Treasury to Enforce Labor Laws for Contractors in Gov't Offices

The continuing violation of labor laws by contractors providing manpower services to the state is likely to end.

The continuing violation of labor laws by contractors providing manpower services to the state is likely to end.The treasury's accountant general, Yaron Zelekha, intends to step up the enforcement of employment laws in light of violations by many contractors providing manpower services to government agencies.

The state is the largest employer of contract workers. Tenders issued by the state include a clause that requires private contractors to uphold employment laws; but in practice, these are generally ignored.

The rights often withheld from employees include minimum wages, pension payments, overtime, vacation pay and severance pay, among others.

The practical result is that the state violates workers rights in Israel more than anyone else.

Full accounting

Contractors will be obliged to allow thorough audits by the Finance Ministry. The accountant general's division of the treasury will be responsible for conducting the audits.The accountant general and Budget Divisions established a joint committee to study the matter, and recommend changes in procedures in order to effectively protect workers rights.

Changes will be made in the contracts signed with the manpower contractors, requiring them to submit to regular, full audits by the treasury.

The new audit procedures will include submitting regular reports to the accountant general of all payments to the tax authorities, the National Insurance Institute, pension funds and provident funds.

In addition, employee paycheck slips will be reviewed by the auditors, and annual sample audits will ensure that all the terms of employment contracts are observed.

Another method will be the distribution of anonymous questionnaires to workers in government offices. The employees will be asked to report whether their rights are being respected by their employers. The contractors will not know whether their employees have received such questionnaires or who answered them.

In addition, every government ministry will appoint a full-time person to be in charge of complaints from employees about violations of their rights.


Along with the audits, enforcement of the law will be increased.

Under the new enforcement policy, penalties for violations will allow the state to seize the guarantees put up by contractors who win tenders. Furthermore, the state will annul tenders won by contractors found to be in violation of the law, and will even disqualify contractors from resubmitting a bid on their annulled tender even after they correct their violations.

The accountant general has already started to enforce his new policies. Zelekha is considering seizing the guarantees provided by the contracting firm Modi'in Ezrachi, should its suspected labor rights violations be confirmed.

The root of the evil

Contractors win government tenders by submitting impossibly low bids, which they then make up for by not paying workers the benefits required.

In this way, the state sets a bad example for the entire economy - the government itself does not keep the law. This is a situation that no law-abiding country can permit.In order to ease the burden on contractors and reduce their temptation to violate labor laws, the treasury will take on the responsibility for the rise in the minimum wage. The new contracts will include a section stating that if the minimum wage is increased, then the price paid by the government will increase proportionally.

In addition, the state is considering signing an agreement with the Histadrut labor federation on the protection of these workers rights.

Another recommendation, which still needs approval from the Justice Ministry, is the creation of a special, expedited process in the labor courts for violations of these labor laws.

The treasury has studied the level of the minimum wage in Israel. According to its research, the minimum wage in Israel is at a reasonable level compared to international levels.

The problem is that workers are not paid the official minimum wage in practice, with estimates saying that it is violated about 40 percent of the time.

This situation leads to pressure to increase the legal minimum wage, a step that harms those employers who do pay according to the law. Therefore, increased enforcement of the labor laws is likely to reduce the pressure to increase the minimum wage.