Labour law7 min read9/18/2026

Employer Went Bankrupt: How to Receive Wages, Severance Pay, and Pension Contributions

The disappearance of the director and a locked office door do not yet mean that Bituah Leumi will pay the debt. The mechanism is activated after an official bankruptcy, liquidation, or commencement-of-proceedings order—and separate parts of the claim apply to wages and severance pay and to pension contributions.

Numbers and facts

•134,966 shekels — maximum for wages and severance pay
•20,764 shekels — maximum for savings funds
•The last 12 payslips must be attached
•September 14, 2019 — cutoff date for the old procedure
•5305 — employee claim form

The Employer’s Financial Problems Alone Are Not Enough

Entitlement to payment under Chapter ח of the National Insurance Law arises for a salaried employee if a bankruptcy, liquidation, or commencement-of-proceedings order has been issued against the employer. Therefore, unpaid wages, closure of the business, or a statement by the owner that there is not enough money do not by themselves trigger payment. For companies, Bituah Leumi’s materials also mention a liquidation order issued by the District Court. The procedure was changed following the enactment of the Insolvency and Economic Rehabilitation Law, 2018.

What Exactly Bituah Leumi May Cover

The employee’s claim includes verified wage debt and severance pay. A debt to a pension fund or another savings fund is accounted for separately: these are amounts that the employer was required to contribute for the employee but did not deposit. The payment equals the recognized debt but may not exceed the maximum established by law. It is therefore important to separate the personal monetary debt owed to the employee from the missing contributions to the fund, rather than combining everything into one total amount.

Two Claims and Two Filing Routes

A claim for wage arrears and severance pay is filed using Form 5305; Bituah Leumi recommends completing it online. The electronic form is sent to the Commissioner for Insolvency and Economic Rehabilitation Proceedings and to Bituah Leumi. A claim for debt to a pension fund is filed through the website of the Commissioner for Insolvency Proceedings. If the proceeding falls under the old procedure and the bankruptcy order was issued no later than September 14, 2019, the claim was filed with the trustee appointed in the case, who forwarded it after review.

Which Documents Prove the Debt

The application should include the last 12 payslips from this workplace. A dismissal letter and statements from the bank account into which the salary was deposited, covering the entire period of the claimed debt, are also required. A bank statement is especially important when a payslip was issued but the money was not actually received. A practical mistake is to claim a total amount without a breakdown and without documents that make it possible to compare accrued amounts with actual transfers.

How Much You Can Receive and Where the Money Will Go

The maximum payment for wages and severance pay is 134,966 shekels. A separate maximum of 20,764 shekels applies to debts owed to pension and other savings funds. These are ceilings, not guaranteed amounts: the recognized amount of the debt is paid within the applicable limit. The pension portion is intended to settle the debt owed to the fund, whereas wages and severance pay concern the debt owed to the employee personally.

How to Track the Review

After filing, Bituah Leumi may request missing documents; letters that have been sent are available in the personal account. A notice approving or rejecting the claim also appears there. If the application is completed by hand, Bituah Leumi states that the original, rather than a copy, should be submitted. Before sending it, it is useful to compare the claimed months against the payslips and bank deposits so that the same debt is described consistently in all documents.

FAQ

Will Bituah Leumi pay if the company simply closed?

Not necessarily. An official bankruptcy, liquidation, or commencement-of-proceedings order is required; debts alone, a closed office, or cessation of payments are not enough.

Where should an application for unpaid wages be filed?

A claim for wages and severance pay is filed using Form 5305, preferably online. The electronic form is sent to the Commissioner for Insolvency Proceedings and to Bituah Leumi.

Can unpaid pension contributions be included in the application?

Yes, the mechanism covers amounts that the employer was required to contribute to a pension or other savings fund. However, this is a separate claim filed through the website of the Commissioner for Insolvency Proceedings.

What evidence is needed if there is a payslip but no salary payment?

Attach the last 12 payslips and bank statements for the period of the claimed debt. The statements show whether the money accrued by the employer was actually received.

Will I receive the entire debt if it exceeds the established maximum?

Bituah Leumi pays the recognized debt only within the ceiling prescribed by law. Separate maximums apply to wages and severance pay and to debt owed to a savings fund.

What to do next

First, check whether an official order exists in the employer’s insolvency case. Then calculate wages and severance pay separately from missing pension contributions, and collect 12 payslips, the dismissal letter, and bank statements. Before filing, determine whether the current procedure applies or the old procedure for cases connected to an order issued no later than September 14, 2019.