Legal Updates

A long-term engagement by itself does not make the contractor an employee

January 28, 2022

A person provided gas infrastructure installation services to a company for about 30 years, including through a company he held but upon termination of the services by the company contended to have been entitled to social rights as he actually served as a company employee and not a self-employed contractor.

The Labor Court held that no employee-employer relationship existed between the parties and the gas infrastructure installer acted as an independent contractor. An employee who contends that there is an employee-employer relationship and not a freelancer or self-employed status must show, among other things, that he integrated with the employer's organization and, in doing so, it will be examined, among other things, whether that employee was supervised, how he integrated in the organization, how he was presented, what undertakings exist in the agreements between the parties, how the employee saw himself, did he operate in his own independent framework, etc. Here, the contractor served for decades as the company's sole service provider in the Jerusalem area. The contractor was not obligated to take any project and was free to decline if the offer was not profitable for him and he acted as an independent contractor, as he employed his own employees and was solely responsible for their employment, including payment of wages and reporting them to the tax authorities. Also the contractor purchased tools and vehicles for the various projects to work and even provided services to other clients on a monthly basis. Therefore, there was no employer-employee relationship, despite the long period in which he provided the services and his claim was denied in full.