National Insurance Institute ordered to pay benefits: A significant court ruling
The Labor Court accepted the claim of a woman who worked in her husband's business, after the National Insurance Institute denied her unemployment benefits, claiming there was no employer-employee relationship. Judge Ravit Tzadick ruled that the evidence presented proves otherwise.
What happens when the National Insurance Institute accepts pay slips for the purpose of paying maternity benefits, but later claims that those exact same documents do not prove that employment took place? This was the question at the center of proceedings in the Regional Labor Court, after a woman who worked in her husband's business was denied unemployment benefits. In a ruling by Senior Judge Ravit Tzadick, the claim has been accepted in full.
According to the claim published in "Bizportal", the woman, aged about 40, began receiving pay slips in March 2022. She was registered as an employee with the National Insurance Institute and the Income Tax Authority, with funds deducted from her salary for pension and severance funds. Her salary was initially 7,911 shekels gross, rising to 11,456 shekels in November 2022, and remained at that level until the end of her employment in October 2023. She worked in a luxury vehicle import and sales business managed by her husband, handling purchase and sale contracts, ownership transfers, and coordination with accountants, banks, customs brokers, the Ministry of Transport, and car dealers abroad.
The National Insurance Institute argued that an employer-employee relationship was not proven, citing the lack of a signed employment contract, bank transfer records, and attendance logs. The institution also pointed to contradictions in the couple's testimonies regarding the termination date and the fact that no one was hired to replace her. However, the judge ruled that the evidence points to actual work rather than mere family assistance. The court placed weight on the fact that pay slips were produced regularly, contributions were made to pension and severance funds, and, crucially, that the National Insurance Institute itself had previously used these same documents as a basis for paying maternity benefits.
The ruling determined that the woman's role was significant and essential to the business. The judge rejected the argument that the absence of an employment contract and attendance records negates her status as an employee, noting the nature of a small family business. Her eligibility for unemployment benefits will now be examined according to standard regulations, including the qualifying period and the established daily ceiling. The parties have 30 days to file an appeal to the National Labor Court in Jerusalem.
