Legal Updates

An employee can not consent to wage withholding and silence on the matter may not be construed as agreement

May 16, 2021

An employee demanded from an employer to pay compensation for withholding wages after resigning from his position due to the employer's custom of paying his salary late for the 3 years preceding the resignation.

The Labor Court held that the employee is entitled to compensation for withholding wages and that due to the fact that the employee's wages were consistently withheld for years the claim did not become mute even though 3 years elapsed from the date the employer began to withhold the wages. The purpose of wage withholding compensation is to protect and establish minimum norms of conduct between employee and employers, and the employee's entitlement to compensation in case of wage withholding is a protective provision of a non-dispositive nature. Therefore, even if an employee seems to have waived his right to payment on time and even if such waiver is done through inaction simply because he does not insist on the issue with the employer, he is still entitled to compensation for wage withholding. The statute of limitation for a wage withholding claim is one year but if the employer withholds the employee's wages at least three times in a period of 12 months, in the three years after the date of payment, then the statute of limitation for a claim will be 3 years. Despite all this, the Court may reduce the amount of compensation depending on the circumstances of the case. In order to determine the amount of compensation, it is necessary to balance the importance of the principle of payment of wages on time and deterring employers from withholding wages, and the financial sanction that may impose a disproportionate burden on the employer. Here, the employee is entitled to compensation for the withholding of wages because the withholding was consistent and for a long period, a fact that allows for the extension of the statute of limitation period, nevertheless the amount of compensation is to be substantially limited.