Legal Updates

An employer may deny severance pay and notice fees from an employee who committed particularly serious offenses

October 12, 2023

An employer is demanded reimbursement from an employee who was found to be stealing from it and embezzling, and also sought to deny his right to severance pay and prior notice payment.

The Labor Court accepted the motion and held that in the event of a serious breach of fiduciary duty, an employee can be ordered to reimburse the employer and his right to severance pay and early notice payment can be forfeited. A contention of theft from an employer is one of the most serious contention that an employer can raise against an employee, and therefore, in terms of the relationship between employee and employer, the employer is required to show that this is the only reasonable conclusion which can be deducted from the circumstances. When two reasonable conclusions may be drawn, the one that is to the benefit of the employee will be chosen. Similarly, in order to deny the employee severance pay and prior notice payment, the employer must show a high degree of severity of the acts by striking a balance between the gravity of the acts, including the damage to the employer, the frequency of the acts, the period of work, etc., and the personal circumstances of the employee. Here, the employee served in a position that requires a high degree of trust and carried out his actions over many years, while causing significant damage to the company, and his actions are not ambiguous in a manner that may be attributed to his benefit. Therefore, the employer is entitled to reimbursement of the funds stolen by the employee and may forfeit the employee’s right to most his severance pay.