This case started with the employee's claim for compensation for unlawful termination by a company operating in the bio-medical field. The employee directed his claim also to two directors of the Company, alleging that they should be found liable to pay for the results of the main claim – in an amount of NIS 500,000. The allegation being that they did not act in good faith and breached their obligations and deviated from their authority as officers of the company. The directors filed an application that the claim against them be struck out in limine.
According to Regulations 44 and 45 of the Labor Court (Procedure) Regulations, 5751-1991, the Labor Court is entitled at any time, at the application of a party or even without such an application, to strike out pleadings in limine. Case law has decided in this respect that as a general rule the remedy of striking out in limine will only be handed out in exceptional cases. Even if the chances are slim, that the plaintiff will succeed in his claim, the general rule is that the doors of the Labor Court should not be closed to him. Nevertheless, the Labor Court should interpret its issue jurisdiction carefully.
His Honor Judge Dr. Tal Golan, in the Local Labor Court in Nazareth, decided that even though prima facie the claim mainly concerned issues of employment relations, the directors are not the employers of the employee rather the companies are. The companies have independent legal status. The directors are not a replacement for the companies and each of them – the directors and the companies – are separate legal persons. Accordingly, the 'identity of the parties' test is not met so as to enable the Labor Court to hear the dispute between an employer and employee. While it is possible to sue the organ of the company in a claim for 'lifting of the corporate veil', in the Labor Court, this is only as against a shareholder and not as against an officer.
So the Labor Court struck out the claim of the plaintiff for lack of good faith on the part of the officers and found that this claim cannot stand on its own separated from a claim for lifting the corporate veil (which is provided for in the Companies Law). Therefore the Labor Court decided that the claim has to be divided as between the Labor Court and the civil court. In the latter court, the plaintiff is entitled to raise claims against directors. On this basis, the Labor Court struck out the claim against the directors in limine.
Reference: SA"S (Naz') 52501-05-15 Berger v N.G.T. – VC (9.12.2015)