Service Users Must Now Hold Hearing Procedures for Service Providers’ Employees

The National Labor Court recently handed down an important ruling that concerns many employers in the market engaged with service provider companies.

The National Labor Court ruled that although there were no employee-employer relations between the employee and its employer in this matter, the service user still had to take part in the employee’s termination and hearing process, in addition to the obligation of the direct employer to hold the hearing.

The ruling deals with the case of a cleaning company’s employee, who was placed with the Israel Electric Corporation. After 23 years of service, the employee was fired by the cleaning company, at the IEC’s demand.

The employee filed suit against the cleaning company (his direct employer) and against the Israel Electric Corporation (the service user), claiming he should be considered an employee of IEC and that he was fired illegally.

In many cases, the service user has the power and authority to terminate the employment of a service provider’s employee. Therefore, the court ruled the employee should be given an opportunity to present his claims before the entity with the authority to decide his employment, i.e., the service user, in addition to the service provider.

The ruling imposes a very broad responsibility for companies using the services of contractor companies and creates a “hybrid creature.” On the one hand, the entity using the service is not the employer, but on the other hand, it has a duty to perform a hearing, which in the first place should be imposed solely on direct employers.

The ruling is expected to provoke claims regarding the dismissal of service providers’ employees. In light of the ruling, and despite the criticism regarding its content, we recommend producing new working methods with service provider companies and their employees to manage exposure in this regard.