The Labor Court has halted the voluntary layoff program of Mizrahi Tefahot Bank (TASE:MZTF). Judge Hadas Yahalom, vice-president of the Tel Aviv Regional Labor Court, decided yesterday that the bank's management, headed by CEO Eldad Fresher, should hold talks with the bank's workers committee and formulate a voluntary layoff program in conjunction with it. The decision followed a petition to the court by the workers committee to halt the program that the bank announced last week, as it was not consulted.
Last week, Mizrahi Tefahot Bank announced that 300 employees would leave the bank over the next five years under a voluntary leaving program. The bank put the cost of the program at NIS 300 million, or an average of NIS 1 million per employee. Employees close to retirement age will be offered a bridging pension, while other employees will be offered severance pay of 250% of the amount they would be due under employment law.
It had been expected that the program would be formulated together with the workers committee and that it would be presented together with a new wage agreement that the management and workers have been discussing. The gap between the two sides on pay has however remained wide.
Meanwhile, the accounting concessions for the cost of streamlining programs allowed by the Bank of Israel, affecting banks' capital adequacy ratios, were valid only to the end of 2016. Mizrahi Tefahot therefore announced its program just before the end of the year without an agreement with the workers committee. In response, the committee petitioned the court.
Published by Globes [online], Israel business news - www.globes-online.com - on January 3, 2017
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