Employer Bankruptcy: How to Get Your Salary Through Bituach Leumi

Core Principle

If your employer has gone bankrupt without paying your salary or severance pay, the state protects your rights through Bituach Leumi. You may receive compensation for unpaid wages and social benefits from a special fund, but only up to the statutory maximum.

Who is Eligible?

Salaried employees (sachirim) are eligible for payment, provided that:

• An official court-issued liquidation order (Tzav Piruk) or an order for the appointment of a receiver (Tzav Kinus Nechasim) has been issued against the employer.
• You have filed a claim for debt collection within the legally prescribed period after the order was issued.
• Your employer made contributions to Bituach Leumi on your behalf.

Who is NOT eligible:

• Self-employed individuals (atzma'im) who worked with the company under a contract.
• Members of a kibbutz or moshav.
• