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Employing Contract Workers – Part II / By Shuki Stauber

To read Part I of this series, click here

This article is the continuation of a conversation with Atty. Tzvika Kind, chairman of the Union of Personnel Companies, about developments following the implementation of the amendment to the Personnel Companies Law, which went into effect in October 2008.

If everybody thought it was bad, why did the Knesset decide to accept the nine-months option?
I have no rational explanation to offer. It has to do with political pressures. It’s unbelievable how decisions are reached in the State of Israel. Labor relations are made up of different interconnected systems. You can’t make a decision in one area and think it won’t have consequences in other areas. The time has come for people here to understand how to make decisions properly.
Barak traveled to Camp David and then Amir Peretz ran to Labor Committee Chairman David Tal and said to him, “Let’s push second and third readings through in two weeks.” Coincidentally or perhaps not coincidentally, Tal secured a solid spot on Amir Peretz’ Am Echad list during those elections. There may or may not be a connection, but those are the facts of the matter.
I went to the Labor Committee for the meeting on the issue. I expected a professional, focused discussion. Instead they brought a few employees who told their personal story. The matter was wrapped up in a single meeting where some of the Knesset members were hearing about the proposal for the first time, but still had to reach a final decision. A respected MK told me: “This is a bad law, but because the government is opposed, I’m in favor. As soon as unreasonable limits are imposed on employers the attempts to bypass it harm employees rights more than necessary.

Atty. Tzvika Kind

It’s like a case that came to my attention in which an employee was working for a personnel company at a public organization. She didn’t really know the personnel company except through her pay slip, and when the personnel company wanted to give her a holiday gift, she had to make a special trip to the company offices to make sure there was not the slightest appearance of employer-employee relations with the organization commissioning the work. Of course she didn’t go to pick up the gift, saying it was an insult to her.
What alternative does that young woman have? Would her situation improve working for a service contractor? That’s the real question that must be raised, not the managerial question of whether workers should be employed in this framework. We’re dealing with workers’ rights and I’m looking to see which options are available. What alternative does this young woman have under the current situation? Neither way would she get hired by that organization as a regular staff member. Under an unsupervised service contractor the conditions could get even worse.
Even assuming the organization were to hire her onto its staff here employment terms could worsen because as soon as the amendment no longer applies to her she’s no longer a personnel company employee. In practice this is what happened recently: some personnel company workers were hired by organizations under reduced terms, such as second-generation agreements and similar apparatuses.

They might have been hired with terms inferior to those of the organization’s permanent staff because another large expense cannot be foisted all at once on the employer; but this is still an improvement over their conditions as personnel company workers.
Not always. There are some people whose pay decreased after they were hired by the organization. In the public sector their employment terms got even worse. Take, for example, the court reporters, whose terms worsened. It used to be hard to recruit them so they were paid relatively high wages based on market forces. When they became state employees their pay went down almost to minimum wage.

Generally in such situations other employment terms are improved, e.g. tenure, so all in all the worker is not harmed.
I’m not so sure this does harm. For many of these employees current income is what matters to them, and not starting to amass rights.
Even in the private sector, although some employers were hired, the question is how? Under what terms? No employees were hired to the core of the organization, but through special arrangements such as second-generation agreements, as temporary workers, etc. As a rule I don’t think the employment security of those employees who were hired at the end of September improved. In most cases they were signed on agreements that don’t guarantee employment security.

*               *               *

You hold that transferring employees to service contractors doesn’t enable implementing the amendment, which seeks to protect their rights. Let’s take a look at one of the prominent areas in which services are provided by service contractors – the computer world. Companies like Ness, Matrix and IBM place many workers onsite at organizations that commission assistance. Would you say these are service contractors or personnel companies?
This employment pattern requires them to obtain an operating license like a personnel company, unequivocally. It should also be noted that you’re citing examples of very large companies, but there are hundreds of small software companies that provide this service.

Does IBM have a license to operate as a personnel company?
Certainly. But that particular example doesn’t truly reflect our main points of discussion. Computer companies sought to sever themselves from the world of personnel companies, though there’s no difference between their mode of operation and that of the classic personnel companies. But by lobbying in the Knesset they managed to prevent the arrangement from applying to computer companies.
The main problem is transferring personnel company workers to service contractors just to bypass the law; and not because the service contractors have unique know-how like in the computer field. It came to a point where sometimes the very same consulting companies that helped organizations hold a tender turned into service contractors.
Now we’re waiting for the outcome of a lawsuit involving an employee who worked through a personnel company and then was switched to consulting company Martens Hoffman. She claims the new company has to provide her equivalent employment terms because her conditions worsened, and that was through the Civil Service.

