to make mandatory pension payments.

Continued or recurring violations can result in even higher penalties.  Further, the new fines are in addition to employers’ liability as already reflected in the various, applicable laws

2.         General Manager’s Liability.  The General Manager of a company is required to take reasonable measures to ensure compliance with the labor law provisions. If the General Manager did not do so and received official warning, fines can be imposed upon her personally in amounts equal to 25% of the above-referenced fines.  

3.         Manpower Agencies.   If a business retains the services of a manpower agency and that agency violates the provisions of the law, the business that retained those services may also be liable for the violations.

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This memorandum is not to be considered as a legal opinion.

For legal advice, we suggest that you contact legal counsel directly.

Russell D. Mayer is senior partner at the Jerusalem-based law firm of Livnat, Mayer & Co.

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