The Rise of Employees’ Unionization and Consultation Obligation during Transactions
The Collective Agreements Law provides that the union must represent the majority of unionized employees to whom the collective bargaining agreement applies, and no less than one-third of the total employees to whom the agreement applies. The union must notify the employer of its claim to be recognised as a representing body and the employer may examine the signatures of employees joining the union.
In light of the recent case law of Israeli labor courts with respect to initial unionization, the employer needs to act in good faith and not to interfere in any wayin the unionization process or try to prevent it in any way.
Following the recognition of the union, the next step will be negotiations for signing the special CBA. Although the company is under legal obligation to negotiate in good faith with the union with an aim of reaching an agreement, it has no obligation to reach any agreement or to do so within any particular timescale.
In the event that the negotiation will not proceed as expected or the union will claim for non-compliance in any way – the union has a right to declare a collective work dispute, which is basically a prior notice to strike, to follow later on, in case the claim raised by the union is not remedied by the company.
The rise of employees’ unionization may have an impact on M&A transactions, which involves employees.
According to Israeli labor courts’ rulings, the employer cannot change the employing entity or to transfer the employees from one entity to another without employees’ consent.
In the event that the employees are unionized the employer must inform and consult its employees and their representatives regarding any intention to conclude a transaction, whether it is a merger, shares transfer, assets transfer or transfer of the control to another entity. This ruling assumes that employees have a basic right to be aware of any substantial changes in their workplace, which may affect their employment rights and obligations. Furthermore, in the event that the employees are unionized the employer may need to negotiate with the representative body regarding its demands for the employees. However, it was held that the employees do not have the right to veto the transaction, and the employer has the full right to conclude the transaction, even if the employees are opposed to said transaction.
As these rules are not statutory, but were set by labor court rulings, the obligations during the transaction depend on the specific circumstances of the transaction, the existing work relations, the existence of collective bargaining agreements, and many other factors.
Our Employment Department is at your service, should you have any question in this regard.