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Status and Contract in the Employment Relationship

Published online by Cambridge University Press:  16 February 2016

Frances Raday
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Extract

There is evidence, in some recent legal thinking on the employment contract, of a readiness to abandon classical contract principles. This phenomenon is especially apparent in the formulation of the Employment Contract Bill, 1985. In this article, I shall examine this development in the framework of an analysis of the employment relationship and the extent to which it is to be regarded as a contractual relationship, both under differing theoretical approaches and under existing labour law principles.

The contemporary employment relationship emerges from a contractual undertaking between individuals to exchange wages for services, but its social significance is not limited to the issues raised by the terms of the contract.

Type
Research Article
Information
Israel Law Review , Volume 23 , Issue 1 , Winter 1989 , pp. 77 - 110
Copyright
Copyright © Cambridge University Press and The Faculty of Law, The Hebrew University of Jerusalem 1989

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Footnotes

*

Senior Lecturer, Faculty of Law, The Hebrew University of Jerusalem.

References

1 H. H. no. 1718, p. 129.

2 See generally for discussion of the legal status of slaves, serfs and servants prior to the end of the 18th century: Rheinstein, M., ed., Max Weber on Law in Economy and Society (Harv. U. Press, 1954) 105–106 Google Scholar; Noyes, C. R., The Institution of Property (N.Y., Longmans Green & Co., 1936) 78 Google Scholar; Selznick, P., Law, Society and Industrial Justice (N.Y., Russel Sage Fdn., 1969) 122–129 Google Scholar.

3 Selznick, op. cit. supra n. 2, at 127.

4 The move from the status of the slave to the contractual relations of the servant to his master was one of the examples given by Maine of his general perception of “a movement from status to contract … in progressive societies”: Maine, H. S., Ancient Law (London, John Murray, 10th ed., 1884) 172–174 Google Scholar.

5 Selznick, op. cit. supra n. 2, at 130–134.

6 In Europe, social security provisions were introduced to protect employees, out of recognition that they were more than mere vehicles for the sale of labour. The earliest such measures were introduced by Bismark between 1883–1889: Der Gross Brockhaus, Handbuch des Wissens in Zanzig Banden – Socialversicherung (Leipzig, Brockhaus, 1928–1925)Google Scholar; other European states quickly followed suit. International conventions and state regulation subsequently established a series of protective standards for employment conditions: maximum hours of work, minimum age, and health and safety regulations replaced the regime of laisser faire. See generally: Jenks, C. W., International Protection of Employees' Rights (London, 1957)Google Scholar.

7 Renner, K., The Institutions of Private Law and Their Social Functions (London, Routledge & Regan Paul Ltd., 1949) 121–122 Google Scholar.

8 Mrs.Webb, Sidney (ed.), The Case for the Factory Acts (London, Grant Richards, 1901) 8–9 Google Scholar.

9 Ehrenberg, R. G. & Smith, , Modern Labor Economics, Theory and Public Policy (2nd ed., 1985) 1–2 Google Scholar.

10 Epstein, , “In Defense of the Contract at Will” (1984) 51 U. Chi. L. R. 947 CrossRefGoogle Scholar; Posner, , “Some Economics of Labor Law” (1984) 51 U. Chi. L. R. 987 Google Scholar.

11 Polanyi, , The Great Transformation (1944) 72–73 Google Scholar, see also 77, 102.

12 Within the workings of capitalist economies, it might even be counter-productive to argue for its decommoditization. The outstanding example of decommoditized labour has been domestic work performed by women. Legal systems have systematically regarded such services as not being sold but rather as being given for reasons other than gain, in the context of the reciprocal rights and duties of marriage: Maine, op. cit. supra n. 4 at 172; Wood, , Treatise on the Law of Master and Servant (2nd ed., 1886) 104, 116, 122, 151 Google Scholar; N.L.R.A. 49 Stat. 449 (1935) sec. 2(3). Recent feminist writings have shown how this decommoditization of women's labour has subjected them to an additional form of oppression beyond that suffered by the working class in traditional Marxist analysis: Brittan, A. & Maynard, M., Sexism, Racism and Oppression (Oxford, Blackwell, 1984) 62–63 Google Scholar.

13 Cf., Ellerman, who argues for the decommoditization of labour and the hiring out of corporate assets to labour rather than the hiring of labour by the corporation: “The Employment Contract and Liberal Thought” (1986) 44 Review of Social Economy 13, 29 Google Scholar.

14 See Jenks, C. W., The International Protection of Trade Union Freedom (London, Stevens, 1957)Google Scholar; Valticos, N., International Labour Law (Deventer, Kluwer, 1979)CrossRefGoogle Scholar.

