Israel's Top Court Blasts State for Misuse of Palestinian Workers’ Sick Fund

The mechanism the state had decided on 'raises questions,' Supreme Court President Esther Hayut says

A Palestinian construction worker in a building site in the West Bank settlement of Efrat, March 2019.
Emil Salman

High Court justices harshly criticized Monday the state's decision to return 218 million shekels ($63 million), accumulated in a fund designated for paying sick leave to legal Palestinian workers, to their Israeli employers.

In a hearing on a petition filed by Kav Laoved – Worker’s Hotline and the Association for Civil Rights in Israel, Supreme Court President Esther Hayut said the mechanism the state had decided on “raises questions.” The restraining order freezing the payment to employers remained in place, and the state was given three months to respond to the justices' questions.

Until this year, employers automatically deducted 2.5 percent of Palestinian workers’ salaries for a sick leave fund, managed by the Population and Immigration Authority. The fund accumulated a total 515 million shekels ($159 million), due in part to the red tape Palestinians were subjected to. In mid-2018, the state assembled an inter-ministerial team to examine the use of the sick leave fund, but its recommendations were never debated nor approved because of repeated election campaigns and the advent of a caretaker government.

Shortly after Haaretz reported the vast amount in the fund, employee representatives joined a petition filed by two NGOs three years ago to reveal the use of the accumulated funds. The state announced a month ago it had decided to give the employers 218 million shekels.

“Who decided they’re returning the money?” Hayut asked state representatives. “You appointed an inter-ministerial team, you sought several postponements, and in the middle – when we expect a full decision examining all aspects – the inexplicable suddenly happens.” Hayut later demanded “answers about distribution of the money, and what it’s based on. Someone decided to return 218 million shekels – an explanation on what authority would help.”

Justice Menahem Mazuz wondered who authorized Population and Immigration Authority chairman Shlomo Mor-Yosef, a team member, to make “such a dramatic decision.” “Even the finance minister doesn’t do this,” he said. Moreover, Mazuz rejected the state attorney’s claim that the decision was discussed in previous messages to the court. “We’re in the midst of a petition,” he said, “and suddenly there’s such a significant decision on the side that pulls the rug out from under the hearing. … If the money is transferred there’s nothing to discuss in the petition.”

Mazuz noted the amount the state was to give the employers “raises a question regardless of the policy behind it.” He asked state representatives, “How did you reach this sum and how did you ensure the money would reach its designated destination?” Mazuz doubted most of the money would make it back to the workers, and asked, “How can you make sure the money doesn’t wind up in employers’ pockets?”

The Histadrut labor federation recently submitted an opinion to the Finance Ministry stating: “Giving money to employers unconditionally is bound to lead to most of the money staying with them and not for its real use – paying eligible workers sick pay.” The Histadrut also calculated that the fund should be closer to 675 million shekels rather than 515 million shekels.

Kav Laoved and ACRI commented that the state’s decision “were shown to be scandalous by the judges’ question.” They added: “We’re happy we managed to prevent underhanded opportunism, which would have prevented rectifying a decades-long injustice. It’s the first step for Palestinian workers employed in Israel to exercise the rights they deserve.”

The Israel Builders Association said, “The state’s obligation is to return to contractors the sick-leave payments illegally collected, which did not serve the workers for their original purpose.” Association president Raul Srugo said, “For years contractors deposited 2.5 percent of salaries of Palestinian workers, who didn’t use these sick days simply because they weren’t sick.”

The Population Authority declined to comment.