Labor LawWhat Every Employer and Employee Must Know Before Matters Reach the Labor Court

1. An employee’s resignation caused by a material deterioration in working conditions – such as a significant change in position, salary, or work environment – may be deemed constructive dismissal and entitle the employee to full severance pay.
2. Dismissal of a pregnant employee is almost always prohibited, even when the employer was unaware of the pregnancy at the time the decision was made.
3. Sending an email attributing a disciplinary offense to an employee – even if its content is accurate – may constitute defamation and expose the employer to a lawsuit.
4. Installing surveillance cameras near an employee’s workstation without their explicit consent may be deemed a material deterioration in employment conditions – even if the reason for their installation is entirely legitimate.
5. The Labor Court has jurisdiction to award compensation for non-economic damages as well – mental anguish, humiliation, injury to dignity.

Why Labor Law Is a Minefield Even for Well-Intentioned Employers

Most labor law disputes do not stem from ill intent. They stem from lack of knowledge. Employers who dismiss an employee without a hearing, who change a position without consent, who criticize publicly – do not always know they are crossing a legal line. And employees who endured months of deteriorating conditions and ultimately resigned because they could no longer continue – do not always know they are entitled to full severance pay.

Understanding the rules is not merely important – it saves both parties money, time, and protracted litigation.

Dismissal – What Is Permitted and What Is Prohibited

The Severance Pay Law, 5723-1963, requires an employer to pay severance to an employee dismissed after one year of employment, at the rate of one month’s salary for each year of service. However, the obligation to pay severance is not the only issue.

Before any dismissal – even when the cause is clear – the employer must conduct a hearing. Not a perfunctory formality. A genuine hearing in which the employee receives the allegations against them in advance, understands that dismissal is being considered, and is given a real opportunity to respond. A defective hearing – even if the dismissal itself is justified – may result in an award of compensation. Dismissal without any hearing will almost always result in liability.

In a case represented by our firm (LC 5060-02-11, Tabakman et al. v. Or City Real Estate Ltd. et al.), the Labor Court held that the duty to conduct a hearing requires an orderly procedure in which the employee is invited, hears the allegations against them, and can respond to them. Expressing dissatisfaction with the employee – even in repeated meetings – is not a substitute for a proper hearing. The court awarded the employees substantial compensation.

Dismissal during pregnancy is a matter unto itself. In NLC (National) 363/07, Sharona Arbiv v. Poamix Ltd., the National Labor Court held that dismissal of a pregnant employee constitutes prohibited discrimination. The Women’s Employment Law, 5714-1954, prohibits dismissal of an employee during pregnancy and maternity leave, and requires obtaining special authorization from the state as a condition for dismissal under such circumstances – authorization granted only in exceptional cases.

Resignation That Is in Fact Dismissal

Section 11(a) of the Severance Pay Law provides that an employee who resigned due to a material deterioration in working conditions, or under circumstances in which they cannot reasonably be expected to continue working, is entitled to severance pay as if dismissed. This is a mechanism many employers are unfamiliar with – but employees who bring it before the Labor Court often emerge with full compensation.

Material deterioration may include a change in position, reduction in salary, change in hours, transfer to another branch, change in working conditions – and also, as recently determined, installation of surveillance cameras near a workstation without the employee’s consent.

Recent Ruling Every Employer Must Know: Cameras in the Workplace

The National Labor Court – the highest tribunal in the field – issued a guiding precedent on March 26, 2025, in NLC 41179-01-24, Dr. Mark Friedman Ltd. v. Roytal Elkner: installation of surveillance cameras in proximity to an employee’s workstation, without their explicit consent, constitutes a material deterioration in employment conditions – even when the employer installed them for an entirely legitimate reason.

The circumstances of the case: an employer in the field of intellectual property installed cameras throughout the office, inter alia to prevent and document sexual harassment. An employee with 18 years of seniority objected to filming her workstation, demanded removal of the camera, was refused – and resigned. The Labor Court recognized her resignation as constructive dismissal and ordered the employer to pay severance.

The judgment established a three-stage test: first, examination of the legitimacy of the purpose; second, the degree of invasion of privacy; third, balancing the invasion against the consent given. The greater the invasion of privacy, the more explicit and informed the required consent from the employee. At the extreme – installation of cameras in restrooms – even explicit consent will not remedy the invasion.

The practical implication: any employer installing cameras in work environments adjacent to employees must obtain explicit consent and document it, assess proportionality, and act with complete transparency.

When the Employer Says Too Much About the Employee

Employers do not always understand that the manner in which they explain to other employees why their colleague was dismissed can expose them to legal liability. Sending an email attributing “serious disciplinary offenses” to an employee by their full name – even if the accusation is accurate – may constitute defamation. Case law has established that personal publication naming an employee, as distinct from a principled explanation of company policy, may give rise to the tort of defamation – and expose the employer to a lawsuit even for publications intended for a legitimate purpose.

Similarly, in CA 54840-10-23, Varoloker v. Sela, it was held that a former employer who posted about a former employee in a WhatsApp group was ordered to pay her NIS 30,000 in compensation for defamation. The writing does not stop on the day of dismissal.

The reverse also occurs: an employer who files a defamation suit against an employee who expressed legitimate criticism may discover the move costs them dearly. In a case represented by our firm (LC 5060-02-11, Tabakman et al. v. Or City Real Estate Ltd. et al.), a real estate company filed a defamation suit for NIS 2.55 million days after an employee rights claim was filed against it. The Labor Court held that the criticism expressed by the employees was legitimate expression of opinion, dismissed the suit – and awarded NIS 250,000 in costs to denounce the use of legal proceedings as a tool to silence employees.

What to Do When There Is a Problem

An employer who comes to the Labor Court with documentation – hearing protocols, written consents, warning letters – is in an incomparably better position than an employer who relied on oral understandings. And an employee who documents material deterioration, preserves all relevant correspondence, and seeks legal advice before resigning – not after – significantly increases their prospects.

Employers who wish to ensure they are acting properly, and employees who feel they have been wronged – should examine the situation before a cause of action crystallizes one way or the other.

© Tidhar Tzur Law Firm | This article is for general information purposes only and does not constitute individual legal advice.