Court strikes down financial penalty that encourages foreign workers not to overstay

Statute from 2016 stripped foreign workers of money deposited on their behalf if they didn’t leave the country on time; High Court rules it is a violation of property rights

Jeremy Sharon is The Times of Israel’s legal affairs and settlements reporter

Foreign workers working in the fields near the Israeli town of Beit Shemesh, November 13, 2016. (Yaakov Lederman/FLASH90)
Foreign workers working in the fields near the Israeli town of Beit Shemesh, November 13, 2016. (Yaakov Lederman/FLASH90)

The High Court of Justice on Wednesday struck down regulations passed by a Knesset committee in 2016 that strip foreign workers of their social welfare benefits (which are automatically deducted from their salaries and put on deposit for them) if they fail to leave the country when their work visa expires.

In a six-to-one ruling, the High Court ruled that the regulations disproportionately violate the constitutional property rights of foreign workers, and ordered the Knesset and relevant government ministers to formulate a new arrangement within six months.

Justice Minister Yariv Levin and other members of the coalition reacted furiously. Levin alleged that it will encourage illegal migration and harm the Jewish identity of the state, and said it demonstrates why the government is seeking comprehensive judicial reform.

In 2016, the Knesset Labor and Welfare Committee established new regulations requiring every employer of a foreign worker in the construction, special technology, nursing, hospitality and industrial sectors to deposit into a designated bank account all social benefits for which the employer is liable.

The foreign workers could get those deposited funds only if they leave Israel when their visa expires. Should they overstay their visa, money is deducted from those deposited funds, and they are liable to lose the sum entirely if they overstay their visa beyond six months.

Petitions against the regulations argued that they did disproportionate harm to the rights of foreign workers, and pointed to a Chinese citizen who worked in construction for 12 years but lost all NIS 93,717 in deposited social benefits after he left the country late.

Supreme Court Chief of Justice Ester Hayut at a Supreme Court hearing, June 27, 2023. (Yonatan Sindel/Flash90)

Writing for the majority, Supreme Court President Esther Hayut said that the purpose of the deduction mechanism — to incentivize foreign workers to leave Israel at the end of their legal stay — was an “appropriate purpose,” but determined that the arrangement drawn up by the committee violated Basic Law: Human Dignity and Liberty in a disproportionate manner.

“From the moment that social contributions are deposited into the deposit account every month for the foreign worker as a result of his work, these funds are his property and deductions constitute an injury to this property,” wrote Hayut.

Although she conceded that it was legitimate to incentivize foreign workers to leave on time, she pointed out that the state did not present any examples of similar laws where foreign workers in other countries lose their welfare funds if they leave the country late.

Hayut also wrote that data presented by the government raised serious questions about the efficacy of the deduction mechanism, while the injury to the rights of the workers was very high.

The Supreme Court president added that the essence of the deduction mechanism was legitimate, and that it is the fact that the entire deposit fund was vulnerable to deductions which the court found to excessively violate the rights of foreign workers.

She also ruled that the foreign workers who had petitioned the court were entitled to have their money returned to them.

Foreign workers work at an onion picking farm near the city of Modiin, on August 12, 2016. (Yaniv Nadav/Flash90)

In his dissenting opinion, Justice Noam Sohlberg argued that the court did not have authority to intervene in the regulations.

He also argued that the foreign workers’ property rights were not infringed by the arrangement since they agreed to these conditions before entering the country and the salary deductions are lost by the foreign worker through their active failure to leave the country on time, in accordance with the regulations they are aware of.

The Association of Civil Rights (ACRI) and the Workers Hotline in Israel, the two organizations that petitioned the court on the issue on behalf of two foreign workers, lauded the ruling.

“A law that allows the theft of pension and termination funds of employees is an evil law, and it is not for nothing that there is no such arrangement anywhere else in the world,” the organizations said in response to the ruling.

“It is clear to us that members of the extremist coalition will now curse the High Court, which is not allowing them to do whatever they wish. We remind them that human rights belong to every person, even those who have no political power, and the role of the High Court is to stop the Knesset and the government when they trample over them,” ACRI and the Workers Hotline added.

Levin, Finance Minister Bezalel Smotrich and several other coalition members all denounced the ruling.

Israeli minister of Finance Bezalel Smotrich and minister of Justice Yariv Levin attend a meeting on the planned state budget vote, in the Israeli parliament on May 23, 2023. (Yonatan Sindel/Flash90)

“If anyone had any doubts as to why deep reform of the judicial system was needed, they received the answer again today in another [High Court] ruling that encourages illegal immigration to Israel while harming the demographic composition and Jewish identity of the country,” said Levin.

“The ruling gives the green light to tens of thousands of foreign workers to violate the conditions of their work permit and remain in the country in violation of the law. The ruling reflects an extreme scale of progressive values, according to which foreign workers who remain in Israel contrary to their commitment and contrary to the law is preferable to preserving Israel’s identity as the nation-state of the Jewish people and preserving its character as such.”

Smotrich said that the High Court was “once again striking down an important and Zionist law of the Knesset designed to protect Israel as a Jewish and democratic state, and only proves the need to continue to work to fix the legal system and ensure that there is a variety of opinions on the High Court. God willing, we will ensure this happens.”

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