Legal Updates

A shareholder in a group of companies will not be liable for debts to employees of a group company in which it holds no shares

June 1, 2018
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An employee who worked in a studio contended that she did not receive her rights and demanded payment from a teacher in the studio, who she contended to be the driving force behind the group of companies that alternatively operate the studio, and is a major shareholder in the group.

The Labor Court rejected the claim against the teacher and held that, in the absence of grounds for piercing the corporate veil, even if there is a moral expectation, there is no ground under law to obligate a material shareholder in a group of companies to pay debts to employees of companies that comprise the group.  The employee did not show that the teacher was a shareholder in the company that owed her the salary debt or any other ground for piercing the corporate veil.