Mediation in employment disputes: how to resolve an employee-employer dispute without a judgment

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

What mediation in a labor dispute is, and what it is not

Mediation is a process in which a neutral third party meets with the parties to bring them to agreement on settling the dispute, without having the power to decide it. This is the definition in section 79C of the Courts Law [Consolidated Version], 5744-1984, and it is also the definition to which the Labor Court Regulations (Conciliation), 5753-1993 refer.

The meaning is worth repeating: the mediator is not a judge and not an arbitrator. They do not rule who is right, do not make findings and do not write a judgment. Regulation 2 of the Conciliation Regulations describes their role as clarifying the issues in dispute, uncovering the information needed and proposing options for a solution. Anyone who enters the room to “win” is in the wrong process.

Two common confusions are worth clearing up in advance. First, mediation is not arbitration: the arbitrator decides and the award is binding; the mediator does not. The full difference is set out in mediation compared with arbitration. Second, mediation is not a “pre-dismissal hearing” and not an internal inquiry committee: those are the employer’s processes, not a neutral process.

The Labor Court track: the Conciliation Regulations

The Labor Court has its own arrangement, and not by chance. The Labor Court Regulations (Conciliation), 5753-1993 were made under section 43(b) of the Labor Court Law, 5729-1969, and they regulate the process from beginning to end. These are the main points:

• Who initiates and when (regulation 3(a)). The court’s proposal to refer a civil matter to conciliation, in whole or in part, “may be made at any stage of the proceedings”. Also at the pre-trial hearing, also after the evidence has been heard.
• What the court must explain (regulation 3(b)). That things said in conciliation will not be used as evidence in civil legal proceedings, and that not agreeing to the referral, or stopping the conciliation, will not affect the outcome of the proceedings. This is an important point for an employee who fears that a refusal will count against them in the case itself.
• Who the conciliator will be (regulation 3(c)–(d)). The parties give notice of an agreed conciliator and submit a letter of consent from them. If they did not reach agreement, the court may appoint a conciliator from a list they submitted to it, and without a list, at its own choice. Here there is an option unique to the Labor Court: it may appoint two public representatives who serve in that court, one a representative of the employees’ public and the other a representative of the employers’ public, before whom the matter is not being heard, or a labor relations officer within the meaning of the Settlement of Labor Disputes Law, 5717-1957 (חוק יישוב סכסוכי עבודה, התשי״ז-1957).
• Stay of proceedings (regulation 4). Once a conciliator is appointed, the court informs them of the period it set for the stay of proceedings under section 79C(e) of the Courts Law. If the period passes without a settlement, the conciliator gives notice of whether the parties agree to extend it.

And at a glance, the whole process in the order of the regulations:

What actually happens in the room

Regulations 5 and 6 set the rules of conduct, and they are very practical:

• The conciliator meets the parties together or separately, and with a party’s consent, also without their lawyer.
• The conciliator will not disclose information given to them to anyone who is not a party to the proceedings. If a party gave them information with a request to keep it secret, they must keep it secret even from the other party, unless the person who gave the information waived the confidentiality.
• The conciliator will not use information they received for any purpose other than the conciliation, and will not give advice on a professional matter outside their field.
• The conciliator will refuse the appointment if they had a previous professional or personal connection with one of the parties (unless they disclosed it and the others agreed in writing), or if they may find themselves in a conflict of interest.
• The parties may consult their lawyers at any stage, and may stop the conciliation at any time.

As for money, regulation 7 provides that the conciliator’s fee does not depend on the outcome and is paid whether or not a settlement was reached; the conciliator states at the start of the process what the fee is and how it is paid; the parties agree in advance on how to split the fee and the expenses, and without agreement they bear them in equal shares. Important for our purposes: regulation 7 does not apply when public representatives or a labor relations officer were appointed to the role under regulation 3(d).

When the conciliator stops the process

Regulation 8 lists the grounds on which the conciliator may stop the conciliation on their own initiative, and this list is in fact a list of “warning signs” worth knowing in advance:

• the matter is not, in their opinion, suitable for conciliation;
• a party is not acting fairly or in good faith, or is not cooperating;
• a party is not disclosing the information needed;
• there is no reasonable chance of a settlement;
• the settlement the parties are about to reach is clearly unfair;
• the settlement may cause real harm to a third party;
• the parties are not paying the fee or the expenses.

The conciliator informs the court of the decision to stop, but does not give their reasons and does not express an opinion on the matter. In other words, a failed conciliation does not pass any information to the judge about what was said in the room.

The settlement and its force: why it is not “just an agreement”

Regulation 9 of the Conciliation Regulations sets the final stage: once the parties reach a settlement, they or the conciliator put it in writing and set out in it all the terms for settling the dispute; the parties sign it and the conciliator confirms it with their signature. The conciliator informs the court as soon as possible, and if the parties asked for the settlement to be given the force of a judgment, they attach a copy. The court may give the conciliation settlement the force of a judgment, and may also summon the parties to give explanations about it.

The model agreement in the schedule to the Regulations says so expressly: the parties declare that they understand that “it has the status of a contract to which the court may give the force of a judgment”.

The practical meaning: a settlement that has been given the force of a judgment can be enforced through enforcement proceedings (Execution Office), without filing a new claim. The same rule also applies in the courts: section 79C(g) empowers the court to give a mediation settlement the force of a judgment, and section 79C(h) extends this even to a case in which no claim was filed at all: parties who mediated outside the court can apply to the competent court and ask it to give the settlement the force of a judgment. When the gap between the parties is about the right itself and not about the amount, mediation will not close it, and the route is a claim, with an employment lawyer.

