An employer failed to wire the required deductions that were made from the employee’s salary to the designated pension fund. The employee contended, inter alia, that the controlling shareholder and manager of the company is to pay the lacking deductions and be personally liable for the damage caused to him.
The Labor Court partially accepted the employee's claims against his employer, but dismissed the claim against the controlling shareholder in the absence of exceptional conditions that justify it. In exceptional cases, a company debt can be attributed to its shareholder, by piercing the corporate veil. Failure to wire deductions that were taken of the employee's salary to their designated destination may be grounds for piercing the corporate veil, if this is done in the course of an illegal act designed to defraud the employee (such as: deceptive entry in the pay slip to cover the tracks). Here, funds were deducted from the employee's salary and were not wired to their designated destination due to a technical malfunction that was apparently due to the negligence of several factors in the company. This is not a case where an employer putting its hand in the employee's pocket intently in order to steal its money nor was there any attempt to cover tracks. Therefore, there is no place to pierce the corporate veil or to hold the controlling shareholder personally liable. However, some other employee claims against the employer regarding the completion of severance pay, compensation for the lack of a hearing and prior notice, were accepted.