15 Ibid.

16 Epstein, op. cit. supra n. 9.

17 Cordova, , “Collective Bargaining”, in Blanpain, R. et al. , Comparative Labour Law and Industrial Relations (Deventer, Kluwer, 1982) 220, 222 Google Scholar.

18 See text at n. 32, infra.

19 Renner, op. cit. supra n. 7, at 121–122; Selznick, op. cit. supra n. 2, at 127ff.

20 Hours of Work and Rest Law, 1951 (5 L.S.I. 125); Annual Leave Law, 1951 (5 L.S.I. 155); Night Baking (Prohibition) Law, 1951 (5 L.S.I. 53); Youth Labour Law, 1953 (7 L.S.I. 94); Apprenticeship Law, 1953 (7 L.S.I. 33); Male and Female Workers (Equal Pay) Law, 1964 (18 L.S.I. 165).

21 Wage Protection Law, 1958 (12 L.S.I. 100), sec. 17.

22 Severance Pay Law, 1963 (17 L.S.I. 161).

23 Ibid., sec. 12 – a month's wages per year of employment.

24 Ibid., secs. 4, 5, 6, 7, 8, 11 – employees are entitled to severance pay in a variety of situations of both dismissal and resignation.

25 Minimum Wage Law, 1987 (S. H., no. 1211, p. 68).

26 Collective Agreements Law, 1957 (11 L.S.I. 58), secs. 15, 16, 19, 20.

27 Collective Agreements Law, 1957, sec. 23.

28 Israel Ports Authority v. National Labour Court (1980) 34(ii) P.D. 141, 158.

29 The relationship between a trade union and the employees which it represents is not an agency relationship; Sokorinsky v. Hadassah Medical Association 6 P.D.A. 70; Israel Ports Authority v. National Labour Court, supra n. 28, at 141.

30 The collective agreement will bind all employees in the categories included in the agreement and employed by the employer party to the agreement (or which is a member of the employer's organization party to the agreement): Collective Agreements Law, 1957, secs. 15(3), 16(3). Hence union membership is not a prerequisite.

31 Bank Ozar Lehayal v. Histadrut HaP'kidim 2 P.D.A. 260.

32 Collective Agreements Law, 1957, secs. 3, 4.

33 Ibid., sec. 25.

34 See Goldberg, M. and Hausman, J., Labour Law (Sadan, Israel, 1987, in Hebrew) 4–36, 4–37 Google Scholar, for a full listing of extension orders.

35 Elbinger v. State of Israel 6 P.D.A. 415; Histadrut and National Organisation of Israel Army Employees v. State of Israel 10 P.D.A. 78; HaPoel, Tel Aviv District v. Mordekovitcz 10 P.D.A. 102.

36 Gilmore v. Sarpon Corp. 8 P.D.A. 300.

37 Milfelder v. National Labour Court (1987) 41(ii) P.D. 210.

38 Gershon v. State of Israel 17 P.D.A. 337; Vardi v. Municipality of Netanya 14 P.D.A. 59; Gai v. Tel Aviv Municipality 15 P.D.A. 409.

39 Vardi v. Municipality of Netanya 14 P.D.A. 59.

40 Frankel v. Overseas Foodcentres (1961) 15 P.D. 87.

41 Eliahu Gal v. Modal Concrete (Israel) Corp. 5 P.D.A. 353; Langston v. AUEW [1974] I.C.R. 180, 190, per Denning J.

42 Mejelle, Art. 425; Regby v. General Administrator of the Railway (1953) 7 P.D. 333; Cancellation of Mejelle Law, 1984: although the Law cancels the Mejelle, it does not cancel norms which, though derived from the Mejelle, have become customary laws.

43 Megin Corp. v. Elan Peer (1973) 27(i) P.D. 576.

44 Weisrag Leon v. A.G. (1956) 10 P.D. 1938.

45 27 L.S.I. 117.

46 Davies, P. and Freedland, M., Labour Law – Text and Materials (London, Weidenfeld and Nicolson, 2nd ed., 1984) 306–307 Google Scholar.

47 Contracts (General Part) Law, 1973, secs. 25, 26.

48 Ben Israel, R., “A New Dimension in Collective Agreements” (1976) 11 Is. L.R. 110–111 Google Scholar.

49 Collective Agreements Law, sec. 16(2): “A general collective agreement is binding on employers, who were, at the time of signing the agreement, members of the employers' organization party to the agreement, except for those members who were expressly excluded from the general applicability of the agreement”. A non-party employer will of course not be entitled to cancel a general collective agreement, and this is clear as a matter both of contract principles and of statutory interpretation, cf. Ben Israel, ibid., at 110–111.