And the extension of the employment restriction will solve the primary problems?
Some of the problems. You cannot restrict one type of employment and leave an opening for an alternative type of employment. A single collective agreement has to be applied to all service providers, clearly delineating who is the employer in each and every case. The Personnel Companies Law already determines that the employer during the period of employment is the personnel company. In the case of service contractors, who the employer is remains unclear and then there are all sorts of complex agreements between the service contractor and the company commissioning the service, which try to cover all situations. The whole business is very murky.
You can’t just touch on individual points at personnel companies without seeing the ramifications.
The private employers, the Finance Ministry, the Histadrus and personnel companies have to sit down together and put matters in order, because the rationale for the law is legitimate, only the restrictions are too rigid and ineffective.

*               *               *

What has happened in practice since the beginning of October? How many employees have been dismissed? How many have been rehired, both through service contractors and direct hiring into the organization?
I don’t have figures on the entire market. I do know that here at Tafkid Plus there are hundreds of such employees.

Who weren’t necessarily fired, maybe they were rehired.
True. But clearly some of them were dismissed.

Why? The work they did previously no longer has to get done?
It created an opportunity for employers to conduct an overhaul and see who they really need and who they don’t. They discovered that some of the employees are not essential and found an opportunity to dismiss them.

From a social standpoint it really is unpleasant, but from a managing standpoint introducing radical changes was useful. Why employ a person who isn’t really useful?
I can’t object to that kind of argument.

*               *               *

How many companies does the union you head represent?
Close to 30.

There are hundreds of personnel companies. What do the companies that belong to the union have in common?
Not every personnel company can be a member of our union. There are conditions, e.g. that at least 50% of operations be job placement. There are hundreds of companies operating in the field, but at many of these firms it’s not the primary enterprise. For example, companies involved in nursing care or guarding are defined as personnel companies, but they also offer cleaning services and sometimes even an insurance agency. All of them have a license to operate as a personnel company, but that’s not necessarily their main enterprise. In practice there are dozens of companies where it’s the primary enterprise.

Why don’t the large personnel companies (Manpower, Tigbur, ORS, etc.) belong to the union?
They decided to set up their own organization because they felt their interests differ from those of the other companies. I don’t know what those interests are.

*               *               *

Kind also wants to play in the major leagues. This year Tafkid Plus became a branch of the world’s largest personnel company, Adecco. We also spoke with him about the company’s operations as reflective of activity in the field and about the international connection.

When was Tafkid Plus founded and what was the placement agencies market like at the time?
Tafkid Plus was founded in 1989. The practice – which later drew extensive criticism – of employing workers on a temporary basis for years, especially at government ministries, was already widespread and large, established companies were involved. They didn’t have to recruit employees, the recruitment drives were conducted by the government ministries. The companies were merely defined as the employers. We couldn’t enter this market as a new company except through recruitment, and we knew how to recruit. We recruited the people for the company commissioning the work and continued employing them for the company. It works the same way today. Nowadays that’s the only employment arrangement. The prior arrangement of an extended period of employment as a temporary worker vanished almost entirely after the amendment was introduced.

Why do you, like other personnel companies, not set up subsidiaries that would provide service as service contractors? You already have the infrastructures.
It’s not feasible because personnel companies are not allowed to take part in these types of tenders, either directly or indirectly, otherwise allegations might arise that the tender was fictitious and intended only to bypass the law.

Did the implementation of the amendment significantly affect the volume of activity?
Definitely. It’s leading personnel companies to get involved in other activities, particularly recruitment and placement. Primarily in light of the fact they are set up to bring in new employees every six or seven months. If that’s what happens, what will the wise men have accomplished through their reform?

So now most of your operations focus on recruitment?
That was our main work in the past, too. That’s where most of our efforts are concentrated. Regular employment of workers is a technical endeavor. In recent years we’ve also entered additional areas like executive placement.

So now you’re competing with both personnel companies and placement companies.
Absolutely. Today everybody does everything.

Who is Adecco?
It’s the world’s largest personnel company and is centered in Switzerland. Its worldwide activity is 50% greater than that of Manpower worldwide, its main competitor. It operates in 70 countries where it has 6,500 branches. Adecco entered Israel a few years ago. A few branches have been opened but it hadn’t turned into a substantial player. From their perspective success means being among the leading companies in all of Israel. In some cases it has done this by competing with leading local companies.

What does this connection give you?
Most of all an ability to work with global companies. Now I speak differently with international companies operating in Israel. These companies can only work with global companies as service providers.

For the Hebrew Article

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