Our office is frequently contacted by employees whose employers are facing economic collapse and ask about their rights. In this short article, we will attempt to review the rights of employees during the economic collapse of their employer, with regard to National Insurance.
introduction
When an employer (whether an individual or a company) encounters financial difficulties, it is often left in a situation where it is unable to pay its debts. Among the other existing debts (to suppliers, customers, etc.), there are often also debts to employees, which have accumulated due to their work for the employer. Since the high prevalence is work within the framework of companies, we will refer in this article to employees employed by companies, but the procedures are also suitable for an employer that is not a company and for an employee who is employed by someone who is not through a company.
In quite a few cases, when employers encounter financial difficulties, they stop paying their employees' wages, promising: "Because next month there will be..." and the employees, who are afraid to resist or speak out against their employer for fear of being fired, "swallow the frog" and continue working in the hope that the employer will indeed fulfill his promise.
From our extensive experience in this field, these promises are rarely, if ever, fulfilled, and many employees find themselves in a situation where they have not been paid one or more salaries, and their additional rights, rights that are attached to and derived from being an employee, may even be affected.
Many employers who encounter difficulties, as part of the rehabilitation process (which, as mentioned, is successful in a small percentage of cases), try to postpone payments to various entities. Among other things, employers postpone payments to employees, to the pension funds and compensation (or managers' insurance) of the employees, and thus, without the employee noticing, he may find himself not only with a deficit in wages, but also with a deficit in the pension funds and layoffs. The meaning of such a deficit sometimes is the cancellation of pension insurance or managers' insurance, which is very problematic.
Additional obligations, which the employer often has towards its employees, are rights paid to the employee upon termination of his employment or at any point in the working year, such as advance notice, redemption of vacation days, convalescence pay, holidays, 13th month salary, etc.
You are in debt to your employer - what do you do?
What if your employer went bankrupt, closed its business, or the company you worked for ceased operations and you were left with debts?! Is there anything you can do? National Insurance, as mentioned, Insuring and promising Most of your rights. However, for this to happen, several things need to happen:
First, the company must go through liquidation proceedings (or bankruptcy of an employer who is not a company). The liquidation proceedings of a company are conducted before the District Court. In order for these proceedings to take place, a liquidation petition must be filed. The liquidation petition can be filed both by the company itself and by its creditors, In which the workers.
The important procedure for our case is the issuance of a winding-up order for the company. When the court issues an order to wind up the company, it appoints a liquidator, usually an attorney or CPA, who will liquidate the company's business and quantify its debts to its creditors.
Issuing a liquidation order to a company is a condition for applying to the National Insurance Institute for payment of debts.
The dissolution order has been issued - what now?
When the liquidation order is issued, the employee must file a "debt claim." A debt claim, in the above-mentioned summary, is a claim that is filed with the company's liquidator in which the employee demands that his rights be paid. The debt claim must be filed on a National Insurance form and must be accompanied by various references that confirm the amount of the alleged debt. After the debt claim has been filed, the company's liquidator will decide on the debt claim and transfer it to the National Insurance Institute for payment. The company's liquidator can accept the claim in full, reject it, approve it in part, and even demand evidence to confirm the debt. The liquidator's decision has the right to appeal to the court. It is important to consult with an authority in the field regarding how to file a debt claim, since the employee is not always aware of his full rights.
What debts are covered by National Insurance?
In this regard, the National Insurance Company is an insurance company for all intents and purposes. In fact, it pays the employee (within the limits of the law) instead of the employer the debts in the following components:
It should be emphasized that the employee is not obligated to file the claim for all components, this matter is important as will be detailed below.
The conditions under which the National Insurance Company will pay the payment for the above components:
First, the amounts paid by the National Insurance Company are limited to a ceiling. As of the date of writing this article, the National Insurance Company pays a total of NIS 112,424 for wage differentials and severance pay. As of the date of writing this article, the National Insurance Company pays a total of NIS 17,296 for the lack of provision for pension funds. Therefore, it is important for an employee who finds himself in a situation where his employer's debts exceed these amounts to remember that the National Insurance Company pays up to a certain limit, and the employee must ensure that the employer's debts to him do not exceed the above amounts, since the chance of paying any debt in excess of the ceiling is generally small and is equal to all of the company's creditors.
Tax provisions will be deducted from these amounts as required by law, therefore, it is of great importance for which components the debt claim must be submitted. For example, an employee who is entitled to severance pay at a rate exceeding the ceiling can submit his debt claim only for the severance pay. What is the advantage? The advantage is that income tax is not paid on severance pay, for example (up to the ceiling set by law), and therefore, to the extent that there is a concern that the employer will not be able to pay the amount exceeding the ceiling, at least the employee will be entitled to this tax benefit.
Obsolescence
Many employees whose employer has owed them money for many years and has not sued are afraid of the statute of limitations. The statute of limitations in these cases is 7 years, so even if your rights have been violated in the past, don't worry, there is hope.
In conclusion, the slogan of the National Insurance Company that it is by your side in the important moments of life, takes on new validity in such a case. It should be remembered that the procedure described above takes a period of many months, but there is confidence that the employer's debt - at least in part - will be paid by the National Insurance Company, when a debt remains towards the employee and when the employer has collapsed. As we wrote - you employees are not alone!!!
Lawyer Yuval Yishai From the office Wolfson Weinstein & Co.', Engaged inCommercial and corporate law, Dissolution and rehabilitation of companies, Consulting and assisting corporations and individuals in steps to prevent insolvency.
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