Direct Request (CEACR) - adopted 2011, published 101st ILC session (2012)

Labour Clauses (Public Contracts) Convention, 1949 (No. 94) - Israel (Ratification: 1953)

Article 2 of the Convention. Insertion of labour clauses in public contracts. The Committee notes the Government’s reference to the Public Bodies Transaction Law, 1976, the Mandatory Tenders Law, 1992, and the Mandatory Tenders Regulations, 1993, as being the legislation implementing the requirements of the Convention. The Committee therefore understands that the Treasury Order No. 109/62 of 20 August 1962 which previously gave effect to the Convention is no longer in effect.

Having reviewed the public procurement legislation, the Committee considers that it applies only partially the basic requirements of the Convention. The Committee recalls, in this regard, that under the terms of the Treasury Order No.109/62, every contract entered into by the State, the carrying out of which involved the employment of employees by the other party to the contract, and the subject of which was the production, assembly, handling, or transportation of materials, goods or equipment, or supply, or the rendering of a service, had to stipulate that the party to the contract should pay wages to the employees employed by it in carrying out the work, and should maintain conditions of employment, in accordance with the collective agreement applying to the other party to the contract, in respect of the employees employed as aforesaid or, in the absence of such collective agreement, in accordance with the collective agreement applying to the greatest number of employees in the State, in the industry in which the aforesaid employees were employed. In the Committee’s view, such provision satisfactorily complied with the Convention in that it covered all public contracts and ensured wage levels and working conditions not less favourable than those fixed for similar work in the same area by the trade union representing the greatest number of workers in the country in the respective branch.

In contrast, the Rules of the Accountant General for the protection of rights of workers employed by services contractors in the guarding, security and cleaning sectors, a copy of which was attached to the Government’s last report, is not comprehensive in scope and does not fully reflect the core requirement of Article 2 of the Convention. These Rules apply only to contracts for guarding, security and cleaning services, while section 4.5.1.1 requires the contractor to pay the employees any payment or entitlement due to them under any law, collective agreement or extension order that applies to them. The Committee is obliged to point out that the Convention applies to all public contracts involving the expenditure of funds by a public authority and the employment of workers by the other party to the contract, whether these are contracts for construction, manufacture of goods or supply of services. It also recalls that the Convention requires wages and working conditions to be aligned to the best local practice, which in practice means collectively agreed standards covering a substantial proportion of employers and workers, even though the specific collective agreement containing such standards may not be applicable to the workers in question.

In addition, the Committee notes that under section 4.4.1 of the Rules, the conduct of the bidder may be taken into account as a criterion in the selection process (e.g., the absence of a negative report from a Ministry with which the bidder has contracted during the three years preceding the submission with respect to compliance with labour legislation). It also notes that under section 4.2.2 of the Rules, bidders are requested to attach a pricing appendix and to sign a declaration specifying the minimum wage rate which will be paid to employees for an hour’s work on a normal working day. It further notes that Appendix C of the Rules contains a model statement that the contractor must sign declaring that he/she has regularly paid all employees a salary that is not lower than the minimum wage prescribed under the Minimum Wage Act 5747 of 1987.

The Committee observes that all these clauses also fall short of the requirements of Article 2 of the Convention, which requires bidders to be informed in advance, by means of standard labour clauses included in tender documents, that, if selected, they would have to observe in the performance of the contract wages and other labour conditions not less favourable than the highest minimum standards established locally by law, arbitration or collective bargaining. The Convention does not relate to some general eligibility criteria, or prequalification requirements, of individuals or enterprises bidding for public contracts, but requires a labour clause to be expressly included in the actual contract that is finally signed by the public authority and the selected contractor. Nor is certification sufficient as it offers some proof about tenderers’ past performance and law-abiding conduct but carries no binding commitment with regard to prospective operations as labour clauses do. Moreover, the essential purpose of the Convention is to ensure that workers employed under public contracts enjoy the same conditions as workers whose conditions of employment are fixed not only by national legislation but also by collective agreements or arbitration awards, in view of the fact that in many cases the provisions of the national legislation respecting wages, hours of work and other conditions of employment provide merely for minimum standards which may be exceeded by collective agreements. The Committee accordingly requests the Government to take all appropriate measures, legislative or others, to ensure that the core requirement of Article 2 of the Convention is fully implemented in all public procurement activities that are covered by this Convention.

Part V of the report form. Application in practice. The Committee notes the statistical information that the central Government has approximately 400 contractual arrangements with over 100 security, guarding and cleaning enterprises, the financial value of which is approximately ILS120 million (approximately US$33 million). The Committee requests the Government to provide all available information on the practical application of the Convention, including, for instance, statistical information on the number and nature of public contracts established by different public entities, samples of public contracts or standard contract forms, including the uniform versions of Tender Documents provided for in section 24(a)(4) of the Mandatory Tenders Regulations, 1993, extracts from reports of the inspection services showing the number and nature of any infringements observed and sanctions imposed, and copies of any official publications or studies on matters dealt with in the Convention, such as activity reports of the Industrial Cooperation Authority (ICA) which is the enforcement agency under the public procurement legislation.