The new expansion order in the guarding and security industry
Jul 12, 2022
By: Adv. Shkema Levi Ezra / Head of Claims and Contracts Department
The Minister of Economy recently signed an extension order in the security and guarding sector, aimed at improving employment conditions for workers in the field. The order is highly relevant to the construction industry, as contractors and developers frequently engage security and guarding companies at their sites.
As is well known, the Law for the Enhancement of Enforcement of Labor Laws, 2011, establishes that the obligations of an employer who is a contractor toward their employee “also apply to the service client.” It is therefore important to highlight for you the main points and changes arising from the new extension order in the security and guarding sector.
"Good news for security industry workers"
The signing of the order is a direct continuation of the general collective agreement in the security and guarding sector from March 2021, and of the condition presented by the Histadrut that the agreement would come into effect only upon its extension.
Among the main issues arising from it are a 10% wage increase for employees and a higher wage increase for employees with special training (according to the type and level of training). The effective date of the extension was set for September 1, 2022.
The minister described the signing of the order as good news for employees in the security and guarding sector. The chairman of the Histadrut echoed these remarks, adding that the move will help “strengthen employees at lower wage levels” and assist in preventing wage erosion among workers in the sector.
The minimum wage according to the decree
The dramatic issue in the new expansion order is, as stated , the determination of a minimum wage for employees in the security and guarding industry at a rate of 10% more than the minimum wage according to all laws (including future updates).
As of April 2022, this is an hourly wage of 32.03 NIS and a monthly wage of 5,830 NIS. With regard to employees who have completed training or courses, and are employed in positions that require the aforementioned training/courses, a higher minimum wage has been set.
For example, a graduate of the "Advanced Security Guard B" training is entitled to a salary of 30% above the minimum wage, and a graduate of the "Advanced Security Guard A" training is entitled to a salary of 40% above the minimum wage. Graduates of the "Jerusalem Area Security Guard" or "Senior Security Guard B" training are entitled, according to the expansion order, to an hourly/monthly salary that is already 60% higher than the minimum wage.
The expansion order leaves room for higher wage rates for additional training, which will be discussed in the future within the framework of the "monitoring committee." It was determined that the training that the employee undergoes will be permanent and will accompany him in his work, even when moving between employers.
Alongside the special minimum wage, the new expansion order in the security and guarding industry deals with socio-economic issues such as provisions for a further education fund, the amount of the holiday gift, weekly rest (and additional compensation for working during the weekly rest hours), and provisions for a provident fund for a pension.
The most significant provision in the new extension order is a minimum wage for security and guarding workers set at 10% above the statutory minimum wage, including any future increases.
As of April 2022, this amounted to NIS 32.03 per hour and NIS 5,830 per month. Higher minimum rates were established for workers who had completed training or courses and were employed in roles requiring those qualifications.
For example, workers who completed “Advanced Security Guard Level B” training are entitled to 30% above the minimum wage, while those who completed “Advanced Security Guard Level A” training are entitled to 40% above it. Graduates of “Jerusalem Perimeter Security Guard” or “Senior Security Guard Level B” training are entitled under the extension order to hourly or monthly pay 60% above the minimum wage.
The order also allows for higher wage rates for additional qualifications to be considered by the Monitoring Committee. It stipulates that a worker’s training credentials remain valid throughout their employment, including when changing employers.
Alongside these special minimum wage rates, the new extension order addresses employment benefits and related matters, including contributions to a continuing education fund (Keren Hishtalmut), holiday gifts, weekly rest and additional pay for working during weekly rest periods, and contributions to a pension provident fund.
Many contractors and developers contract with security and maintenance companies. As the "service providers", they are responsible for the terms of employment of the contractor's employees when the following conditions are met:
· The service is provided by at least 4 employees.
· The service is provided for at least six months.
· The employee or labor supervisor gave the service customer a notice regarding a violation of rights.
