A recent labor court ruling has placed the distribution of severance pay following death at the center of legal debate. The case concerns the late Avraham Yosef Leizerson, who was employed by the Independent Education Center and passed away in 2020. Following his death, Migdal Insurance distributed the severance funds accumulated in his executive insurance policies to his heirs according to a standard probate order. Consequently, 382,143 NIS was transferred to his son, Simcha Bunim Leizerson.
It was later revealed that this distribution violated statutory provisions, as severance pay for a deceased employee is intended exclusively for survivors—in this specific case, the widow—rather than all heirs. Upon discovering the error, Migdal compensated the widow and demanded that the son return the funds. The son refused, arguing that since his father had surpassed retirement age, the severance pay had become a vested property right and part of the estate.
The court rejected the son’s argument, ruling that the estate has no claim to these funds. Legally, the court emphasized that the purpose of Section 5 of the Severance Pay Law is to support survivors and that the employee’s death is what triggers the entitlement. The court also dismissed the defense of good faith, noting that Migdal demanded repayment within 21 days of the transfer and that the funds were not used for the son’s essential livelihood. Ultimately, the court ordered the son to return the full amount plus interest and 10,000 NIS in legal costs.