An employee of a wholly owned subsidiary of a public company may not demand the public company to pay his salary

A CFO of a private company handled the process of listing it on the stock exchange, and when the procedure failed, the process of a reverse merger into a public shell. It was agreed that he would start working as an external service provider to the company and would receive significantly higher fees and options in the company. The public company reported that the CFO was working in its wholly owned subsidiary and shortly thereafter the CFO was given a hearing and his work at was terminated. The wholly owned subsidiary entered into liquidation and therefore the CFO demanded payment from the public mother company.
The Labor Court rejected the employee’s claim. Even if the public company holds all shares of the subsidiary, it is still an independent legal entity and an employee of one company in a cluster of companies is not deemed to work for the others, unless the employee is transferred from one company to another without the employee’s consent in order to avoid paying the employee. Because the CFO contracted the subsidiary and was aware of the identity of the employee, he may not demand his salary from the parent public company.