Manpower contractor and service contractor workers: the 9-month rule, equal conditions and who is responsible

Service page: Employment lawyer: dismissals, wages and severance pay.

“Contractor worker” is one heading for two completely different legal situations. A worker of a manpower contractor is lent to another employer (the “actual employer”) and works there like a regular employee: a clerk, a machine operator, a customer service representative. A worker of a service contractor performs a service that the contractor sells to a client, such as cleaning, security guarding or catering, and remains the contractor’s employee. Each has its own law, different rules and a different defendant. This article sorts out both, and corrects a common mistake: there is no “nine-month law” that requires an offer of a contract or the payment of compensation. There is section 12A, and it does something stronger. More guides on the employer-employee relationship are collected in the employment law hub.

Manpower contractor, service contractor and actual employer: the definitions that decide everything

The Employment of Employees by Manpower Contractors Law, 5756-1996 defines a manpower contractor as “a person whose business is providing manpower services of its employees for work with another”, a service contractor as a person whose business is providing a service in one of the fields of work in the Second Schedule (guarding and security, cleaning), and an actual employer as the person with whom a worker of a manpower contractor is employed. A manpower contractor must hold a license (section 2) and must have a written employment contract with the worker (section 11), and it, and also the actual employer, may not collect from the worker any payment or reimbursement of expenses for the service (section 12). If it is still not clear to you whether you are an “employee” at all and not an independent contractor, start with the article on classifying workers.

The nine-month rule: section 12A

Section 12A, in force since 2008, does not require the contractor to “offer a direct contract” and does not entitle the worker to compensation. It simply turns the worker into an employee of the actual employer. These are its main points:

• Section 12A(a): a worker of a manpower contractor shall not be employed with an actual employer for a period of more than nine consecutive months; a break in work of no more than nine months does not interrupt continuity.
• Section 12A(b): the Minister may, in exceptional cases, permit longer employment, provided that the total period does not exceed fifteen months.
• Section 12A(c): a worker who was employed with the same actual employer beyond the permitted period is treated as an employee of the actual employer from the end of that period.
• Section 12A(d): the seniority the worker built up with the same actual employer during the period of employment through the contractor is added to their seniority as an employee of the actual employer.

Three practical points. First, the change is automatic: the actual employer’s consent is not needed, and a term in a contract that tries to prevent it is not valid. Second, continuity is not broken by a break shorter than nine months, so the practice of stopping a worker for a month and bringing them back does not reset the clock. Third, seniority is counted from the first day of placement, so a dismissal after the change entitles the worker to severance pay under the Severance Pay Law, 5723-1963 for the whole period. The rule does not apply to several groups: workers of a manpower contractor in computing roles, meaning maintenance, development and implementation of computer systems (section 13A, which also excludes them from section 13); foreign workers of a manpower contractor that holds a permit in the construction sector (section 12A(e)); and workers of service contractors. These groups have other arrangements.

Before nine months: equal conditions under section 13

Even while the worker is on loan, the terms of employment of a manpower contractor’s worker may not be lower than the terms of the employees employed at the same workplace and in the same role: wages, supplements, vacation, recuperation pay and pension contributions. The comparison is with the parallel role at the actual employer, not with the cheapest employee in the organization. Two qualifications: when several collective agreements apply to the worker, the provision that is better for them applies (section 13(b)); and the equal-terms rule does not apply to a worker whose terms of employment with the contractor are governed by a general collective agreement that was extended by an extension order (section 13(c)). A worker who receives less than a direct colleague in the same role may sue for the difference, and it is worth checking the employment contract and the payslip in advance against what is customary at the workplace.

Cleaning, security and catering workers: the liability of the client

Workers of a service contractor do not become employees of the client, so the legislature protected them in another way. Chapter C of the Increased Enforcement of Labor Laws Law, 5772-2011 places on the client (service recipient), meaning the body that buys cleaning, guarding and security, or catering services, civil liability for the contractor’s debts to its workers when three conditions are met (section 25): the service is provided at the client’s premises by at least four workers; for at least six months, on a regular and continuous basis; and the worker, or the workers’ organization (trade union), demanded in writing that the contractor correct the breach, and then notified the client in writing, and the contractor did not correct it within 30 days. A client that did not set an effective way to give notice of a violation of rights, and did not inform the workers of it, is liable even without the 30-day condition (section 26).

Section 28 is especially important: if the contract between the client and the contractor does not set out in writing the wage components and the minimum wage cost, or if the client pays the contractor less than the “value of a work hour” set by the Minister, the liability applies to the client even without the conditions of four workers and six months in section 25(a)(1)–(2), and without the defenses of section 27. Jurisdiction over a worker’s claim against the client lies with the Regional Labor Court (section 29). In addition, sector extension orders apply to cleaning and security workers, and in public bodies a dedicated law applies to workers of service contractors in the fields of guarding and cleaning.

End of employment: what you are owed and who pays

A manpower contractor’s worker who finished after more than nine months with the same actual employer is an employee of the actual employer, and dismissing them requires a pre-dismissal hearing and advance notice as for any employee, and severance pay after one year, with the year counted from the day of placement. A “project ending” or a move between work orders with the same actual employer, without a real change in the work, does not reset seniority. A service contractor’s worker whose contractor was replaced by a new contractor at the same client ends their work with the old contractor and claims their rights from it; the law gives no priority right to be taken on by the new contractor, but the sector extension orders regulate part of the transfer. In both cases the claim is filed with the Regional Labor Court.

Frequently asked questions

The staffing agency ended my employment after eight months and sent me back to the same place a month later: has my seniority been reset?

No. Under section 12A, a break in work with the same actual employer of no more than nine months does not interrupt continuity, and the periods are added together. Once the total employment with the same actual employer passes nine months, you are treated as its employees and your seniority is counted from the first day of placement. An employer that stops workers before the end of the nine months to avoid taking them on is acting at the edge of the law, and the Labor Court examines whether this was done without good faith. Proving the lack of good faith is a matter of records and calculations, so it is worth contacting an employment lawyer before the nine months have passed.

I work as a cleaner through a contractor in an office building: does the 9-month rule apply to me?

No. Section 12A applies to workers of manpower contractors, not to workers of service contractors in cleaning, security guarding and catering. Your protection is in the Increased Enforcement of Labor Laws Law: the client (the owner of the building or the company that orders the cleaning) is civilly liable for your rights if the service is provided at its premises by at least four workers for at least six months, you notified it in writing of the breach after demanding that the contractor correct it, and the contractor did not correct it within 30 days. In addition, the extension order for the cleaning sector applies to you, and it improves several rights.

Whom do I sue: the contractor or the company where I actually worked?

It depends on the type of contractor and on seniority. A manpower contractor’s worker who has passed nine months sues the actual employer as their employer in every respect; before that, you sue the contractor and, in suitable cases, also the actual employer over inferior terms under section 13. A service contractor’s worker sues the contractor and, when the conditions of section 25 of the Increased Enforcement of Labor Laws Law are met, also the client, and jurisdiction over a claim against the client lies with the Regional Labor Court. In practice, it is usual to join both parties and let the court divide the liability between them.