Almost all sectors of industry in Israel have taken the brunt of the war following the events of 7.10.2023, although it transpires that the main factor affecting economic activity in the construction industry only, is manpower shortages.
The industry relies on around 80,000 labourers from the Palestinian Authority who are legally employed in Israel (and to complete the picture, another 20,000 illegal workers). The current crisis is not only attributable to the fact that the Palestinian labourers have not returned to work, but also because it is fair to assume that many of them will also not return in the near future.
A brief guide to employing foreign workers and arranging insurance for foreign workers
As an insurance agency working with numerous small and large contractors and developers around Israel, we are aware of the evident and immediate problem from first hand experience and discussions on-site. In view of numerous questions we have received, we have written this article to address several important issues connected to the employment of foreign workers and the insurance for foreign workers.
Regulations governing the employment of foreign workers in the construction industry
In accordance with Israeli law, only registered and licensed contractors involved in construction works are allowed to employ foreign workers, and only in four specific occupations as follows:
Formwork (building moulds into which concrete is poured).
If the main occupation of the labourer is metalwork or formwork, it is permitted to employ them to perform other works secondary to their main occupation, with their agreement, such as welding or framing work. There is also no preclusion to labourers involved in at least one of the four aforementioned occupations from carrying out “wet works” of the following types:
Works connected to the frame of the building including formwork, metalwork and assembling industrialised elements.
Work involving preparing infrastructures for building systems (electricity, communications, lighting, air conditioning, water and sewerage pipes).
Works involving laying environmental infrastructures (curbstones, pavements).
Aluminium and metalworks.
Interior and exterior cladding and flooring works.
Waterproofing and sealing works.
Construction of interior and exterior walls.
Painting and plastering works.
Employment in any other occupation is illegal, including management and supervisory roles. This is not a triviality. In the event of a work accident which causes bodily injury or property damage, the party responsible for the illegal employment will be held liable.
Types of projects in which it is permitted to employ foreign workers
At present, the government only permits employing foreign workers in projects involving infrastructures, residential construction, multi-tenure buildings and public buildings. In extraordinary cases it may be possible to obtain a permit to employ foreign workers in other types of projects.
Claims in respect of third party work accidents
To differentiate from Israeli or Palestinian workers, foreign workers are only employed by manpower companies which are legally licensed by the government to operate as such. These companies pay the wages and employee benefits of the foreign workers, including national insurance contributions.
Nonetheless, if a foreign worker is injured at a construction site, they may sue the contractor and other parties, usually for negligence relating to safety procedures, such as failing to provide safety training, failure to supply personal protective equipment or failure to ensure that a foreman is present.
The National Insurance Institute can also bring subrogation claims for benefits paid due to work injuries. The worker can also take direct legal action on grounds of tort / negligence.
Contractors All Risks insurance policies covers such claims under Section B – Third Party Liability and Section C – Employers Liability, which also covers foreign workers. Similar to other sections of the insurance policy, the Third Party Liability section is subject to various subjectivities, exclusions and nuances relating to common features of construction sites in Israel such as the presence of large number of workers and contract staff, various changes at construction sites, common risks (such as working at heights) and more.
Developers and contractors take note! According to statutory law and common law in Israel, you have a broad scope of liability for foreign workers at construction sites, even though you are not the formal employee of the foreign worker. You should ensure that all relevant safety regulations are implemented in line with the Safety at Work Ordinance and other regulations.
The “building contractor” is the party responsible for complying with these regulations. A general / main contractor is construed to be the building contractor, and if there is no main contractor – the principal is liable.
A contractor was held liable to pay compensation of around NIS 280,000 to a foreign worker from China and to the National Insurance Institute following a fall at a construction site. The court ruled that the defendant did not prove that the employee received safety training in a language he understands and more significantly, it transpired that he was not equipped with a safety harness, neither was he accompanied by another employee to provide assistance and supervision.
A building contractor was held liable to pay compensation of NIS 550,000 to a foreign worker who was injured at a construction site after a heavy item fell on his head and injured him.
Language and cultural barriers
Foreign workers constitute around 25% of non-Israeli manpower at construction sites in Israel. Whilst contractors and developers are ostensibly more familiar with Palestinian workers, many of them have rather limited experience in employing foreign workers.
It is important to recognise the linguistic and cultural barriers with these employees and bear in mind that the term “foreign workers” is not a generic term, as they come from different countries, with different languages and local cultures. This is especially relevant, for example, from the perspective of providing safety training in a language that the worker understands and ensuring compliance with safety regulations at work at all times.
The phenomenon of accommodating foreign workers at construction sites in designated facilities is quite common. Israeli law permits this, subject to compliance with the Foreign Workers Regulations (Prohibition of Illegal Employment and Ensuring Adequate Conditions) (Adequate Accommodation) – 2000.
Living at construction sites, even though it suits the contractors and the employees alike, involves various risks, relating to property damage (such as fires arising from cooking in kitchens), bodily injury due to environmental hazards or entering the construction site outside of work hours. In many cases, there are gaps between the condition of the site at the time when the insurance company surveyor visits the site and the actual situation which prevails when transportable accommodation buildings have been erected at the site at a later stage.
It is important for developers and contractors to be fully aware of the extent of their liability to foreign workers, including outside of work hours if they provide on-site accommodation.