After trying to solve the problem of retirement packages under in the Financial Sector Salaries Law and being turned down, the banks have decided to petition the High Court of Justice against the new law. The Association of Banks in Israel, headed by CEO Moshe Pearl, today filed a petition against the Knesset, Minister of Finance Moshe Kahlon, the Bank of Israel, and Supervisor of Banks Dr. Hedva Ber. In the document submitted to the High Court of Justice, the banks attack the law, stating, "Not often does the High Court of Justice encounter such an extraordinary and unprecedented piece of legislation, one without parallel anywhere in the world, certainly among Western and Organization for Economic Cooperation and Development (OECD) countries, which fundamentally alters the principles of the free market and the system of balances between the individual and the state. The law is a serious violation of freedom of occupation, freedom to employ, property rights, freedom of contracts, the principles of equality, and the social and economic rights of employees established and accumulated over many years, to which they are entitled for their work and toil."
Despite their severe criticism, the banks are not asking that the law be struck down. They are seeking two things: a ruling that the law does not apply to their employees' retirement packages, and elimination of the limit on salaries to 35 times the lowest salary at the bank. Sources inform "Globes" that the Association of Life Insurance Companies of Israel and the Israel Insurance Association are planning to follow the banks' example by filing a similar petition to the High Court of Justice in the near future, although no final decision has been taken in the matter. The Association of Life Insurance Companies of Israel and the Israel Insurance Association said, "The issue is on the agenda, and will be decided in the near future." The insurance companies have dozens of executives receiving annual compensation costing more than NIS 2.5 million.
The banks are asserting that the lack of clarity on the question of a breach of past rights is liable to lead to the resignation of dozens of employees in key positions in the system whose retirement packages exceed NIS 2.5 million. They quote Ber, who said in this context that this was liable to cause a managerial crisis at the large banks, a loss of know-how and experience, damage to control, and exposure to risks.
The Association is seeking an urgent hearing and an interim injunction in order to allay the concern among their employees about retirement and their ability to benefit from their original retirement packages, and in order to avoid a situation in which employees prefer to resign, due to the fear that their retirement rights will be affected if they wait until a ruling on the petition is handed down. The banks are also petitioning against the restricting of executive salaries to 35 times the lowest salary at a bank. The banks want the law to resemble the original law that former minister of finance Yair Lapid planned to pass, such that a salary in excess of NIS 2.5 million will not be recognized as a tax expense (in Lapid's bill, the ceiling for recognition was NIS 3.5 million). The goal is that in exceptional cases, the banks will be able to grant a NIS 2.5 million salary. In the current law, the restriction of 35 times the lowest salary is inflexible.
In the petition, the Association of Banks' legal representatives - Advocates Dr. Israel Leshem, Eyal Dotan, and Dr. Issar Birger from the Meitar, Liquornik, Geva, Leshem, & Tal law firm - argue that the hasty and negligent clauses were added to the original bill at the last minute in the final Knesset debate, without any orderly and professional assessment of their consequences, and in complete contrast to the position of all the professional committees and the enormous amount of staff work conducted by the government itself on the issue. The banks also emphasize the extreme discrimination resulting from the decision to impose the restriction solely on financial companies, and argue that they are thereby prevented from competing freely for excellent employees against corporations in the non-financial sector and against financial companies to which the law does not apply.
Published by Globes [online], Israel business news - www.globes-online.com - on June 1, 2016
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