Employee rights when the employer becomes insolvent
When an employer is liquidated or declared insolvent, employees do not have to chase the company for their money. The National Insurance Institute pays unpaid wages and severance pay up to a ceiling fixed by law — but only through the trustee appointed in the proceedings, and only within the time limits.
What the benefit covers
Wages that were not paid, severance pay, and sums the employer failed to transfer to your pension fund. The payment is capped at a ceiling set in the National Insurance Law and updated annually; anything above the ceiling remains a claim against the company in the insolvency proceedings.
How the claim is made
The claim is submitted to the trustee or liquidator appointed by the court, who checks it and forwards it to the National Insurance Institute. Deadlines apply, and a claim filed late is a common reason for refusal. Documents matter: employment contract, payslips, records of hours, correspondence about unpaid wages, and the notice of dismissal or resignation.
Where we help
- Calculating what is actually owed, including severance, unused leave and pension contributions.
- Preparing and filing the claim with the trustee within the deadline.
- Challenging a partial or refused decision.
- Representation in the labour court where the employer is still operating and simply not paying.
Frequently asked questions
Do I get paid if the company simply stopped operating without formal insolvency?
The National Insurance benefit requires a formal court order — liquidation or an insolvency order. Where the company merely stopped paying, the route is a claim in the labour court against the employer, and often against its controlling shareholder.
Is there a ceiling on the payment?
Yes. The benefit is limited to a maximum fixed in the National Insurance Law and adjusted each year. The balance is claimed in the insolvency proceedings, where employees rank ahead of ordinary creditors for part of the debt.
How long does it take to receive the money?
It depends on how quickly the trustee processes claims; several months is typical. Filing early and with complete documents is the main thing within your control.
Does the benefit include pension contributions the employer did not transfer?
Yes, unpaid contributions to a pension fund are included in the claim, within the same overall ceiling.
I am a foreign worker — do I have the same rights?
Employment rights in Israel apply regardless of nationality, and lawfully employed foreign workers are entitled to the same claim.
Talk to us
Offices in Tel Aviv, 125 Menachem Begin Rd (Kiryat HaMemshala), floor E2, and in Ashdod, 6 HaGdud HaIvri St, Top Sea Mall, 20th floor, office 9. Sunday to Thursday, 09:00–18:00, by appointment. Phone 08-8648090, WhatsApp 058-764-8090, yoffe.law@gmail.com.
