Israel: Can’t Shed Employees by Shedding Division

Employees of an Israeli parent company whose division has been spun off by the parent do not automatically become employees of the new company, according to a recent decision by the Israeli Supreme Court.

Rather, the workers can choose to remain employees of the former enterprise.  In a fractured decision that resulted in three separate opinions — none a majority — the Court appears to have held that the employees’ contract is with the parent and cannot be transferred without employee consent.  If the parent no longer needs the employees, it can terminate them pursuant to whatever limitations and agreements it had with them previously.

Shoshana Gavish and Avi Ordo of Tel Aviv’s S. Horowitz & Co., recount the decision in Do Employees Have The Right to Refuse to be Employed by Another Employer, in The Event of an Enterprise “Changing Hands”?

[Frank Snyder]