Legal Updates

Demand of an employer to register an employee as an employee and not a contractor is not grounds for resignation

June 25, 2018

A private investigator was employed at his request as a "service provider" although in practice he was an "employee" of an investigation firm in which he worked. When the employer sought to change his classification to an employee, in accordance with the actual relations between the parties, the investigator resigned from his position and demanded, inter alia, severance pay due to the worsening of his terms of employment.

The National Labor Court rejected the claim and held that the manner in which the employee is represented in an employment agreement cannot change the actual existence of employer-employee relations between the parties, because this is an “eye-wash” contract to be annulled. The employee's good faith will be examined when the remedies are discussed although it will not be used as a threshold for the entitlement to his rights as an employee.  When the employer sought to correct the distortion that was created and to classify the employee in accordance with the actual relations between the parties and the employee refused to cooperate and sign such an agreement, while the employee seeks to benefit from both worlds - both as a "service provider" and as “employee” - this is not a deterioration of the terms of the employment in a manner that justifies severance pay and it is not a matter of dismissal, but of the employee's resignation.