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A ruling issued last weekend at the National Labor Court regulates for the first time the way in which brokers are employed in offices, the vast majority of whom are employed as independent brokers, and may cause an earthquake in the world of real estate brokerage. As a precedent, the court ruled that a broker who worked as a freelancer in a brokerage firm will be recognized retrospectively as an employee an employee of the company, after he stopped working for it, and will receive the derived social rights. Along with this, it should be noted, the court made a distinction between an independent broker and a common platform for independent brokers who cooperate with each other. In this case, then there will be no employment relationship between them.
At this stage, more It is not known how the market will react to the new ruling, which is the first of its kind by the National Court, but the lawyers in the field say that the ruling exposes employers in brokerage firms to future lawsuits.
The background to the precedent ruling
The procedure in question dealt with the claim of a 28-year-old real estate broker who worked for 16 months in a brokerage firm specializing in the Tel Aviv area. An agreement was made between the broker and the firm that the broker would receive 60%, including VAT, of the commissions received from his work. It was also agreed that if a judicial court determines that he is entitled to the rights of an employee, his conditions will be calculated according to the minimum wage in addition to other stipulated conditions.
In practice, during his employment he received a one-time commission in the amount of only NIS 10,000. After the contract with the firm ended, he claimed an employee-employer relationship, under which he is entitled to minimum wage and social rights. However, the company objected, and the regional court in Tel Aviv, before which the case arrived, determined that there was no employee-employer relationship.
The mediator filed an appeal to the national court, which overturned the ruling. The President of the National Court, Varda Wirt Livna, and Judges Sigal Davidov-Motola and Ilan Sofer, determined that there was no dispute that the broker played a core role in the office used for real estate brokerage. One of the tests that the court examines is the "integration test", which examines how well the employee has integrated into the workplace , and to what extent his work is an integral part of the business.
The court ruled that this test was met: the firm acted through agents on its behalf and the broker was defined as a buyer's agent. He worked in the field and in the firm, performed the work assigned to him, and his name was listed on the firm's website. The broker proved that he was required to update his direct manager on a regular basis, to act according to his instructions and to carry out any action related to the position. In addition, it is stipulated that the "supervision test" takes place, in which they examine whether the employee is subject to the employer's supervision, while an independent practitioner has more flexibility.
The meaning: even a part-time worker deserves social rights
The regional court, which initially rejected the claim as mentioned, determined that the broker did not work full-time, but part-time and at irregular hours. However, the national court later determined that even the part-time working hours do not affect the fact that the broker was integrated into the company. "A part-time employee is also an employee, and an employee who performs his work in a way that is not favorable in the opinion of his employer, or without achieving the goals set for him or through negligence or while committing disciplinary offenses - does not lose his status as an 'employee' because of this," the National Court stated.
The court attached a lot of weight to the fact that for 16 months the broker received almost no payment. "The contract that was signed does not predict everything, especially when it was drafted and prepared by the respondent. In addition, even if the appellant believed that he would be able to receive his salary with the help of commissions from transactions, or he preferred to say nothing and gain experience in his work as a young broker at the beginning of his career, this does not indicate the absence of relations employee-employer". The national court returned the case to the regional courts to clarify the financial rights arising from the employment relationship.
According to attorney Raanan Balls, who represented the realtor in the case: "The verdict overturned the determinations of the regional court and explicitly stated that a working relationship existed between a real estate broker and a real estate agency. The ruling of the higher court affects all the brokers employed in the economy in brokerage agencies as self-employed, who can claim to receive rights by virtue of the protective laws in labor law and to receive various rights given to an employee, such as:
pension
, vacation, recovery, illness, overtime pay, severance pay and more.
The national real estate brokers stated: "The bar will study the verdict together with the bar's legal advisor, Adv. Ilan Sharkon, in order to examine it and its implications for the real estate profession in Israel."
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