According to Israeli law, companies can hire employees via third-party providers, which are then responsible for fulfilling employers' various statutory obligations. Such third-party providers are referred to as 'service and manpower companies'.
However, Israeli law provides that if a manpower company's employee continues to provide services to another company under this arrangement for more than nine months, the latter will be considered to be the actual employer.
Further, according to a labour court ruling, employees of service or manpower companies may be regarded as the employees of the engaging company even:
- within the nine-month period (but not only with regard to that period); and
- when the contract between the third-party provider and the employee states that no employment relationship exists between the engaging company and the employee.
Such a finding may arise in circumstances which indicate a greater linkage between the engaging company and the employees compared with that between the third-party provider and the employees.
Examples of such linkage may include the engaging company being involved in the employee recruitment process or advising employees and other similar criteria.
The result of such a finding is that the employees of third-party providers will be entitled to receive social benefits (eg, severance pay, recreation payments and holiday leave) from the engaging company in accordance with the social benefits that the latter provides to its employees throughout their entire service period.
Further, in July 2020 the National Labour Court ruled that companies must conduct a hearing process (ie, a process in which employees can present their thoughts and claims before their employer reaches a final decision regarding their termination) not only for their own employees, but also for manpower or service company employees who work for them.
