Violating the rights of Palestinian workers in Area C, Israeli firms provide no pension insurance

Some 30,000 Palestinian workers are employed by Israelis in Area C. Most of them suffer from exploitation and lack of basic rights.

Abstract: Some 30,000 Palestinian workers are employed by Israelis in Area C. Most of them suffer from exploitation and lack of basic rights. In 2007, responding to an appeal by the workers’ rights group Kav Laoved, Israel’s High Court of Justice ruled that Israeli labor laws and employment benefits apply to Palestinian workers employed by Israelis in the occupied territories. Following this landmark decision, there was a degree of positive change in some of the biggest companies, but the majority just looked the other way. Now WAC-MAAN has found out that even in the few cases where employers are ready to pay workers full rights and cover their pension-fund obligations, Palestinian workers are not fully covered and have no insurance for loss of the capacity to work or in case a worker died before his retirement age. The following position paper establishes the legal and normative basis for the right of Palestinian workers to comprehensive pension insurance. The latter includes: (1) old age allowances, and (2) compensation to the family of a worker who died before his retirement age and 3. the insurance of workers in case of a loss of work capability.

WAC-MAAN is an independent representative workers organization, uniting Jewish and Arab workers in Israel regardless of nationality, religion, gender or the color of their skin. WAC-MAAN organizes Palestinian workers employed in the Israeli settlements in the occupied territories.

Tens of thousands of such workers have been employed for many years in area C of the West Bank by Israeli factories, companies and private businesses. Most are employed under substandard working conditions, do not receive basic labor rights to which they are entitled by law, and often work without receiving pay slips and social benefits. Moreover, their salaries often range between 100-140 NIS per day (the minimum wage for an 8 hour working day is currently 185 NIS, not including transportation expenses of 25 NIS. This means that the minimal payment for a worker should start at 210 NIS per day). Workers do not receive compensation for holiday, illness or working accidents, because payment is given only for de facto working days.

The discrimination against Palestinian workers in comparison to their Israeli counterparts led workers to appeal to labor courts in order to demand their rights. As Area C lies outside Israel proper, and because the workers are not Israeli citizens, the legal obligations of employers towards these workers were unclear for many years. The situation changed in 2007, when the workers rights’ center “Kav LaOved” appealed to the High Court of Justice on behalf of Palestinian workers employed in the Israeli settlement of Givat Ze’ev, demanding to make their benefits equal to those of their Israeli counterparts. The court ruled that Israeli labor laws should apply in the occupied territories and that both Palestinian and Israeli workers should receive the same benefits.

The Givat Ze’ev ruling—a cornerstone in the recognition of Palestinian workers’ rights—was made unanimously by a panel of nine judges, headed by the then President of the High Court of Justice, Dorit Beinisch. The ruling laid the legal foundation for the examination of the situation of Palestinian workers employed by Israelis in area C.

The Givat Ze’ev ruling was followed by many labor court rulings that applied Israeli labor law to Area C retroactively from the beginning of a worker’s employment.

Entitlement to Pension allowance

The Givat Ze’ev ruling allows no exceptions, and thus the right of Palestinian workers to pension allowances is clearly included. The firm demand for equalizing Palestinian and Israeli job conditions includes pension insurance, which is a foundational element of workers’ social benefits in Israel. In the past, the obligation to allocate pension funds to workers in Israel was tied only to collective agreements in major sectors such as government, industry, and construction. All other employers were exempt from paying pension allowances. This situation changed on January 1, 2008, when the order for Pension Insurance in the Labor Market was issued. From that date onward, every employer was obligated to insure his employees with a comprehensive pension fund, including Palestinian workers in accordance with the Givat Ze’ev ruling.

