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Beit Midrash Series P'ninat Mishpat

based on ruling 71089 of the Eretz Hemdah-Gazit Rabbinical Courts

Chapter 576

Questionable Firing and its Financial Implications – part I

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Case: The plaintiff (=pl) began working in 2009 for the defendant (=def), an informal education organization, as the director of its midrasha, which runs educational tours for students. Pl was very successful for close to two years in his main task, expanding the midrasha’s reach. Def was unwilling to pay pl a set salary due to uncertainty about resources, and so pl agreed to a salary of 50% of net profits from the midrasha’s operations plus a set rate for tours he led. In 2011, the midrasha began receiving funding by the Education Ministry. This affected pl’s salary in two ways: He could no longer lead tours due to lack of a degree; the higher cost of tour leaders with degrees was higher, which lowered the net profits that made up his salary. Tensions between the sides grew over pl’s demands to rework his salary and complaints about how the process of joining up with the Education Ministry was done. A few months later, def fired pl (there were several months left on their contract). Pl demands payment until the contract’s completion, severance pay, and penalties for late payment (he received salary only after groups paid). Def respond that the firing was justified because pl began to disregard orders and was often unavailable (he began university studies). They point out that the contract states that pl waives severance pay and that, in any case, he was not a salaried work. Def countersued for having overpaid, as they did not factor in certain expenses when determining the net profits.
P'ninat Mishpat (580)
Beit Din Eretz Hemda - Gazit
575 - Was the Renter Normal?
576 - Questionable Firing and its Financial Implications – part I
577 - Questionable Firing and its Financial Implications – part II
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Ruling: Severance pay – A kablan, one who is paid by the job rather than the time put in, is not an employee, by law or by Halacha, who receives severance pay. Pl’s salary was calculated along the lines of a kablan, receiving a percentage of incoming revenues for his part in them. However, the overall nature of the work clearly indicates that pl was an employee. His contract linked the two sides for an extended period of time and the nature of pl’s obligation was broad and required availability according to the employer’s needs (see Piskei Din Rabbaniim, vol. III, from p. 272). Additionally, their contract factored in social benefits, which only salaried workers receive. Rather, the unusual mode of calculating the salary was due to def’s specific concerns.

The clause in the contract waiving pl’s rights to severance pay is invalid here for two reasons. The law, which is valid both as dina d’malchuta and as the common practice, nullifies the waiving of severance pay. Secondly, the waiving was done in the framework of a contract that extended pl’s employment into the future. In relation to a situation in which def ends pl’s employment prematurely, any such mechila is invalid mechila b’ta’ut. However, since the question of whether pl deserves severance pay is a valid one, we will not impose a penalty for late payment of the severance pay.

We will continue next time with other elements of the dispute
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