Do Employees Have The Right to Refuse to be Employed by Another Employer, in The Event of an Enterprise 'Changing Hands'?

Author:Mrs Shoshana Gavish
Profession:S Horowitz & Co
 
FREE EXCERPT
I. The Legal Questions

What rights are available to employees and what is their legal status, in the event of an enterprise "changing hands", i.e., transfer of the ownership of the enterprise resulting in a change in the identity of the employer? Would, in such event, the employees have the right to refuse to be employed by the new employer and to insist on continuing their employment relationship with the original employer? Which options does the original employer have in the event of such a refusal?

The above questions were discussed and examined, in depth, in a precedent decision handed down by the Israeli Supreme Court on June 2, 2004, in the matter of H.C.J. 8111/96, 922/97 The New Employees' Organization et al. v. Israel Aircraft Industries Ltd. ("IAI"), et al. (not yet published), dealing with two petitions filed against an earlier decision of the Israeli National Labour Court.

II. The Background

The background leading to the Supreme Court's ruling stemmed from a decision of respondent no. 1, IAI, an Israeli governmental company, to spin-off one of its many plants and to transfer the ownership therein to a subsidiary specifically incorporated for such purpose, the aforegoing as a first step toward re-organisation and privatisation of IAI.

In a significant judgment rendered by the National Labour Court it was adjudicated, inter alia, that in the event of transfer of the ownership in an enterprise resulting in a change in the identity of the employer, the employees may neither refuse to be employed by the new employer nor insist on continuing their employment relationship with the original employer. The National Labour Court further held that the only option available to the employees in this matter would be for them to resign with entitlement to severance pay (as, under the circumstances, such resignation would be regarded as dismissal for the purpose of severance pay), without, however, the possible entitlement to extended relief ordinarily available in the event of actual dismissal. Both parties petitioned the-Supreme Court against the aforesaid decision.

III. The Supreme Court's Decision

The panel of justices presiding over the case before the Supreme Court comprised of seven justices, however three disparate opinions were given, none of which constituting a majority decision. Thus, the determining judgment was based upon the opinion which received the most support. In the case at hand, the opinion of the Vice President (Retired) of the Supreme...

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