Legal Updates

Engagement of an employer with a single shareholder company held by an employee does not by itself prevent employer-employee relationship

September 12, 2020

An employee of a financing company founded a company that deals with project financing and supplied services to the employer and then resigned. The employer contended, inter alia, that the employee is not entitle to receive commissions for an unfinished project due to his resignation.
The Court dismissed the employer's claims in full and held that the employee’s freedom of occupation may not be restricted and the commissions should not be forfeited just because the project has not yet finished upon termination because the agreement does not set so. The fact that the engagement between the employer and employee was with a management company that is wholly owned by the employee does not set clearly that there is no employer-employee relationship. Freedom of occupation is a basic constitutional right of the employee. Here, the employee did not set up a competing business on his own but used a business opportunity and experience earned while contracting with the owners of the company that employed him in an independent agreement for the purpose of developing another financing channel in a different method and through a new company established for that purpose. Also, the commission annex signed by the employee did not stipulate a pre-requisite of completion of the project as a condition for receipt of commission and therefore the employee is entitled to the commission in full despite his resignation and despite the fact that he did not work on the project until its consummation.