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Some 500 of the 800 Bank Hapoalim employees who left the bank in a wave of dismissals in early 2003 have sued the bank at the Tel Aviv District Labor Tribunal, demanding the same entitlement to stock options as the 7,700 remaining employees.

At the time the bank laid off nearly 10% of its workforce, in the name of efficiency. It had reached an accord over the layoffs with representatives of the Hapoalin union, but the Histadrut labor federation, headed at the time by Amir Peretz, was not privy to the decision. It called a strike after the layoffs had been implemented.

In March 2004, a year after the layoffs, an agreement was signed between the management and the union, under which Bank Hapoalim employees would be entitled to receive bank stock options free of charge, annually for six years, beginning in 2004.

It was agreed that these options could be realized for only NIS 1, which constitutes an unprecedented discount of 90 percent.

The agreement also granted each employee a special bonus equal to one half of a salary.

The 500 laid-off employees, all of whom took early retirement, claim that the bank should grant them every financial benefit granted to active employees, as is customary in the banking system. Accordingly, they should also be granted the options and the bonus granted to active employees.

The group says that Bank Hapoalim has rejected this claim, alleging that the options and special bonus are not part of a wage agreement, and that the retirees are entitled only to agreements which guarantee a set percentile increase of wages.

The retirees claim that the stock option terms and the special bonus constitute a de facto wage increase, and thus they are entitled to these benefits. They add that there is some concern that the management of Bank Hapoalim planned the "retiree-circumventing agreement" in advanced so it would not be forced to grant these benefits to them as well.

The statement of defense filed by Bank Hapoalim alleges that these benefits, which were created only after the departure of the 500 claimants, were granted only to active bank employees who meet the prerequisites.

"From the moment the employees stopped working at the bank, they no longer contributed to it," says the bank. "They are also free of any obligation toward the bank [except the obligation of secrecy and trust applicable to any employee leaving his job]. Some of the retirees are even employed elsewhere, while simultaneously receiving early pension from the bank.

"They have no right to the options, which are meant to strengthen the connection between the bank and its regular employees and provide an incentive for them to continue their work at the bank for an additional period."