Please note that liability is not only civil but also criminal. The Law to Increase Enforcement of Labor Laws imposes criminal liability on service providers to the extent that violating the employment conditions of contractor employees can result in financial sanctions. This includes violations of various sections of laws such as the Minimum Wage Law, the Youth Labor Law, the Wage Protection Law (which deals with wage garnishment, for example), the Annual Leave Law, or the Working Hours and Rest Law.
See, for example, what was said on the subject by the Labor Court last August: " The service customer is not relieved of his responsibility in accordance with the provisions of the Law for Increasing Enforcement, where he allows the main contractor to employ "subcontractors", while supervising the employment conditions of the main contractor's employees only, and turning a blind eye to the employment conditions of the employees who actually perform the work on his premises, through a third party " (Sa'sh 57713-12-16).
The contractor/developer's responsibility for the rights of the contractor's employees
Many contractors and developers engage security companies. As “service recipients,” they are responsible for the employment conditions of the contractor’s workers when the following conditions are met:
The service is provided by at least four workers.
The service is provided for at least six months.
The worker or a labour inspector has notified the service recipient of a violation of workers’ rights.
This responsibility is not only civil but also criminal. The Law for Increased Enforcement of Labour Laws imposes criminal liability on service recipients, and violations of contract workers’ employment rights can result in financial penalties. These include breaches of legislation such as the Minimum Wage Law, the Youth Employment Law, the Wage Protection Law, which addresses matters including delayed wage payments, the Annual Leave Law, and the Hours of Work and Rest Law.
For example, in a ruling issued last August, the Labour Court stated:
“A service recipient is not relieved of its responsibility under the Law for Increased Enforcement merely because it allows the main contractor to engage ‘subcontractors,’ while monitoring only the employment conditions of the main contractor’s employees and turning a blind eye to the conditions of those actually performing the work on its premises through a third party.” (Labour Case 57713-12-16).
What should the contractor/developer do?
The Law to Increase Enforcement of Labor Laws states that service providers (in the construction industry - contractors/developers) must take reasonable measures to prevent infringement of the rights of the contractor's employees employed by them.
Dear contractors and entrepreneurs, take precautions. Remember that a contractor insurance policy does not provide coverage against claims by subcontractors for violations related to their wages .
You should know that the law places a responsibility on you to ensure that there is an effective way for employees to report violations of their rights, and that there is a mechanism for clarifying the information in the report. Contractors/developers are required to inform employees of subcontractors about the ways in which they can report violations of their rights by their employers.
It should be noted that the law also provides contractors/developers with protections against claims filed against them in this regard. This is, for example, to the extent that the violation of rights was fully remedied immediately or there was good faith reliance on periodic inspections conducted by a qualified wage inspector. Similarly, the cancellation of the contract due to failure to remedy a violation within a reasonable period of time may serve as a legal argument in your defense.
The Law for Increased Enforcement of Labour Laws requires service recipients, including contractors and developers in the construction industry, to take reasonable measures to prevent violations of the rights of contract workers employed on their premises.
Contractors and developers should act proactively. Remember that a Contractors’ All Risks policy does not cover claims by subcontractors’ employees concerning wage-related violations.
The Law makes you responsible for ensuring that workers have an effective way to report violations of their rights and that a mechanism exists to investigate those reports. Contractors and developers must inform subcontractors’ employees how they can report violations by their employers.
The Law also provides contractors and developers with defences against such claims. These may apply, for example, where a violation was immediately remedied in full, or where there was good faith reliance on periodic inspections conducted by a certified payroll auditor. Terminating the contract because a violation was not remedied within a reasonable period may also support your legal defence.
In conclusion,
The expansion order in the security and guarding industry embodies a significant improvement in workers' rights in this industry. Since security and guarding companies frequently provide their services to contractors and developers, often in the context of guarding construction sites, and since contractors/developers have responsibility for violating the rights of subcontractors' employees, it is important to be aware of the changes.
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