Insurance aspects of employing legal Palestinian workers
Mar 27, 2023
By: Itzik Simon
Written with the assistance of: Attorney Maya Arieli, who specializes in advising on and handling claims of Palestinian and foreign workers.
Each year, approximately 60,000 Palestinian workers are employed in Israel’s construction sector, and many employers regularly approach us with questions regarding insurance for these workers, such as:
Is there insurance for legally employed Palestinian workers in the event of a work accident?
What does insurance for Palestinian workers include under a contractor’s policy?
How does a Palestinian worker receive medical treatment at a hospital following a work accident?
Are there exceptions or limitations in the policy that are important to know regarding workers from the Territories or workers from the Gaza Strip?
What are the differences between project insurance and the employer liability section of National Insurance coverage?
In the brief text below, we will address several key points, and of course, we are available for any questions. As an insurance agency that has specialized in construction insurance for over 35 years, with clients who regularly employ Palestinian workers, we are always happy to assist.
By: Itzik Simon
Written with the assistance of: Attorney Maya Arieli, who advises and handles claims by Palestinian and foreign workers .
Every year, approximately 60,000 Palestinian workers are employed in Israel in the construction industry , and many employers frequently contact us with questions regarding the insurance of these workers, such as:
· Is there insurance for legal Palestinian workers in the event of a work accident?
· What does insurance for Palestinian workers include in the contractor's policy?
· How does the Palestinian worker receive medical treatment in the hospital after a work accident?
· Are there any exceptions/restrictions in the policy that are important to be aware of regarding insurance for workers from the territories or insurance for workers from the Gaza Strip?
· What are the differences between project insurance and the employers' liability section of the National Insurance Scheme ?
In the following short text, we will touch on a few key points, and of course we are available for any questions. As an insurance agency that has been dealing with construction insurance for over 35 years, whose clients regularly employ Palestinian workers, we will always be happy to be at your service.
Who is a legal Palestinian worker?
Legal employment of a Palestinian worker from the territories is subject to the provisions of the Foreign Workers Law, 5751-1991 and, in the construction industry, also to the provisions of the "Procedure for Regulating the Employment of Palestinian Workers in Israel in the Construction Industry " ("the Procedure"). This is a procedure of the Population and Immigration Authority (Foreign Workers Administration Division) that defines the conditions for legal employment ( link to the full procedure, here ).
In principle, and according to Section 1M of the Foreign Workers Law, any employment of a Palestinian worker in a building requires an "employment permit" from the supervisor, who is the Director General of the Population Authority. Even though the worker's place of residence is in Judea and Samaria or the Gaza Strip, the employment is subject to the provisions of Israeli law, including collective agreements and expansion orders (we note that there are nuances that distinguish between Israeli and Palestinian workers, such as in aspects of pension savings, but we will not elaborate on this here).
In a sidebar, we emphasize that the employment permit is not the only relevant document. It is mandatory for the employee himself to have a permit to enter Israel for work purposes from the Civil Administration (Jerusalem) or the Coordination and Liaison Administration (Gaza).
The legal employment of a Palestinian worker from the Territories is subject to the provisions of the Foreign Workers Law, 1991, and, in the construction sector, also to the provisions of the Procedure for Regulating the Employment of Palestinian Workers in Israel in the Construction Sector (“the Procedure”). This is a procedure issued by the Population and Immigration Authority (Foreign Workers Administration), which defines the conditions for legal employment (link to the full procedure here).
In principle, and pursuant to Section 13 of the Foreign Workers Law, any employment of a Palestinian worker in construction requires a work permit from the authority, which is the Director General of the Population Authority. Even though the worker resides in the West Bank or the Gaza Strip, the employment is subject to Israeli law, including collective agreements and extension orders (there are nuances that differentiate between Israeli and Palestinian workers, such as in pension savings, but we will not elaborate on them here).
As a side note, it should be emphasized that the work permit is not the only relevant document. The worker must also personally hold a valid entry permit to Israel for work purposes, issued by the Civil Administration (West Bank) or the Coordination and Liaison Administration (Gaza).
An employment permit is always issued: to a specific employer for a specific employee . That is, it is a permit for direct employment only and is not intended for intermediaries, staffing companies, and the like. Similarly, the employer is not permitted to transfer the employees assigned to him to other employers.
The permit holder must " employ the worker directly in his business in the type of work listed in the permit and in accordance with the terms of the permit ." Once the worker is with another employer, he is no longer a legal Palestinian worker, and this has complicated implications ( see more on illegal Palestinian workers ).
