Questionable Firing and its Financial Implications – part III | Beit Din Eretz Hemda - Gazit | Beit Midrash

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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 from the Education Ministry. This affected pl’s salary in two ways: He could no longer lead tours due to lack of a degree; the 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. They countersued for having overpaid, as they did not factor in certain expenses when determining the net profits.

Ruling: [We have seen that def was allowed to fire pl but that pl deserves severance pay because he had the right to quit because of a worsening of conditions.]

In this case, we see it fitting to grant pl higher severance pay (three instead of two months of salary) than the standard required by law. This is due to the circumstances around pl’s firing in the midst of the contract period and our understanding that the deterioration in the relationship was to a large degree because of def. Additionally, the fact that pl was soon to be awarded larger profits due to the upcoming season is a factor, although not to the degree pl claims because he was spared a difficult period of work.

Def was not correct in withholding salary until the midrasha’s clients had paid, as pl was an employee, not a partner. We penalize 2,000 NIS for the frequent late pay, as consistent with the law. This is not forbidden interest because def has an obligation to appease pl for the violation of paying late and because it is unlike cases of forbidden ribbit in that the obligated did not agree to pay, but beit din is mandating it.

Def’s counter-claim for not reducing the salary due based on certain expenses is rejected out-of-hand. The fact that they consistently did not factor that in is either a sign that this is the way def understood the agreement to have been made or, if not, that def was mochel the money. If he was mochel, they cannot rescind the mechila to the dispute between the parties.