This system of employment is common to many of the companies and nonprofit organizations that provide care under the auspices of the National Insurance Institute (NII) to the approximately 115,000 senior citizens who are eligible to receive it under the Nursing Law. This phenomenon is also one of the thorniest problems in the bitter, protracted battle between the national insurance establishment and service providers. The current chapter in this conflict will be played out in the Jerusalem District Court tomorrow.

In the 17 years since the Nursing Law went into effect, providers have been operating without a tender despite the fact that they now receive NIS 2.5 billion per year from NII. The NII issued no less than five tenders in the last decade to regulate the services of these providers. However, the four previous tenders were canceled in response to determined opposition from about 120 service providers.

"We hope that the court will not agree to be used in this game of endless rejections, which robs the public coffers while the workers get poorer and the companies get richer," says attorney Yuval Elbashan, founder and director of the legal clinic at the Hebrew University of Jeruaslem. Elbashan intends to ask the court if he can join the list of appellants representing the interests of the public, the workers and the seniors.

The companies and nonprofit organizations claim that the conditions of the tender will bring financial ruin upon them and destruction of the quality services that they provide. They are backing their claims with the help of expert witness provided by two well-known accountants, once-general director of the Prime Minister's Office Moshe Lion and Alex Hillman. Yossi Kutchik, who also served as general director of the Prime Minister's Office and now heads the Manpower Group, a major provider of nursing services, also supports these claims. The NII, on the other hand, claims that the enormous sums of public money paid to a growing number of service-providing companies in recent years has not reached the 74,000 poverty-stricken caregivers who are entitled to compensation according to the law.

Revolving door

The tender does not call for competition based on price, but according to the quality of services, the experience of the caretakers, the number of employees and the stability of their jobs, geographic distribution and other aspects of care. The cost of services is outlined by a price-setting committee in the welfare offices of the Finance Ministry, which decides how much money caregivers receive per hour for their services. The fee is now set at NIS 38.44. Providers are obligated to use this amount to pay the caregivers NIS 18.65 to cover their basic wages (4 percent over minimum wage), plus rest and relaxation costs, travel expenses, annual vacation, holidays and sick days, as well as contributions to pension and unemployment compensation funds. The fee also includes a budget for training caregivers, administrative expenses of the providers and their profits.

Presently, the fee being paid is about NIS 2 higher per hour - and the companies are not required to contribute to pension funds. To win the tender, companies will have to contribute to the pension fund and also to a personal compensation fund opened in the name of each caregiver during the first month of his employment. The caregiver will be able to receive this money even if he or she is not fired, and even if he or she leaves the company after a month.

The companies claim that these demands are unreasonable, and go far beyond what the law requires. Moreover, they claim that this system will create a revolving-door effect by which thousands of caregivers will enter the system in order to receive compensation funds, and will then leave to the detriment of their clients.

But the NII explains that such demands are necessary, due to a system of employment which causes caregivers to lose their source of income for weeks or months, and forces them to frequently seek new employment. The result of these circumstances is the same whether they are caused by companies that "burn out" caregivers to encourage them to leave, or by the changing needs of seniors who may cease to require a caregiver. The NII also claims that the real reason that service providers doggedly oppose paying these compensation fees is that they now use the funds that they receive for this purpose from the NII to increase their profits.

In response to appeals to cancel previous tenders, the High Court decided that workers were entitled to receive compensation only after 12 months of employment. The NII interpreted this judgment to mean that a worker is entitled to receive compensation from the beginning of his employment, but that if he leaves before the end of a year, he would only receive compensation upon his retirement. If he is fired, according to the NII, he should receive compensation immediately.

In the current legal appeal, presented by attorney Dan Friedman of the Hayim Tzadok legal firm, on behalf of the 15 major providers of nursing care, Friedman mainly argued against the "pretensions of the NII, which is meddling in the employment conditions of workers and forcing those seeking employment to work under certain conditions that directly conflict with the High Court's decision in this matter, and go far beyond the requirements set by the judicial system and labor law."

