ESG Aspects in Israeli Regulation

The State of Israel has numerous laws and regulations addressing various ESG aspects, though they are not featured under any one comprehensive framework, nor titled as ESG/CSR legislation. The following is a list of key legislation on pertinent issues, intended to provide a context of the regulatory environment all business sectors in Israel operate under.

Israel Securities Authority Regulations for Public Companies in Israel

Reporting Obligations of Public Companies on Environmental Issues

All public companies have an obligation of disclosure on environmental issues, both in the framework of the description of the corporation and its business environment, and in the framework of the corporation’s risk factors; legal proceedings that have been filed and other legal and administrative proceedings; anticipated environmental investments; legal environment; fundamental events and others.

Labor and Employment Related Legislation

Collective Bargaining Agreements

Freedom of association is a basic right in Israel. Worker unionization is a proven way of enforcing employee rights and the improvement of their working conditions. In Israel there are several active general employee/trade unions, and recent years have seen a substantial growth in the number of employees unionizing in their work places: In the Maala ESG Index, the percentage of companies who have workers unions rose from 47% in 2014 to 63% in 2018.

Employment via Employment Agencies/Personnel Contractors

The law defines the rights of workers employed by employment agencies and the duties of their employers (both the agencies/contractors and the employers in practice). This law distinguishes between a personnel contractor (employment agency) and a service-providing contractor:

  • Personnel contractor – provides personnel to an employer for the purpose of performing work that is part of the employers’ regular activity.
  • Service contractor – provides personnel to an employer for the purpose of performing a defined service (such as security/guarding or cleaning) which is distinguished from the employers’ main activity.
  • According to item 1 and the second addition to the law, a service contractor is defined as a service provider in the field of security and guarding and in the field of cleaning.
    For example: a contractor supplying a factory with a worker to perform as a receptionist is a personnel contractor, whereas a contractor supplying an employee to the same factory to serve as a security guard is a service contractor.

Increased Enforcement of Labor Legislation

This law aims to make enforcement of labor laws more robust and effective, by using an administrative procedure of fiscal sanctions onto employers and service customers, as well as by defining the civil and criminal responsibility of service customers, while intervening in the contract between those ordering the service and the employer.

Notification to Employees and Candidates (Working Conditions and Processes of Recruitment and Hiring)

The law of notification to an employee, obligates the employers to specify to the employee the social rights to which they are entitled within 30 days of start of employment. The law intends to negate the ambiguity in salary slips and employment contracts with regard to the terms of employment.

Payment during Illness (Absence Due to Sickness of Child, Spouse or Parent)

This law stipulates that an employee is entitled to attribute up to 6 days of workabsence due to sickness of their child, parent, either their own or their spouse’s, at the expense of their own accumulated paid sick leave.

Prayer Time at Work

All employees in Israel are entitled to pray during their work day in accordance with their religious practices. The prayer time will be determined at the workplace in accordance with the needs and constraints of the job, and in consideration of the employee’s religious obligations. In some cases, an employee who does not pray at the workplace is permitted to be late for work due to morning prayers.

The Rights of Foreign Workers

Foreign workers employed in Israel are entitled to employment social and personal rights, as well as protection from exploitation by employers:

  • General rights – basic rights of foreign workers, as residents of Israel.
  • Employment terms – foreign workers are entitled to the same employment conditions to which Israeli employees are entitled, and due to their special status in Israel, are also entitled to unique privileges that regularize their stay in the country.
  • Health – the law in Israel obligates the arrangement of medical insurance for foreign workers, which would ensure their medical rights during their stay in the country.

Compensation at Termination of Employment

This law stipulates that an employer must compensate an employee whose employment was terminated by the employer. The compensations are payed to the employee at the time of their dismissal, as compensation for the loss of income, and at times are part of a retirement grant awarded due to work termination.

Equal Pay for Male and Female Employees

The law intends to promote equality and prevent discrimination between genders with regard to salary or any other work related compensation. The law stipulates that a female employee and a male employee working for the same employer, are entitled to equal salaries for equal work, work that is equal in essence, and work of equal value.

Equal Opportunities at Work

The Law of Equal Opportunities forbids any employer from discriminating against any employee or candidate due to various features detailed in the law: gender, sexual orientation, personal status, pregnancy, fertility treatments, in vitro fertility treatments, parenthood, age, race, religion, nationality, country of origin, place of residence, world view, political party membership and
military reserves service.

Equal Opportunities for People with Disabilities

The Law of Equal Opportunities for People with Disabilities intends to protect the dignity and freedom of any person with disability; anchor their right of equal and active participation in society in all aspects of life; and provide adequate response to their special needs, in a way that would enable them to live their life with maximal independence, in privacy and honorably, fully living up to their potential.

Extension Order for the Employment of People with Disabilities

The extension order aims to implement the adequate representation of people with disabilities in employment, by mandating the employment of people with disabilities at a rate of 2% of employees by October 2015, and 3% by October 2016. This obligation applied to employers of 100 workers or more.

The Right to Work While Sitting

The employer must provide sitting to employees, and to enable them to work while sitting down, except for special cases in which the nature of the work does not enable sitting. The employer is obligated to provide sitting for employees also during work breaks.

Comprehensive Pension Insurance in the Economy

All salaried employees in Israel are entitled to a retirement pension, necessitating employers to set aside a percentage of wages to pension funds.


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