Employer Ordered to Pay NIS 890,000 for Disrupting Continuity of Pension Insurance Coverage

How the Dispute Arose

The employee had been continuously insured by the Menora Mivtachim pension fund since 2001. In May 2016, he began working for the company as a maintenance manager and worked until mid-July. The employer deducted the pension contribution for June from his salary but did not transfer it to the fund. As a result, the continuity of his insurance coverage was disrupted, and the employee was registered as a new member.

Why the Fund Rejected the Claim

Four years later, the employee lost his capacity to work and filed a claim for a disability pension. The fund rejected the claim because the illness had existed previously, and after the disruption of his insurance continuity, the employee had not managed to reaccumulate the required 60-month qualifying period. The court ruled that the employer’s administrative failure caused the loss of eligibility.

The Obligation Arose on the First Day

The panel, headed by Deputy President Rachel Gross, ruled that the company knew about the employee’s active pension fund. The court interpreted the Extension Order for Mandatory Pension Insurance as follows: the right to contributions arises on the first day of employment, even though the actual payment may be made retroactively after three months or by the end of the tax year—whichever is earlier. The obligation remains in effect even when the employment relationship ends before three months have elapsed; moreover, contributions from the first day were stipulated in the employment contract and the general collective agreement.

Waiver of Pension Rights and Health Status

The court rejected the argument that the employee had waived pension insurance in writing: the basic right to contributions, which ensures continuity of coverage, cannot be waived. The incorrect information the employee provided about his health also did not exempt the company from its obligation to transfer the contributions, because that obligation does not depend on his medical condition. The court did not attribute contributory fault to the employee.

The Company Intends to Appeal the Judgment

The employer’s representative called the liability unjustified and announced an intention to appeal to the National Labor Court. Among other things, he pointed to the short employment period, the employee’s letter, the insurance company’s warning, and the absence of an agreement to maintain insurance coverage for risks. The original source provides no information on whether the appeal was filed or its outcome.

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