The NII, for its part, claims that these conditions influence both the well-being of elderly patients and the welfare of their caretakers. Therefore, as the institution charged by law to protect the social welfare of the citizens, the NII claims that it has a right and, in fact, an obligation to determine employment conditions.

Unfair conditions

In response to the providers' claims that the fee permits only minimal profit, the NII claims that the providers profit at every opportunity. For example, providers receive complete compensation for the travel expenses of caregivers, but because some of the caregivers are over 60 years old and entitled to a savings of 50 percent on public transportation, providers often pocket half of what they receive. Providers receive total compensation for sick days in accordance with labor laws, but many employees do not take advantage of all of their sick leave. The companies are supposed to train 30 percent of their caretakers, and the fees to cover this are based on the assumption that there is a 90-percent turnover of caretakers each year. But the actual turnover is often less, and the budgeted fees to cover this also provide companies with a marginal profit, according to the NII.

A survey conducted by NII last year revealed that none of the companies compensated their employees for the total number of holidays that they were entitled to by law, although the providers received the entire sum from the institution. Companies also saved money on compensation for rest and relaxation expenses, because so many of the caretakers did not complete a year of employment and were not eligible to receive this payment.

The assistant to the NII's legal council, Ya'akov Sassporta, estimates that providers save about NIS 80-90 million per year only on severance pay because they pay about 25 percent of the amount that they receive. The extended legal proceedings connected to the realization of the tender also earn the providers millions of shekels, according to Sassporta, and they are therefore likely to appeal again.

The providers, on the other hand, claim that they pay their workers even more than the law requires. Senior employees, for example, receive more than NIS 18.65 per hour. Social workers and professional nurses who oversee caregivers receive salary in excess of the set fee, which sometimes cause companies to pay for services not covered by the NII. Providers also claim that the NII takes advantage of its position as the nearly sole consumer of these nursing services to dictate unfair conditions to providers who rely on the NII to exist.

The companies exerted intense pressure on the previous director of the insurance institution, Prof. Yochanan Shtessman, to cancel or amend the tender, and in recent months they attempted to persuade current director-general Dr. Yigal Ben Shalom to agree to an arbitration in this matter. He rejected this proposal.

"Arbitration is an unethical process in this case, and represents the loss of shame and greed of the companies," Elbashan says. "The companies are actually demanding arbitration in regard to the basic rights of the third party, the workers, and regarding the money that the nation wants the workers to receive. Anyone who thinks there is not enough profit in the tender, should not apply. No one is forcing them to lose money."

Yona Adir, owner of the Danel human resources company, says that the providers would be happy to contribute to the caregivers' retirement fund, and that some provide them with employment insurance. But many caregivers do not want to pay 5 percent to a retirement fund because their salary is already low - about NIS 800-1,000 per month - as they only work an average of 40 hours per month. Their part-time status results in many cases from requests of caregivers to work only during the morning hours which limits, in many cases, the number of elderly patients that they can serve.

According to Ya'akov Sadan, chairman of the Nursing Service Providers Organization and owner of the Matan Chen company, 70 percent of the caregivers work between a quarter to a third of a full week of employment. Employers are interested in increasing these hours of employment and encouraging seniority to stabilize the branch. That is why he included a proposal that caregivers be employed half-time or more, and receive full retirement benefits after a year and a half of employment in the arbitration document that he presented to the NII. However, Sadan also admits that the caretakers' hours are limited by the demands of elderly clients and their families that they work only during the morning. The NII says it receives numerous complaints from families about caregivers that arrive at inconvenient hours.

Sadan warns that the fee scale outlined by the NII will hurt not only seniors - but the workers that the NII is striving to assist. "There is a high level of [consumer] satisfaction with our services," he says. "But if the tender is not amended, all kinds of fly-by-night opportunist, who agree to work for the low tariff, will employ the workers to avoid losing money, and ruin the Nursing Law, which is one of our most important laws."