Worker Forced to Choose Between Layoff or Unpaid Leave Entitled to Severance
An Israeli labor court has ruled that an employee who resigns after being forced to choose between unpaid leave or termination is considered to have been laid off, and is therefore entitled to severance pay. The ruling, issued by Judge Kamel Abu-Kaoud of the Regional Labor Court in Tel Aviv, establishes that such a situation constitutes a "material deterioration" of employment conditions.
The case involved Ron Saig, a sales employee for optics and lens company S.T. International (Nametov) from 2014 to 2020. Due to the COVID-19 pandemic, the company placed Saig on unpaid leave in March 2020. By May 2020, with no economic viability for even part-time work, the company offered employees a choice: continue on unpaid leave indefinitely or terminate their employment. The company stated, "As of today, there is no possibility of returning to work, not even part-time, at least until the end of June. We all hope the government will act logically and extend the unpaid leave period universally through June. However, if not, the options available to us are: 1. Unpaid leave until a certain return to routine. 2. Termination as detailed below."
Saig chose termination. While Judge Abu-Kaoud rejected Saig's claim that the company's termination process was flawed, he determined that the circumstances amounted to a constructive dismissal. The judge stated that demanding an employee remain on unpaid leave without pay for an unknown period, without the employer offering even partial return to work, constitutes a material deterioration of working conditions. This is especially true when the employee does not agree to the continued unpaid leave. The court found a causal link between the deterioration and Saig's resignation, as his notice was sent the same day in direct response to the company's ultimatum.
Abu-Kaoud partially accepted Saig's claim, awarding him NIS 280,000 out of the NIS 870,000 he sought. The judge ruled Saig was entitled to overtime pay, rejecting the company's argument that he was a senior employee exempt from rest and work hour regulations. However, the judge criticized Saig's handling of the legal proceedings, citing excessive evidence submission and evasive testimony, and therefore did not award Saig legal costs.
