Employer Ordered to Pay $250,000 for Pension Error After 2 Months of Work

An Israeli employer has been ordered to pay a former employee 889,301 shekels (approximately $250,000 USD) due to a pension and insurance error that occurred during a two-month period of employment in 2016. The significant payout stems not from the actual pension contributions for the short work period, but from the loss of disability insurance coverage that resulted from the interruption of the employee's long-term insurance continuity.

The employee worked for Mimun D.D. Packaging and Chemical Services for approximately two months in 2016, holding a maintenance manager position. He had an existing, active pension fund with Menora Mivtachim, and his employment contract stipulated that he would be insured from his first month. While deductions for May and June 2016 were made from his salary, the funds were not deposited into his pension account. His employment ended in July 2016.

Years later, in October 2020, the employee's health deteriorated, and he lost his ability to work due to a joint condition. Menora Mivtachim denied his disability claim, ruling that his condition predated the renewal of his insurance. This was due to a five-year waiting period, or "qualifying period," that began when his insurance continuity was broken and he started contributing to a new fund with a subsequent employer. A pre-existing condition diagnosed within this five-year window is typically not covered.

The employer argued that the employee delayed pension arrangements, provided incomplete information, requested to cancel his insurance, and misrepresented his health status on his initial declaration. The court acknowledged the employee's false health declaration and criticized his conduct during the trial.

However, the court ruled that the employer was primarily responsible for the financial damage, citing a "direct causal link" between the company's actions and the loss of coverage. The court adopted the lower compensation figure calculated by the employer's actuary, 889,301 shekels, as a present-value lump sum payment. The employee's additional claim for 20,000 shekels for emotional distress was denied, as were court costs, partly due to his misrepresentation of his health.