Pension insurance  is a foundational element of workers’ social benefits in Israel. A worker covered by comprehensive pension insurance is entitled to a sum between 12% and 14.33% of his\her basic salary which is to be paid by the employer to his\her pension fund. The worker himself allots 5%-5.5% of his\her salary to the fund. The result is a monthly allowance of approximately 20% of the worker’s salary to a private pension fund that includes a major part of what the worker should get as compensation when he\she leaves the job or is fired from the job. This comprehensive pension fund guarantees the worker three main insurance components: (a) insurance for retirement age; (b) insurance for relatives in case of death; (c) insurance for loss of work capability. In all of the labor court rulings in Israel, in which Palestinian workers rights were acknowledged in accordance with the Givat Ze’ev High Court ruling, the right to pension allowance has been deemed fundamental, and employers are obligated to pay compensation to workers if they have not provided such allowance. Court rulings in these cases are unequivocal.

The reality on the ground: insurance companies refuse to insure for loss of work capability

Since the Givat Ze’ev ruling some Israeli employers in area C have started to pay into pension funds for their Palestinian workers. We do not have the exact number of such employers, but from fieldwork done by WAC-MAAN it seems that only a minority of them, mainly big companies and factories, are adhering to the law, whereas most small business owners continue to employ Palestinians without pay slips, paying them less than the minimum wage and providing them with no social benefits or pension insurance. Therefore, the struggle to implement the High Court’s decision and stop the exploitation of Palestinian workers is far from over.

In addition, even employers who attempt to follow the court’s decision and have already started paying into pension funds on behalf of their Palestinian workers now face a new and unexpected problem: Israeli insurance companies are refusing to accept Palestinian workers as full members with comprehensive pension funds. This means that the insurance companies get the money but provide only for an old age pension—without insuring for loss of the capacity to work.

In one of the workplaces, where Palestinians organized under WAC-MAAN had been guaranteed their legal right to a pension plan, they were met by a refusal of the insurance company to insure them for loss of work capability. This led to a comprehensive examination by WAC-MAAN with the aid of our pension expert, Mr. Yaakov Zlotnik. The examination showed that all Israeli insurance companies currently refuse to insure Palestinian workers for loss of work capability.

The Court Order that obligates pensions explicitly rules that every worker is entitled to comprehensive insurance that includes relatives and disability, as defined in section 3A:

“Every worker, as defined below, without a pension plan as defined below, who is employed or is to be employed in any work place, is entitled to insurance according to this order, and may choose, through a written notice to his employer… a comprehensive pension, including a pension allowance authorized by the supervisor, in which he will be insured from the beginning of the time of his entitlement… including coverage in the case of death and disability…” [Expansion Order to Obligatory Pension, 2011. Signed by the Minister of Industry, Trade and Labor, MK Shalom Simhon, August 3, 2011].

In reality, these orders are not executed, because insurance companies refuse to insure Palestinian workers for loss of work capability. The insurance companies are using their right to select their beneficiaries in a manner that creates group discrimination on national grounds. Such discrimination is apparent also in the factories in area C that employ Israeli workers, both Jewish and Arab, who do receive pension insurance as required by law.

This situation results in tens of thousands of uninsured workers who may find themselves unable to provide for their families because of accident or illness. It should also be noted that the Palestinian workers employed within Israel, mainly in construction, receive their salaries through the governmental payment department of the Ministry of Trade and not directly from the employers. These workers are provided with comprehensive pension insurance provided by the Ministry of Finance, which does include insurance for loss of work capability as an integral part of the pension insurance.


The aim of this position paper is to raise awareness to a relatively new problem, which arose when Israeli employers began to cover their Palestinian employees with a pension insurance plan. WAC- MAAN field work has shown that in addition to gross violations of labor court decisions by Israeli employers in Area C, there is another problem that derives from the refusal of Israeli insurance companies to insure Palestinian workers in these areas for loss of work capability.

This situation violates the basic rights of Palestinian workers, and Israeli authorities are obligated to resolve it- either by amending the provisions of the national supervisor of insurance, or through guarantees provided by the state to the insurance companies, guarantees that it already provides for Palestinian workers hired by the Payments Department in the Ministry of Finance.

Unless such measures are taken, the principle of equal working conditions is violated, leading to de facto discrimination. Not only are Palestinian workers discriminated against compared to their Israeli counterparts, but in the event that they lose their capability to work because of illness or accident, they may find themselves without rights.

– Assaf Adiv is the National Director of WAC-MAAN

– Translated from Hebrew by Itamar Manoff

אודות Assaf Adiv