Legal Updates

A salary that includes social rights negates the right to separate payment of such

September 16, 2018

Three employees provided services to a German communications corporation in Israel for many years against an invoice but due to cuts and after a hearing, ended their employment. After the employment was terminated, the employees claimed that employer-employee relations were established and demanded social benefits, travel expenses and other rights.

The Labor Court rejected the claim and held that in order to examine whether employer-employee relations exist, one must examine not only the manner of payment, but also other aspects, including the manner in which an employee integrated at the company. Here, the employees did a work that is part of the company's core activity in Israel and did not have an independent business. The totality of the facts, together with the fact that they worked from the company's offices and used their equipment for the purpose of carrying out their work, indicate the existence of employer-employee relations between the parties. However, the compensation paid to the employees was higher than the usual salary in the field in similar positions and also included social benefits, therefore the employees are not entitled to such rights beyond what they received.