50 It is generally accepted that there is no agency in the relationship between a trade union and individual employees: Sokorinsky v. Hadassah Medical Association, supra n. 29; Israel Port Authority v. National Labour Court, supra n. 28. Since the National Labour Court Law regarded the nature of employers' organizations as analogous to that of trade unions (Tel Aviv University v. Tel Aviv Academic Faculty Members Organisation 5 P.D.A. 85, 99), it seems likely that there is no agency in the relationship between an employers' organization and an individual employer.

51 Collective Agreements Law, 1957, secs. 2(2), 16(2).

52 Ibid., secs. 2(1), 15(2).

53 Rosner v. Stern (1973) 27(i) P.D. 78; Anrel Corp. v. Lifschitz (1975) 29(ii) P.D. 146; Cameri Orchestra v. Semadar Shazar 12 P.D.A. 355.

54 Weisrag Leon v. A. G., supra n. 44.

55 Cameri Orchestra v. Semadar Shazar, supra n. 53, at 362; Cohen v. State of Israel 11 P.D.A. xxi.

56 25 L.S.I. 11.

57 Zori Pharmaceutical and Chemicals Corp. v. Riks 4 P.D.A. 477.

58 Zori Pharmaceutical and Chemicals Corp. v. Riks, ibid.; Zori Pharmaceutical and Chemicals Corp. v. National Labour Court (1974) 28(i) P.D. 372; Salman Salman v. National Labour Court (1976) 30(i) P.D. 495; Histadrut v. National Labour Court and Salman Salman (1978) 32(i) P.D. 825. A nisi order has recently been given for review of this question in the High Court of Justice.

59 Histadrut v. National Labour Court and Salman Salman, ibid.

60 In the Explanatory Note, this principle is clearly stated: “The foundation of the relationship between an employer and an employee is the contractual relation between them”.

61 Camerlynck, G. H., Droit du travail (Le Controt de travail) (2nd ed., 1982) 124 Google Scholar; Harduf, Ch., Rights of Employees in Change of Employers, Bankruptcy and Winding Up (Milo Publ., Tel Aviv, 1988, in Hebrew) 22 Google Scholar.

62 Harduf, ibid., at 22, points out that under the existing law “an employee cannot be transferred to the employment of another employer without his consent”.

63 Camerlynck, op. cit. supra n. 61, at 132.

64 Schaeffer, , “L'envers de l'article 23, 70, livre 1 du Code du Travail” Étude J.C.P. 1963 I 1753 Google Scholar, (1963) 37 La Semaine Juridique 1753 Google Scholar.

65 Ibid.

66 Gilmor v. Sarpon Corp. 8 P.D.A. 300. See Schaeffer, op. cit. supra n. 64, at para. 2.

67 Collective Agreements Law, 1957, sec. 19. See Raday, , “Collective Dismissal”, in Goldstein, S., ed., Israeli Reports to the Tenth International Congress of Comparative Law (Institute for Legislative Research and Comparative Law, The Hebrew University, Jerusalem, 1978)Google Scholar.

68 Cf. Histadrut v. Beged Or 81 Corp. Regional Labour Court Nazareth, September 1988, not yet published. There it was held that dismissals upon plant closing were not redundancy dismissals regulated by the collective agreement but economic dismissals which were not so regulated.

69 Sec. 17.

70 7 L.S.I. 161, sec. 12(b). In these circumstances, the employee will be entitled to severance pay from the first employer, unless the new employer agrees in writing to take upon itself responsibility for such severance pay.

71 Harduf, op. cit. supra n. 61, at 33–36.

72 Sec. 11. Sec. 8 of the Bill might put this right of resignation with severance pay in doubt. Under the operation of sec. 8, the new employer would become the employee's contractual employer by law, and hence the employee's burden in proving a sec. 11 right of resignation would be considerably heavier.

73 This duty was a statutory duty under the Mejelle, Article 425, but has most probably rested upon custom since the cancellation of the Mejelle – see above, text at n. 42.

74 H.H., no. 791, p. 384.

75 Sec. 8(b) of the 1968 Bill.

76 Tedeschi, G., “Two Comments on the Bill for the Contract of Employment Law 1968” (1975) 6 Mishpatim 163, 169 Google Scholar.

77 Such benefits are not usually available for temporary non-payment of wages. In order to qualify for unemployment benefit, an employee must report to the Employment Service in search of new employment.

