By Amit Acco, Partner |

The state of Israel, Ministry of Industry, Trade and Employment, the Haifa Regional Labor Court convicted a business owner of illegally employing foreign workers.

This is even though the foreign national workers were employed by a contracting company that declared their employment in Israel legally. This ruling joins previous rulings on the subject, which determine the overall responsibility of a company for employing foreigners within its framework of illegal workers.


 

Many Israeli companies (“end-user companies”) tend to employ foreign workers as part of projects they carry out, through business dealings with manpower contracting companies, which declare to the end-user company upon service agreement between the parties that “all the foreign workers that will be provided, will be legal.

The end-user companies are often satisfied with the contracting company’s statement mentioned above and do not bother, intentionally or unintentionally (while “closing their eyes”), to check the true and absolute legality of the employment of the foreign nationals with the contracting company.

Through this triple employment structure, the inviting companies seek to absolve themselves of liability for the illegal employment of foreign workers while claiming that they are not the employers of the foreign workers, are unaware of their illegality of employment in Israel, and rely on the contractor’s undertaking.

This employment trend, while “closing its eyes”, was rejected by the courts and labor courts. Just recently, a company general manager was accused of unlawfully employing three foreign workers without a permit.

In his defense, the defendant argued that the mental element of the offense did not exist. i.e. men’s rea, which requires him to be aware of the circumstances that constitute the offense, since the contracting, i.e. the manpower company explicitly declared that the employees had the appropriate visas.

Relying on case 22/06 of the state of Israel – Ministry of Commerce and Industry – Yaakov Rosen, the court ruled that as to the actual employer’s reliance on a manpower contractor concerning the employment capacity of foreign workers – the actual employer should not be exempted by inclusion on another, but instead, the actual employer is expected to know the rules and check for the legality of the employment, and that the actual employer’s reliance on a manpower contractor concerning the employment of foreign workers does not absolve the actual employer’s criminal liability if the foreign worker was employed illegally.

This way, the employer cannot be hung on the ‘approval’ of a manpower company as an excuse to employ an employee illegally and thus open a ‘bypass route’ for training the employees. Such suspension constitutes “closing one’s eyes,” which constitutes the mental element necessary to a criminal conviction for the offense of employing a foreign worker unlawfully.

In section No. 26/05 State of Israel – Ministry of Industry, Trade and Employment V. Maximum Restaurants Ltd. et al. The National Labor Court ruled in a similar case that:

“The Foreign Workers Act imposes on the actual employer a direct obligation of “lawful employment” of the foreign workers. Any promise or declaration from the manpower company regarding the lawfulness of the foreign worker’s employment is invalid and cannot replace lawful permit to be obtained…Ensuring that the employment is indeed carried out legally is in full responsibility of the company and they cannot exempt themselves from this duty by referring the issue and offense to the manpower contractor company only.” (Draft translation A.A)

 

Following the ruling, the court ruled that in the circumstances of the employment it was clear that the suspicion had lurked in the thoughts of the company manager, that the employees were illegal. Therefore, the defendant had a duty to investigate the suspicion and refute it.

Concerning the duty of inquiry, the court also made it clear that:

“The duty to clarify the suspicion (of illegal employment by the man-power company- AA) is a can be met by conducting a reasonable and proper investigation and the duty of clarification must be exhausted to the end.

The defendant had to review out the existence of permits for foreign nationals to work in Israel; make sure they are in the allowed occupation, within the location allowed in the permit, or with a  certain employer. To do this the defendant had to require the foreign workers to present their identification documents including a work permit in Israel, while carefully checking the information provided in these documents, spending adequate time in understanding the details and clarifying whatever needed to be clarified”

The Employment of Foreign Nationals Contractor Employees Within the Premises of the Company

The obligation to check the legality of the employment of foreign nationals also applies to companies, in the framework of which other companies operate in the execution of other projects within their premises (“owners of the premises“).

For example, a large industrial company that employs catering contractor services in its dining rooms, or other contractor engaged in engineering development, may find itself accused of illegally employing foreign nationals that work for the contractor.

The industrial company cannot “close its eyes” to the legality of employing the foreign nationals within the catering contractor or engineering contractor operating in its yards. It may well be the case that during an official onsite inspection, the company general manager as well as others within the company may find themselves personally accused of illegally employing foreign workers, although these were employees of the contractor.

It is therefore recommended that such companies take appropriate steps to monitor and clarify the legality of the employment of foreigners within its framework.

Enforcement and Punishment Trends

Recently, Interior Ministry inspectors have started visiting the various businesses daily. As part of the Tax Authority’s work plan, bookkeeping audits will also be conducted for tax purposes at taxpayers who employ foreign workers in violation of the law – to ensure that their illegal employment was not accompanied by various tax offenses.

Other punitive measures include the filing of a criminal indictment against the company and its managers concerning the employment of illegal foreign workers. In addition, employment permits for any illegal foreign worker caught with those companies may be revoked.

An employer who employs a foreign worker without a work permit is expected to receive a prison sentence of up to one year and possibly high-level monetary fines of up to NIS 104,000. In addition, the company or manager is subject to a continuous daily fine of NIS 5,200 for each day the employee was illegally employed. Furthermore, in cases where the employer did not hold documents properly or did not present medical insurance as stipulated by law – the fine will be increased.

The law also imposes on the company officers the duty to monitor and do as much as possible to avoid illegal employment. The personal sanctions may include fines and criminal charges up to imprisonment in some cases. Moreover, the office may be later unable to serve as an elected official or a director as a director on his behalf.