An employee who was employed as a salesman and whose salary consisted of a base salary and a "bonus" component resigned due to worsening conditions, as the employer contributed to a pension fund only from the base salary.
The Labor Court accepted the claim and held that a 'bonus' which is a part of the salary is subject to pension contributions and a breach of the employee's pension rights justifies resignation in circumstances that entitle the employee to severance pay. In general, a bonus that its payment is contingent upon the fulfillment of specific conditions is not a pensionable income. Resignation due to a tangible deterioration in working conditions or due to circumstances due to which the employee is unable to continue working is entitled to severance pay. Here, according to the employment agreement, the employee was compensated for every investment made in a fixed amount that was paid to him "from the first payment". In addition, the amount paid to the employee exceeded the basic salary paid to the employee by hundreds of percents. Therefore, in the absence of any contingency or condition for the payment of the bonus, it is a salary for all intents and purposes and the employer should have contributed for it to a pension fund. Prior to the employee's resignation the employer was required to make a retroactive deposit in relation to the employee's full salary, but it did not do so. Therefore, the employee was entitled to resign and should be considered as a dismissed employee who is entitled, inter alia, to severance pay and compensation for non-contribution to the pension fund.