ISRAEL Law and Practice Contributed by: Barak Platt, Micki Shapira, Liron Hacohen and Nataly Margalit, Arnon, Tadmor-Levy
local employees) or by exercising decisive influ - ence over the commercial decisions of a local agent, representative or distributor. A “merger of companies” which meets the nexus requirement is reportable if any of the following thresh - olds are met: • the combined local turnover of the merging par - ties, along with the individual local turnover of at least two of the merging parties in Israel, exceeds certain thresholds (currently, ILS423,780,000 for the combined turnover and ILS23,040,000 for each party); • a party to the merger transaction is a monopoly, defined as an entity that holds a market share exceeding 50% in any defined market in Israel, including any segment or geographical area in which the parties operate in Israel. This threshold can also be triggered by markets unrelated to the transaction; or • as a result of the merger transaction, the combined market share of the parties will exceed 50% at any level of the supply chain of any relevant market in Israel, including any segment or geographical area in which the parties operate. The nexus and filing requirements are assessed on a group level, meaning that they encompass all entities that are either controlling or controlled by the merg - ing party, as well as any entities under the control of the ultimate controlling entity, whether directly or indi - rectly. Control is defined as holding more than 50%. 2.5 Labour Law Regulations The Work and Rest Hours Law, 1951, which applies to employees in Israel (unless a specific exemption applies), requires overtime payments if an employee exceeds daily and weekly hour limits. Additionally, Israeli law requires Israeli employers to monitor and record attendance as well as working hours and overtime of employees. Failure to record work hours properly may expose the company to claims by employees that the actual overtime per - formed by the employees exceeds the number of hours covered by the global overtime compensation. Companies at times do not treat certain components
of compensation as salary (notably commissions) cor - rectly, as required for the purposes of severance pay obligations. As a general rule, Israeli law requires employers to pay severance pay to their employees upon termination of employment by the employer. The amount of sever - ance pay is equal to one month of the current base salary, multiplied by the number of years of employ - ment. Under Section 14 of the Severance Pay Law, 1963 (Section 14), and a general permit issued by the Min - ister of Industry, Trade and Labour, an employer and employee may agree to limit the employer’s liability for severance pay to those amounts accrued in a sever - ance pay insurance policy, provided that certain pre- conditions are met. The employer must undertake to release the accruals upon cessation of employment in all but the most extreme “for cause” termination situ - ations, including upon resignation of the employee. In addition, the insurance policy must meet certain criteria, including: • with respect to disbursements of pension/provi - dent and disability insurance; • the employment agreement must explicitly specify that the parties have entered into the arrangement; and • both employer and employee deposits must be made in line with the percentages set out in Sec - tion 14. 2.6 National Security Review The Advisory Committee for Evaluating National Secu - rity Aspects of Foreign Investments (the “Advisory Committee”) was formed in 2019 to examine foreign investments from a national security perspective, in a centralised way. It began its work in 2020, establishing a mechanism to handle regulator queries concerning transactions that may give rise to national security considerations. This ensures more encompassing and effective scrutiny of national security concerns across those sectors that the government views as critical to the economy and national security.
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