Legal Updates

Non transfer of social deductions of employees is ground for piercing the corporate veil

April 12, 2017
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Published in Afik News 229 25.04.2017

An employee filed a claim for non-payment of various social rights to which she entitled to for the period of her employment and moved the Court to pierce the corporate veil and obligate the sole shareholder (who was also the sole director) for the company’s debts.

The Court held that a company is a separate legal entity however in case where social benefits were deducted from the employee but were not transferred to the relevant pension fund and the company cannot now pay such amounts due to financial distress or insolvency, the Court may pierce the corporate veil and impose company’s debts on the shareholder. Thus, the Court found the sole shareholder and director personally liable.

 

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