78 Sec. 17.

79 The preexisting rule under the Mejelle and under English common law was, at least partially, dispositive (A.G. v. Dolanski (1956) 11 P.D. 746). A rule which attempted to preempt contracting out would be well-nigh futile since it would so easily be avoided. The right to wages may itself be contractually circumscribed so as to avoid the vesting of entitlement to a wage in the employee where he/she does not perform the work. Contracts which provide for piece-work payment (see Wage Protection Law, sec. 10) or for payment of wages by commission (see Netanya Municipality v. Berger 3 P.D.A. 177) would avoid the policy of sec. 9. Furthermore, the employee would not be entitled to a quantum meruit since this is conditioned upon the performance of the work. See also sec. 4 of the Bill.

80 F. Raday, op. cit. supra n. 67; Ben Israel, R., “The Validity of Unfair Dismissal and Its Legal Implications” (1980) 7 T.A. Univ. L. R. 345 Google Scholar; Zori Pharmaceutical and Chemicals Co. v. Riks. supra n. 57: Government Employees Assoc. v. Nat. Lab. Ct. et al (1986) 40(iii) P.D. 318.

81 Employment of Women Law, 1954 (8 L.S.I. 128), sec. 6.

82 State Service (Discipline) Law, 1963 (17 L.S.I.58), sec. 68.

83 Discharged Soldiers (Reinstatement in Employment) Law, 1949(3 L.S.I. 10), sec. 6.

84 Equal Employment Opportunities Law, 1988 (S.H., no. 1240, p. 38), sec. 2.

85 See supra n. 67.

86 See above, text at nn. 48 and ff.

87 Sec. 17.

88 See sec. 11(a)(2). This section of the Bill is to be contrasted with the Severance Pay Law, 1963, sec. 9, which guarantees the employee protection against avoidance of severance pay payment through the technique of non-renewal of fixed term contracts.

89 Epstein, op. cit. supra n. 10.

90 Knetsch, , “Legal Rules and the Basis for Evaluating Economic Losses” (1984) 4 Int. L. & Econ. 5 Google Scholar; Schwab, , “A Coasean Experiment on Contract Presumptions” (1988) 17 J. Legal Studies 237 CrossRefGoogle Scholar.

91 Cf. U.K. Employment Contracts Act, 1963.

92 Ben Israel, R., Customs in Individual Employment Relations: Their Connection with Collective Agreements (Institute for Legislative Research and Comparative Law, Hebrew University, Jerusalem, 1978)Google Scholar.

93 Halsbury's, Laws of England (2d ed. Ud 10, as ann. in Cum. Supp. 1956) 2, 16 Google Scholar.

94 Dias, R.W.M., Jurisprudence (Butterworths, London, 5th ed., 1985) 187–193 Google Scholar.

95 Salmond, , On Jurisprudence (Sweet and Maxwell, London, 12th ed., 1966) 196 Google Scholar.

96 Contracts (General Part) Law, 1973, sec. 26.

97 Ben Israel, Customs, op. cit. supra n. 92, at 6, 7. The thesis itself does not go as far as the provision proposed in sec. 15 of the Bill, in that it does not seek to justify the “transfer” of collective agreement custom from one sector to another but rather requires a collective agreement provision which applies to the majority of sectors and is hence apparently to be regarded as the norm for all sectors.

98 Silberger v. Diekman (1968) 22 P.D. 148. See generally, Tedeschi, , “Custom in Israel Law: Present and Future” (1973) 5 Mishpatim 9 Google Scholar.

99 Ben Israel, Customs, op. cit. supra n. 92, at 9.

100 Raday, , Adjudication of Interest Disputes, the Compulsory Arbitration Model (Institute for Legislative Research and Comparative Law, Hebrew University, Jerusalem, 1983) 155–156 Google Scholar.

101 Sec. 25.

102 Sec. 26.

104 Sec. 25.

105 Ben Israel, Customs, op. cit. supra n. 92, at 108–121.

106 Israel Airlines Incorporated v. Maintenance Employees Committee 3 P.D.A. 393.

107 This danger of ineffectuality echoes the concern of equity that specific performance of contracts for personal services requires an unreasonable degree of supervision.

108 The employer might succeed in showing a genuine disagreement as to employee's entitlement to wages on the grounds that it was not clear that such entitlement would be “just in the circumstances”. See Wage Protection Law, 19S8, sec. 18.

109 Of course, even without sec. 9(b) of the Bill, the employee would not be able to seek enforcement in this situation in view of sec. 3(4) of the Contracts (Remedies for Breach of Contract) Law, 1970.