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Bankruptcy and Corporate Liquidation (Employee Rights)

The law of insuring employee rights in case of bankruptcy and corporate liquidation was enacted in 1975, to protect employees whose rights were severely impaired as a result of difficulties faced by their place of work, consequent to which liquidation or bankruptcy decrees had been filed.

Under the law, an employee whose employer went bankrupt or whose company underwent liquidation is entitled to receive a benefit from the National Insurance Institute that includes payments, owed by the employer, up to the maximum amount set by the law:

  1. Wages
  2. Severance pay
  3. Provident fund payment
The benefit, which includes wages, severance pay and provident fund payment, is be paid to employees only, and under all the following conditions:
  1. Bankruptcy or Liquidation Decrees – The district court has filed a decree against the employer and declared him bankrupt, or has filed a decree for liquidation of company, of partnership or of cooperative society or association.
  2. Appointment of Trustee or Liquidator – The district court has appointed a trustee or liquidator.
  3. Approval of Trustee or Liquidator – The employee's claim information has been approved by the trustee of the bankrupt or by the liquidator of the company.
 The benefit includes the following three components:
  1. The wages to which the employee is entitled that has not been paid by the employee;
  2. The severance pay to which the employee is entitled that is not covered by the provident fund;
  3. Provident fund payments for the employee that were supposed to be transferred by the employee but were not.

Indexation differentials from the day the debt was made to the day of the actual payment are be added to the wage and the severance pay paid by the National Insurance Institute. The payment for wages is made first, and only afterword is, severance pay paid, up to the maximum amount set by the law.

Deductions from the Benefit
The fees required by law are deducted from the approved benefit: income tax, and national and health insurance contributions.
Contact Us
For additional information, contact the Department of Employee Rights Insurance of the National Insurance Institute, Head Office, 13 Weizman Blvd. Jerusalem 91909
  • Phone: 02-6463020 Sunday, Wednesday 12:00-15:00
  • Fax: 02-6535851
Useful Advice regarding Employee Rights in case of Bankruptcy and Corporate Liquidation
To avoid delays in the treatment of your claim for benefit under the Law of Employee Rights in case of Bankruptcy and Corporate Liquidation, you are requested to carefully fill out all the information on the claim form attach the required documents, and file the claim to the trustee or liquidator as soon as possible.