Israeli Restaurant Owners Personally Liable for Worker's Back Pay

Seven owners of the "Joyah" restaurant chain will personally pay 85,000 shekels to an Ethiopian migrant worker, Yohannes Okbancayle, who was employed at the chain's Ramat Hachayal branch in Tel Aviv. The Supreme Court, in a final decision by Justice Yechiel Katcher, rejected the owners' appeal against a ruling by the National Labor Court. The central controlling owner, Itzik Ankonyina, did not appeal his own liability.

The Tel Aviv Regional Labor Court had initially imposed personal liability on Rachel Ezra, Ronen Cohen, Beni Ashkenazi, Yuval Bolgref, Gal Lahav, Yossi Ankonyina, and Alon Katz. Judge Michal Naim-Dibner justified piercing the corporate veil by noting the owners lacked a substantial defense, failed to submit closing arguments, and that the evidence warranted the personal liability. She described a concerning pattern where the company operating the restaurant dissolved and was replaced by new entities, leaving debts, particularly to employees, behind. The court found this indicated a "method that disadvantages company employees" or an "unreasonable risk-taking regarding the repayment of its debts to them," constituting an "abuse of the corporate veil" and "a form of thin capitalization that disadvantages employees."

The chain and owners were ordered to pay 70,000 shekels in back pay and damages, plus 20,000 shekels in expenses. The seven owners had argued to the National Labor Court that Ankonyina registered them as shareholders without their knowledge and that their individual stakes of 5%-15% did not justify piercing the veil. The National Labor Court dismissed their appeal, stating they did not address the procedural grounds for the ruling and that the lower court acted appropriately. It also rejected their attempts to introduce new arguments, deeming it a significant change of position.

In their petition to the Supreme Court, the owners reiterated these arguments and claimed they suffered a miscarriage of justice due to joint representation with Ankonyina. Justice Katcher summarily dismissed the petition, stating the conditions for an exceptional intervention were not met. He affirmed the National Labor Court's decision not to allow new arguments at that stage and noted that the owners' choice not to seek separate representation was their own responsibility. Justices Yael Vilner and Ofer Groskopf concurred with Katcher.