Employer Must Pay $240,000 to Employee for Pension Fund Negligence

A labor court in Be'er Sheva has ordered an employer to pay NIS 890,000 (approximately $240,000) to an employee who became disabled four years after a brief 52-day period of employment. The employer, "Mimon David Packaging and Chemical Services," failed to transfer pension contributions to the employee's fund during his short tenure, severing his continuous pension coverage and rendering him ineligible for disability benefits.

The court ruled that the employer's failure to remit the funds constituted an administrative lapse. The employee had been insured with Menora Mivtachim Pension Fund since 2001. He began working for the company in May 2016 as a maintenance manager and was employed for only 52 days, from May until mid-July. Although the employer deducted pension contributions from his June salary, these funds were never transferred to the pension provider.

Following the interruption in contributions, the pension fund treated the employee as a new member. Four years later, when the employee lost his ability to work, his claim for disability pension was denied because the fund considered his condition a pre-existing illness, and he had not met the required 60-month waiting period for new members.

The employer argued that the employee had not cooperated, provided false health declarations, and had not specified his preferred pension fund. They also claimed they were not legally obligated to insure him due to his short employment period, less than three months, and that the employee had contractually waived this right. However, the court found that the employee's actions on the intake form did not constitute a waiver and that the employer was aware of his active pension fund. The court emphasized that under the mandatory pension order, employees are entitled to pension contributions from their first day of work, with retroactive payments possible.

The court rejected the employer's claims of shared responsibility and stated that the employee's loss of disability pension rights was a direct result of the employer's failure to transfer the deducted funds. The employee's lawyer hailed the ruling as a significant message to employers about the non-waivable nature of pension obligations, even for short employment periods. The employer's lawyer called the decision "outrageous and unreasonable," stating they intend to appeal to the National Labor Court.