There is a franchisee, there is a chain - are they the same entity? (Photo: ShutterStock)
An interesting and highly influential ruling received in recent days at the National Court discusses the question of whether a chain and a franchise jointly employ workers, or whether they are two different legal entities.
The legal process began in 2014, with a lawsuit filed by a Thai citizen who was employed as a chef, against his former employers - a restaurant chain, one of the chain's franchisees, and against the chain's and franchisee's managers and shareholders, who will be represented by attorney Amit Gross, founding partner and department manager Labor law at the Doron, Tykotsky, Kantor, Gutman, Ness, Amit Gross & Co. attorney office.
As part of the lawsuit, the employee demanded rights due to the employment relationship, including overtime pay and weekly rest pay, wage differentials, vacation pay and payment of recovery pay, holiday pay, pension payment, payment of severance pay and advance notice.
In addition, the plaintiff made claims regarding the fictitiousness of his payslips and even accused his employers of stealing money from him.
The plaintiff further claimed that the restaurant chain and the franchisee are joint employers of the plaintiff and therefore both are responsible for paying his rights - jointly and separately.
The case went through several courts, the first of which was the Regional Labor Court, where Judge Tomer Silura rejected the claim and the allegations made.
The plaintiff appealed the decision to the National Labor Court - and it returned the case to the Regional Labor Court before Judge Dori Spivak.
Judge Spivak also rejected most of the claims, but contrary to the previous ruling - obliged the restaurant chain and the franchisee to pay several wage components, including overtime pay.
Following this, the chain and the franchisee appealed to the National Labor Court, which essentially accepted the appeal and determined that the restaurant chain and the franchise branch are not joint employers.
Also, the national court overturned the regional court's determination of the overtime compensation component.
The lawsuit was rejected, and as a result the employee, who sued his former employers for the amount of NIS 2.3 million, was required to pay about NIS 7,000 in legal costs.
A ruling that will significantly ease the burden on the courts.
Attorney Amit Gross (Photo: Sigal Saban)
Attorney Gross explains: "This is a statement that has enormous significance for the Israeli economy, the labor market and the restaurant industry in Israel.
The court actually sharpened the boundaries between franchisees and the chain, and the responsibility that each of them bears towards employees.
If until now, many employees who wanted to do so did not hesitate to sue both the franchisee that employed them and the chain, which usually has significantly greater economic power than the franchisee's, which led to the fact that the chains in some cases were required to meet the franchisor's obligations, from now on - many employees will think twice if They should also sue the network.
This decision is also expected to reduce the existing burden on the labor courts.
In practice, this is an employee who sued the chain, the franchisee and the shareholders of the franchise company in the amount of NIS 2.3 million, and paid NIS 50,000 in expenses out of his own pocket on the compensation account, plus NIS 7,000 in attorneys' fees for the other side.
This is a ruling of the national court that made it very clear what the correct conduct of an employer is."
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