Forgot to check that your employer duly paid you? Too bad, so sad

Forgot to check that your employer duly paid you? Too bad, so sad

June 2, 2021

An employer pays his employee's wages at varying times: once by the 10th, but sometimes also on the 15th, or the 20th. On the first few times the employee is not "excited", but after the fifth time, he "wakes up" and seeks to file a claim for holding back wages. But, then, it may be too late ...

The Wage Protection Act is one of the Israeli protective labor laws, intended to anchor (and protect) the basic rights of employees by imposing a legal obligation on the employer, which cannot be conditioned nor waived. Part of the obligations of an employer are to pay the salaries and the social benefits on time.

In addition, the law stipulates a compensation by way of an extremely high interest rate in the event of non-payment of wages on time (holding back wages) or for late payment of allocations to the pension fund. It is also important to note that the Labor Court has discretion to reduce the compensation and even annul it, for example due to circumstances beyond the employer's control. Of course, the burden of showing the existence of such circumstances is on the employers. This ostensibly creates a balance between deterring employers from non-compliance with the labor protective laws and imposing a disproportionate burden that may result from insisting on the interest rate set by the legislature to make employers pay wages on time. In practice, the Courts thus encourage non-compliance with the law by employers.

Moreover, and although the basic obligation to pay wages on time rests with the employer, the law also seeks to deter employees from “sitting on the bench” and aspires to prevent a situation where an employer is punished after a few years due to a single delay in payment, and thus stipulates that the statute of limitation for the right to claim the punitory interest is one year. However, in the case where the employer has withheld the employee's salary three times in a period of a year, the limitation period is increased to three years. An exception to the exception is a situation in which the employee is not paid at all: Then we are again in a situation where the increased responsibility is on the employee to ensure that the salary is paid on time.

Thus, for example, in a case decided by the Haifa Regional Labor Court in May 2021, which concerned a lawyer who resigned, inter alia, due to holding back of wages, it was held that the employee was entitled to resign, and be deemed dismissed, due to the holding back of wages and that the lawyer, who was employed for 16 years had a claim for punitory interest on salaries of the past three years because his salary in each and every one of the months in the last three years has been held back. The employee received punitory interest of ILS 15,000.

Thus, the timing of filing a claim for holding back wages is critical and for that reason it is very important to consult a lawyer with experience in the field of labor law who will know how to formulate the claim, including the dates of holding back wages, in the most accurate manner.