Hiring a freelance foreman

Employing a foreman without a direct employer-employee relationship is an option that often exists on construction sites in Israel. As for insurance – the end is in the end, the beginning is in the end. Our insurance agency, which knows the subject well, adds to all specifications regarding contractor insurance policies a specific extension regarding freelancers working exclusively with the insured and against a single invoice issued each month. Please note that this is not a blanket standard in the insurance industry, as I frequently encounter policies that were prepared by other parties and in which the appropriate emphasis was not placed on this. In these situations, to the extent that the policy does not include the extension I mentioned, it is necessary to make sure that the foreman is protected with all of his policies (professional liability, etc.).

In any case, and beyond the insurance issue, it is also important to address labor law. Care must be taken to word the contract very wisely in terms of labor law and the existence/absence of an employer-employee relationship. There are quite a few cases in which external freelancers, including those who worked against an invoice, ultimately filed claims for compensation and rights as full-time employees. Moreover, the rulings of the labor courts in Israel are tiresomely loaded with cases in which employee-employer relationships were recognized retrospectively. This is in addition to complex situations of work accidents on site which, if they occur, God forbid, will allow the family members of that "freelancer" to be entitled to a claim for lack of a pension.

According to the ruling of the National Labor Court, the burden of proof lies with the one who claims the existence of an employee-employer relationship (and in the above case, on the shoulders of the freelancer work manager). If things come to that, the Labor Court will attempt to establish the intention of the parties and the purpose of the employment, based on a series of evidence, such as the behavior of the parties during the relevant period, the manner of the engagement, the arrangements that were agreed upon, the duration of the employment period, etc. This is usually a test called the "mixed test" which consists of two aspects:

• Positive aspect – whether the freelancer was integrated into the business, whether he was part of its organizational structure, etc.

• Negative aspect - can it be proven that the freelancer had an independent business (for example, registered with the Tax Authority, provides services to additional clients, issues invoices, retires, etc.).

Labor courts deal with questions such as subordination, the ability to terminate employment (as opposed to the dismissal/resignation of salaried employees), economic dependence, the manner in which the contract is presented to external parties, the exclusivity of the relationship, the provision of work tools, the duration of the relationship, the continuity of the relationship, the regularity of the relationship, and more.

In conclusion,

An engagement with a freelance manager must be based on a good contract that includes a full breakdown of the cost of social benefits as part of the remuneration. A copy of the pension plan must be attached to the contract and ensure that the premium is paid every month. The Mahadin will also make the pension provision independently for the freelancer and from the agreed remuneration.

Another important clause that should be included is a clear statement that the manager will not work for, advise, and/or receive salary or financial compensation from any other party. Of course, he can only be a licensed dealer and not a corporation or limited company (as long as we are dealing with a limited company, that manager needs his own comprehensive insurance and we are dealing with a complex and specific insurance issue here).