Confidentiality works symmetrically: section 79C(d) provides that things said within a mediation process will not be used as evidence in civil legal proceedings, and regulation 3(b) of the Conciliation Regulations requires the court to explain this to the parties in advance. If the process fails, a settlement offer heard in the room will not count against you in the case.

The difference from a civil court: no MAHUT meeting in the Labor Court

This point confuses even representatives. In the civil courts there is a mandatory mechanism: regulation 37 of the Civil Procedure Regulations, 5779-2018 requires a MAHUT meeting (an information, introduction and coordination meeting) in claims for more than NIS 40,000 (except claims for bodily injury and road accidents). The official in charge appoints a MAHUT mediator within 45 days of the last pleading, the meeting is held without cost within 30 days, and an invitation to it has the status of a summons to a hearing; anyone who does not appear is ordered to pay costs.

The Labor Court has no such mechanism. The Labor Court Regulations (Rules of Procedure), 5752-1991 (תקנות בית הדין לעבודה (סדרי דין), התשנ״ב-1991) contain no provisions on mediation or MAHUT, and the Civil Procedure Regulations do not apply in the Labor Court. So in a labor dispute, the move to conciliation is made on the court’s proposal and with the parties’ consent, not by an automatic summons. Anyone who wants mediation in a labor dispute must ask for it, not wait for it. More on the difference between the tracks in mandatory mediation and the MAHUT meeting.

What conciliation can achieve that a judgment cannot give

This is the strongest argument for the process, not “speed” or “cost”. The Labor Court awards monetary remedies and sometimes a declaratory remedy; a conciliation settlement can include things for which there is no cause of action at all:

• changing the wording of the end of employment in the employer’s documents, from dismissal to agreed resignation or the other way round, for the purpose of entitlement to unemployment benefit or for professional reputation;
• an end-of-employment letter or a letter of recommendation in agreed wording;
• spreading payments, payment dates and an agreed interest mechanism;
• arranging mentions on social networks or in publications, and an undertaking of mutual non-disparagement;
• release of severance pay or benefit money from a fund, and an agreed Form 161 (employer’s notice of termination to the Tax Authority);
• narrowing or canceling a non-compete clause, and arranging the return of equipment and information;
• a comprehensive mutual waiver that also closes causes of action that were not raised.

In addition, the process is confidential, whereas a judgment is public; and it allows both parties to avoid the cross-examination of employees and managers who continue to work together.

When mediation is not the right route

There are situations in which an agreed process is not suitable, and not because of “tactics”:

• Mandatory rights. Protective labor laws cannot be waived in advance. A settlement that tries to “buy” a waiver of the minimum wage, of overtime pay or of severance pay to which the right has arisen is open to challenge, and a conciliator may stop a process in which the settlement is clearly unfair (regulation 8(b)(5)).
• Sexual harassment or violence at the workplace. These have a public and criminal dimension that is not exhausted by a confidential financial settlement.
• Systematic discrimination or a recurring question of principle: there, the judicial decision is the value.
• Extreme power gaps or lack of good faith: a party that uses the process to gain time or to collect information.

A special case worth knowing: in a complaint by a foreign worker, section 1Z(c)(3) of the Foreign Workers Law, 5751-1991 empowers the Commissioner for Foreign Workers’ Rights to refer the complaint to mediation under section 79C, with the consent of the complainant and of the person complained against. See foreign workers in Israel: rights under the law.

Frequently asked questions

How do you start mediation in an employment dispute?

In the Labor Court the process is called conciliation (pishur) and is regulated by the Labor Court Regulations (Conciliation), 5753-1993. Under regulation 3(a), the court’s proposal to refer a civil matter to conciliation, in whole or in part, can be made at any stage of the proceedings, and the referral depends on the parties’ consent. The parties give notice of an agreed conciliator and submit a letter of consent from them; if they did not reach agreement, the court may appoint a conciliator, including two public representatives, one on behalf of the employees and one on behalf of the employers, or a labor relations officer under the Settlement of Labor Disputes Law, 5717-1957. You can also go to mediation before filing a claim.

Can what was said in mediation be used against me in the Labor Court?

Not in civil proceedings. Section 79C(d) of the Courts Law [Consolidated Version], 5744-1984 provides that things said within a mediation process will not be used as evidence in civil legal proceedings, and regulation 3(b) of the Conciliation Regulations requires the court to explain this to the parties in advance, and also that not agreeing to the referral to conciliation, or stopping it, will not affect the outcome of the proceedings. The conciliator is subject to a broad duty of confidentiality under regulation 5, and when they stop the process they inform the court without giving reasons and without expressing an opinion.

Is a mediation settlement in an employment dispute binding, and how is it enforced?

A conciliation settlement is put in writing, sets out all the terms for settling the dispute, is signed by the parties and is confirmed by the conciliator’s signature (regulation 9). Under regulation 9, if the parties asked for it to be given the force of a judgment, the conciliator attaches a copy to their notice, and the court may give it such force and may even summon the parties for explanations. A settlement that has been given the force of a judgment can be enforced through enforcement proceedings. In the courts, section 79C(g)–(h) allows this even when no claim was filed at all.

Do you have to go to mediation before suing in the Labor Court?

No. A MAHUT meeting (an information, introduction and coordination meeting) is mandatory in the civil courts under regulation 37 of the Civil Procedure Regulations, 5779-2018, in claims for more than NIS 40,000, except claims for bodily injury and road accidents. The Civil Procedure Regulations do not apply in the Labor Court, and the Labor Court Regulations (Rules of Procedure), 5752-1991 contain no provisions on mediation or MAHUT. So in a labor dispute the move to conciliation is made on the court’s proposal and with the parties’ consent, and anyone who wants it must ask for it.