The employment of a restaurant employee was terminated, where during the employment pension deposits were duly made, the employee was not notified of the terms of employment and he did not duly receive a notice of termination. About a year later, after entry into liquidation proceedings of the company that managed the restaurant, the employee demanded payment from both the company and its shareholders.
The Labor Court held that the company must compensate the employee, including for failure to give notice of the terms of employment, but there is not personal liability of the shareholder. A pay slip is an apparent evidence of the correctness of the data specified therein, including regarding the salary but when a pay slip is not properly written or the employee is not duly given a notice of the terms of employment, the burden passes to the employer to show that the pay slip is correct. Here, the employee himself used the pay slips for an application to the Social Security Authority and therefore may not raise contentions that the slip is incorrect. However, because no social rights payment were made, the company must compensate the employee for this as well as pay compensation of ILS 3,000 for not giving notice of the terms of employment as required under law. In principle, there is no personal liability of shareholders for corporate debts and the corporate veil may be pierced, and company debts may be attributed to its shareholders, only in rare cases. Business failure is not by itself a cause for piercing the corporate veil, but when it comes to employer-employee relationships, there is a wider tendency to do pierce the veil, including when deductions from the salary were not transferred to provident funds. Here, there is no place for piercing the corporate veil as the non-payment of social rights was not accompanied by a failing management and usurping the corporate veil and the claim was filed only after one year and only after the company collapsed.
Published in Afik News 303 26.02.2020