New El Al deal grants workers some stability

However, the airline may have an incentive now to lay off employees early in their careers.

El Al Israel Airlines Ltd. (TASE: ELAL) employees will become eligible for tenure only after ten years at the airline, instead of the current five years. However, they will receive improved job conditions and a hearing mechanism against arbitrary layoffs, under the special labor contract agreed upon yesterday by El Al managers and the Histadrut (General Federation of Labor in Israel).

Until now, El Al employees with five year's seniority reached the point where management had the right, at its discretion (at least formally), to decide whether to fire them or grant them tenure. In practice, the ratio of layoffs versus tenure was subject to annual negotiations between management and the workers committee. In many cases, El Al extended employees' contracts to 7-9 years, without improving their salary conditions.

El Al and the Histadrut have now agreed that, after five years employment, employees will receive the same salary as tenured employees, except for the supplementary training fund. The non-tenured job period has been extended to ten years, but after five years it will not be possible to fire an employee without the consent of the workers committee. If no consent is forthcoming, the case will be brought before the El Al CEO and Histadrut chairman, and if they cannot reach a deal, the case will be brought before a judge emeritus.

Tenure will not be automatically granted after ten years' employment, but only by a consent mechanism by the parties.

The great fear is that this agreement will boomerang, because it does not prevent El Al from firing employees at any moment before completing five years on the job. In fact, El Al has an incentive to fire employees before this deadline, and the workers committee and Histadrut will have to be vigilant against the emergence of just such a trend in practice. A Histadrut source said that if the union sees layoffs made in bad faith, it will know how to respond.

Published by Globes [online], Israel business news - www.globes-online.com - on February 23, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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