A., who works in the services industry, was put on unpaid leave at the end of March as were some 100 of her co-workers. The coronavirus pandemic had dried business up.
Only the CEO (because he doesn’t qualify for unemployment benefits) and two others would stay on. The others would apply for benefits at the Israeli Employment Service and the National Insurance Institute, as those on unpaid leave are entitled to do.
But it soon turned out that the unpaid part of the formula applied but not the leave part. The CEO continued to assign tasks to workers on unpaid leave, scheduled daily meetings with them and, in A.’s case, had her open an account with a government body the firm works with.
“People who are on unpaid leave are working 40% to 100% of their regular shifts,” said A., adding that no one is pretending otherwise. “It’s all on the table. Once a week there’s a meeting on Zoom and people have to show how the projects they’re responsible for are progressing. Whole teams are on unpaid leave and still working.”
Nirit Geller Jamili, a headhunter and career counselor, said A.’s situation is not unusual as some 880,000 Israelis were put on unpaid leave as the coronavirus all but shut down the Israeli economy over the past month.
“There are employers who are exploiting the situation and taking advantage of their employees. They could keep employing them but they use government money,” Geller Jamili said. “They say orally, sometimes explicitly and sometimes not: ‘Anyone who isn’t available for the company now won’t be working here after the crisis.’”
In a Facebook post that has attracted a lot of attention, she recommended that people on unpaid leave record the hours they have worked and the tasks they have performed – and then threaten to sue.
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A., who asked not to be named, is angry. “There was no reason to put us on unpaid leave. We’re all working,” she said.
“The CEO realized, justifiably, that this is a time he could be building for the future and that there were a lot of opportunities. He’s right, but why do I have to do the work without getting a salary? Why do I need to sit at home to get about 50% of my regular pay and volunteer my time for the company?”
In 2018, some 130,000 Israelis worked at restaurants or in the hospitality industry and another 110,000 in retailing – two sectors that have shut down almost entirely – according to a survey by the Israeli Employment Service and the Central Bureau of Statistics.
Another 63,000 work in financial services and insurance, an industry that has been deemed critical and whose employees continue to work. Another 110,000 in management, support and other services are barred from working altogether.
The process for putting employees on unpaid leave has made it possible for businesses and organizations to pass labor costs onto the state. The view that “everyone is doing it” has convinced even reluctant employers.
Others see it as a “benefit” the government is providing employers stung by the coronavirus. But companies like insurers Harel and Clal, credit card issuer Isracard, financial services firm Meitav Dash and big law and accounting firms have also put hundreds of staff on unpaid leave even though they’re financially strong.
An offer they can't refuse
One worry is that when the crisis is over, many employees on unpaid leave will end up losing their jobs. Businesses expect to face declining sales and won’t need as many workers. Other staff may remain on unpaid leave for an extended period.
And, because the rules require those on unpaid leave to be furloughed for at least 30 days, employers are incentivized to keep them on the dole for longer.
There are no exact figures for how many of the 880,000 put on unpaid leave since the start of the crisis have returned to work.
The Israeli Employment Service says only 3,840 people have notified it that they are back on the job, and officials believe that several thousand more have not yet reported that they have returned. In any case, 116,000 of the 880,000 only went on leave this month, meaning their 30-day minimum has not yet been reached.
S., a marketing manager who also spoke on condition of anonymity, discovered within a day after she was ordered to go on unpaid leave that she was expected to keep on working.
Her employer expected her to be available by WhatsApp any hour of the day, to take part in Zoom conferences and present reports. She says she’s basically working full-time from home. “They didn’t even ask me if the time was convenient for me or not,” she said. “They expected me to be available all the time.”
Some employers have said they will pay employees for work hours they put in while on unpaid leave or make up the difference between their regular salaries and the unemployment allowance. But S. says her employer hasn’t spoken about compensation at all.
“The message is that right now everyone has to pitch in,” she said. “The feeling is that anyone who doesn’t make himself or herself available isn’t contributing and won’t be staying with the company after the crisis.”
Yaron Kremer, a partner at the Ramat Gan law firm N. Feinberg & Co., makes it clear: “It's a violation of the law to ask employees on unpaid leave to work. An employer is making an offer the employee can’t refuse if he wants to keep his job.”
Off the books in cash
Kremer also warned that employers who pay staff for work performed on unpaid leave or pay them subsequently are violating the law.
“The last two months have seen employers devise all kinds of mechanisms with or without the employee’s consent. Some of them are trying to be smart alecks and profit from an employee’s continuing to work while National Insurance subsidizes him,” Kremer said.
“The worker goes home after getting a letter saying he’s on leave due to the coronavirus and will receive unemployment benefits. He doesn’t say anything to anyone but sits in front of his computer and continues to work, maybe part-time. The work hours will be calculated when he comes back to the job and he gets a bonus when his unpaid leave is over.”
Kremer says this is not only illegal but may create problems for the employer in the future. “If he pays a bonus to the employee at the end of the period of unpaid leave and later relations between the two go bad, the employee may sue to get the salary for the work he did,” he said.
Employees often feel they don’t have a choice. Y., who owns a small business, put his staff on unpaid leave. But now his business isn’t generating any income while he still has to pay rent and generate some income for himself. Suddenly, a consignment of goods he could sell during the crisis arrived. Y. had no way of handling the shipment.
He said his employees actually offered to come to work and help. “They told me that they knew I wasn’t insured and that I couldn’t pay them, but it was important to them that the business didn’t collapse, so they helped me,” Y. said
He said other businesses he knew of faced the same kind of problem, and some of them are paying their workers off the books in cash.
“Yes, it has created a black market, but people have no choice – there’s nothing on which you can pay full salaries, and those who go on unpaid leave don’t have enough money to get by. So it’s a way for each side to help the other. If the government doesn’t want to create a black market, it has to help businesses.”