An investor wished to invest in Israel in a concrete factory and used an Israeli middleman, a company was registered and funds were transferred. At some stage, due to differences, the investor took over the company and discovered that hundreds of thousands were paid to the daughter of the middleman via an employment agreement signed upon execution of the company. The company claimed such funds from the “employee.”
The Labor Court held that the existence of an employment agreement does not by itself create employer-employee relationship – a legal and factual question. Indeed, an employment agreement was signed but the “employee” did not tender herself to the company and actually worked full time at a different place. Thus, the “employee” was ordered to repay the funds received by her.