The Tel Aviv Regional Labor Court recently issued a significant ruling regarding the car rental company "Shlomo Sixt." As reported by N12, the company has been ordered to pay its employees an estimated 4.7 million NIS, following a determination that for over a decade, it infringed upon the pension rights and vacation days of its workers in violation of applicable collective agreements.
The legal proceedings focused on the definition of salary components and the obligation to make statutory social contributions on them. The company's central argument during the hearings was that sales commissions do not constitute "wages" and, therefore, there is no obligation to contribute to a pension fund for them. The court rejected this argument outright, pointing to inconsistencies in the company's claims, as it had considered even minor additions, such as accessory sales commissions, as part of wages in other contexts.
The ruling noted that the company habitually delayed pension payments for new employees, commencing deposits only after a probationary period—a practice contrary to the industry-wide collective agreement. Furthermore, employees were denied the vacation days (choice days) to which they were entitled. Attorneys Moshe Vaxart and Liat Ben Simon Nagar, representing the employees, presented individual cases where base salaries were significantly lower than total sales commissions, leading to a substantial shortfall in pension contributions over the years.
Conversely, Shlomo Sixt attempted to argue that a retroactive payment of this magnitude would undermine its financial stability and viability. However, the court dismissed this argument, noting that the company failed to provide data or affidavits to substantiate it. The court ordered that an expert appointee will conduct a detailed calculation for each employee to determine the precise final amount, taking into account the expansion of the eligible group through July 2024.
In response to the ruling, Shlomo Sixt stated that it is reviewing the decision and evaluating the possibility of an appeal to the National Labor Court. This decision is reverberating among employers, as it sharpens the obligation to strictly adhere to collective agreements and to include variable salary components in social benefit calculations, even when sales commissions are involved. This ruling underscores the significant financial exposure that can arise for companies that fail to observe pension contributions and ancillary payments in accordance with industry agreements.