Permit for a specific employer
Compliance with the provisions of the law is the best way to absorb a Palestinian worker. The process is based throughout on a continuous dialogue between the contractor and the payments section of the Population and Immigration Authority, the MTA .
In the first stage , the employer must issue an "employer symbol" at the Labor Relations Commission, which is not a simple process that requires a contractor's license, permits, and a number of declarations, the most important of which are:
· A statement that he is the one who employs the workers.
· A statement that he is aware of his obligation to all provisions of the Employment of Foreign Workers Law.
· A statement that he is aware of the rights of employees under the collective agreement in the construction and woodworking industry.
Reality and experience show that the recruitment process is not always smooth and free of vested interests, to say the least . Often, employees are recruited not because of their professionalism but because of their acquaintance with family members, village representatives who make contact with contractors, etc. In other words, the employer does not know the specific employee in depth.
Of course, the MATS is supposed to review the relevant security risks, but there is almost never an orderly, multi-stage process for absorbing an employee. When we talk about insurance aspects of employing Palestinian workers, we are talking not only about the contractor's direct employees, but also about the full range of challenges facing subcontractors who themselves employ workers from the territories or Gaza.
How do you legally hire a Palestinian worker?
Exceeding the work permit in Israel is not uncommon, unfortunately. Whether the employer referred the employee to another employer himself or the employee did it alone to "supplement income" and without informing the person who signed his work permit. Although at our agency we clearly emphasize that the work permits issued should not be exceeded, we are aware of the wide scope of the phenomenon.
When is employing a Palestinian worker against the law?
The Employers Liability section of the contractor's policy provides insurance coverage (among other things) for all legal Palestinian workers on the construction site. With regard to Palestinian workers employed by subcontractors, the main contractor can fulfill his obligation by ensuring that Form 648 is completed for National Insurance, drawing up proper contracts , and supervising and registering those entering the site.
It is important to know that if there are no specific exceptions listed in the policy, then a contract work policy also provides a solution when it comes to an employee who "exceeds the work permit" and works on a project insured through an employer other than the one listed on his work permit. A contract work insurance policy is usually a policy for the site itself, with coverage for every employee who comes through its gates. Regardless of his legal status in terms of labor and immigration laws (and again, we emphasize: provided that there are no specific exceptions).
In a sidebar, we note that we have already encountered policies with limitations and exceptions to coverage, and therefore it is of great importance to arrange contractor work insurance through an agency that is well-versed in the characteristics of the construction industry.
Employers' Liability - Palestinian Workers' Insurance, included in the contractor's policy
Of course. If the legal employer did not take care to deduct the employee from his employee quota and report the termination of the employee's employment, he will continue to be considered his employer. In this way, he loses control and supervision over the employee and, in the event of an accident, it will be difficult to prove that the employee was not working on his behalf at another site and that the employee-employer relationship between them has ended.
For example, if the employer allowed the employee to work elsewhere, and he was injured at an uninsured construction site, the lawsuit could reach him. This is also an offense in itself that may result in a large fine, and in exceptional cases even an indictment with exposure to actual imprisonment. Section 2 of the Foreign Workers Law defines the offense of "illegal employment of a foreign worker" and explicitly states that it applies to anyone who " has employed a foreign worker who is not permitted to work in Israel ."
Can the legal employer still be harmed?
In principle, the legal employer is not exposed to any special risk as long as it meets the National Insurance payments for the employee through the National Insurance Company. The National Insurance Company will pay its share to the injured party and in the event of an employers' liability claim, the employer's insurance company will protect him. That is, if the employee is awarded compensation, the insurance company will make up the gap beyond the National Insurance Company benefits.
However, insofar as the workers are subcontractors, and if it is proven that the accident was caused by failure to comply with safety regulations, the National Insurance Institute may file a subrogation claim against the main contractor. A claim aimed at being reimbursed for the amounts paid to the injured party due to the negligence of the main contractor or another third party who is directly or indirectly responsible for the accident. The contractor insurance policy should also include coverage for these subrogation claims.
National Insurance, is it valid?
Treatment of a Palestinian worker in an Israeli hospital
Once an employee is injured in a work accident, the employer can find themselves faced with a complicated procedure with Israeli hospitals, which require anyone who refers a Palestinian employee to commit to paying for medical treatment, sometimes even by leaving credit card details and signing commitment forms.
