Dear Clients and Friends,

We would like to update you regarding two important topics:

First, changes to recuperation payments in 2024, namely, freezing the value of recuperation payments, reducing the payment per recuperation day while transferring the amount by which it is reduced to the State.

Second, a new and precedent-setting ruling relating to a prohibition on weight-based discrimination in employment.

Changes to Recuperation Payments for the Year 2024

1.On January 23, 2024, the government, together with a group of public-sector employers, signed a collective agreement with the Histadrut union regarding a reduction in payments for every employee entitled to recuperation pay, and a freeze on the value of a recuperation day for the year 2024.

2. This collective agreement constitutes a step in the process for dealing with the deficit that the State is facing as a result of the ongoing situation from October 7, 2023, and the major budgetary expense arising from the war. The “donation” of the payment on account of recuperation pay and the freezing of the value of a recuperation day are intended as an expression of the employees joining in efforts to enable the economy to face the expenses of both the war as well as the general economic state.

3. The terms of the collective agreement stated that it would enter into force once legislative action relating to this matter was completed. On March 12, 2024, those legislative steps were completed when the Knesset passed the Law for the Freezing and Reduction of 2024 Recuperation Payments for the purpose of Budgeting Benefits for Reservists, 5784-2024.

4. Freezing the Value of a Recuperation Day

Under the law, the value of a recuperation day, according to which employers will calculate recuperation payments to be made in 2024, will be the same as the value of that recuperation day, for the same employee, in 2023.

Please note:

The law establishes that this freezing of the value of a recuperation day applies even if there exists, in a workplace, an agreement (individual or collective) or accepted practice that entitles employees to a higher value for a recuperation day in 2024 than that which they were entitled to in 2023. To the extent that the employer is obligated to update the value of a recuperation day in 2024, that obligation will be postponed and included in the calculation of entitlements to recuperation pay for 2025.

5. Reduction of Employees’ Recuperation Pay

Under the new law, employers must deduct from the payment of the 2024 recuperation pay, the value of one recuperation day, for each employee. This will be done in order to transfer that amount to the State, as part of sharing in the costs arising from the budgeting of benefits for reservists.

Please Note:

• For employees who in 2024 are entitled to five days of recuperation, and whose average monthly salary for January through March of 2024 is not higher than 6,000 NIS, the reduction will be at a rate of half of one recuperation day.
• Employers that award recuperation pay in the form of funding vacations or another benefit are required to reduce the scope of that funding or the value of that benefit by a rate equal to the value of a recuperation day.
• This obligation regarding reduction of the sum of recuperation payments also applies to those who are paid a salary without having a formal employment relationship.
• The law includes provisions regarding how employers who make recuperation payments to their employees on a monthly basis, as opposed to doing so with an annual payment, shall make this reduction.
• The reduction of recuperation payments does not affect the calculation of amounts paid into the employees’ pension arrangements.
• The amount deducted from the employees’ recuperation pay must be transferred to the tax assessor and is considered as tax withheld at the source.

6. We are available to answer any question you may have regarding implementation of the requirements of freezing the value of a recuperation day, of the reduction of recuperation pay, and regarding the method of transferring the payment to the State.

New Ruling: Prohibition of Weight-Based Discrimination

1.Recently, the National Labour Court handed down a new ruling, which dealt with the precedential question of the prohibition of weight-based discrimination. In the ruling [Labour Appeal (National) 34220-10-21, Lifless vs. Israel Football Association (February 21, 2024)], the court recognized the existence of a claim of weight-based discrimination by virtue of the existing duty of good faith imposed on the employer.

2. In the case at hand, the employee was employed as an assistant referee for the Football Association. The employee claimed that the Association’s decision to bar him from refereeing in games of the upper leagues, and to assign him to games in the lower leagues only, was tainted by discrimination based on his weight.

3. The Regional Labour Court in Be’er Sheva rejected the employee’s claim, and ruled that his removal from refereeing in the upper leagues was based solely on relevant considerations.

4. The National Labour Court took up the matter of the decision and conclusions of the Regional Court in this case. As part of its ruling on the appeal, the National Labour Court examined all the evidence and came to the conclusion that the Association’s decision was based, to a significant extent, on the appellant’s weight, and not only on professional considerations.

5. The National Labour Court found that there was considerable evidence that throughout the period in which the employee was refereeing in the upper leagues, his weight and its impact on his appearance were the subject of discussions between him and various parties in the Association. In that context, it was made clear to the employee several times, explicitly, that if he did not lose weight, it would affect his standing.

6. In its ruling, the National Labour Court did mention that despite the studies indicating a phenomenon of weight-based discrimination, the legislature has not yet dealt with this form of discrimination, and weight-based discrimination is not included as one of the grounds listed in Section 2(a) of the Equal Employment Opportunity Law, 5748-1988. Several bills related to this matter have been proposed in the Knesset over the years, but they were not advanced.

7. Despite this lack of legislation, however, the ruling determined that weight cannot be one the considerations taken into account by an employer, and therefore the employee is entitled to compensation, as a violation of the employer’s existing duty of good faith.

8. The National Labour Court refrained from deciding as to whether the weight criterion constitutes prohibited discrimination under the Equal Employment Opportunity Law, as such a determination may influence the burdens of proof in discrimination claims. However, the Court emphasized that the list of grounds given in the law is not a “closed list”.

9. In view of these determinations and conclusions, the Court ruled that the Association must compensate the employee, paying him an amount of NIS 40,000 for its violation of its duty of good faith.

10. The National Labour Court’s ruling expands the grounds of discrimination and indicates the Court’s willingness to recognize various other grounds, beyond the “classic” ones, as substantiating a claim of discrimination.

We will continue to keep you updated and stand ready to assist you,

Labour & Employment Law Department

Herzog Fox & Neeman