Of course, this poses a difficulty. The employee is already in the hospital and needs medical treatment, and the employer has no choice but to sign and approve (and as a result, to commit). It should be noted that these are significant amounts, to say the least.
In such a case, it is recommended to contact the National Insurance Institute without delay and request approval to cover the expenses of the medical treatment. It may be necessary to physically visit the branch. Please note that there are only three National Insurance branches in Israel that deal with field workers: Jerusalem, Hadera and Netanya.
The National Insurance Institute, for its part, will not rush to approve coverage for the worker before examining and verifying the incident. The National Insurance Institute wants to make sure that the worker was indeed injured at the construction site, as people who were injured in other places, and not even in Israel, often come to the hospital, wanting to benefit from medical treatment in Israel illegally.
Is the law of a legal Palestinian worker the same as that of an Israeli worker?
Simple but must be clear : The law of a legal Palestinian worker employed on a construction site in Israel is the same as that of an Israeli worker. Including collective agreements and expansion orders. Payments for social benefits, benefits and pensions are transferred by the employer to the MTS (it is not possible to establish a pension fund for a Palestinian worker in Israel).
Employers' liability insurance
A contractor's insurance policy includes an employers' liability insurance section designed to cover a claim against the employer for components of claimed compensation that the employee is not entitled to receive from the National Insurance Institute. For example, supplementing 25% of his salary, since with a full disability pension he is only entitled to a maximum of 75% of his salary from the National Insurance Institute.
In addition, if the employee files a parallel civil lawsuit against the employer alleging negligence, the employers' liability chapter includes coverage for compensation for heads of damage that are not compensated by the National Labor Relations Board, such as pain and suffering, loss of enjoyment of life, etc. The coverage in the contractor's work insurance is a protection for the employer and also includes legal expenses for the tort proceedings and the criminal proceedings (up to a certain limit).
Third party insurance
Every contractor insurance policy has a section that deals with coverage against damages caused by the insured to a third party. This section is also relevant to claims by legal Palestinian workers who are employed on site by a subcontractor when the main contractor is a "third party" in their view.
Form – 648
Many subcontractors come for short, focused jobs, and sometimes their workers stay on site for only a few days or even a few hours. The main contractor cannot always monitor these workers and whether they are all legally employed with the required employment permits. It is quite possible that these are illegal workers, with all the complex implications that this entails (read more about the insurance aspects of illegal Palestinian workers here).
Whether these are Palestinian workers or foreign or Israeli workers, in any contract of this type, it is important to report the employment of the subcontractor to the National Insurance Institute on Form 648. A form which – in principle – removes responsibility from the main contractor regarding the employee’s coverage by the National Insurance Institute. ( For more information on Form 648, click here ).
Simply put, but it must be clear: the legal status of a Palestinian worker employed on a construction site in Israel is the same as that of an Israeli worker. This includes collective agreements and extension orders. Payments for social benefits, severance, and pension are made by the employer to the National Insurance Institute (it is not possible to establish a pension fund in Israel for a Palestinian worker).
Employer Liability Insurance A contractor works insurance policy includes an employer liability section designed to cover claims against the employer for compensation components that the worker is not entitled to receive from National Insurance. For example, topping up 25% of the worker’s wage, since under a full disability allowance the worker is entitled to only 75% of their wage from National Insurance.
Additionally, if the worker files a parallel civil claim against the employer alleging negligence, the employer liability section provides coverage for damages not compensated by National Insurance, such as pain and suffering, loss of enjoyment of life, and more. Coverage under contractor works insurance protects the employer and also includes legal costs for both civil and criminal proceedings (up to a certain limit).
Third-Party Insurance Every contractor works insurance policy contains a section covering damages caused by the insured to a third party. This section is relevant in cases involving claims by legally employed Palestinian workers who are employed on-site by a subcontractor, where the main contractor is considered a “third party” in this context.
Form 648 Many subcontractors are hired for short-term, focused work, and sometimes their employees are on-site for only a few days or even a few hours. The main contractor cannot always monitor whether all these workers are employed legally with the required work permits. It is entirely possible that some workers are illegal, with all the complex implications that entails (read here for more on the insurance aspects of illegal Palestinian workers).
Whether the workers are Palestinian, foreign, or Israeli, in any such arrangement it is important to report the employment of the subcontractor to the National Insurance Institute using Form 648. This form – in principle – relieves the main contractor of responsibility for the employee’s coverage under National Insurance. (For more on Form 648, click here).
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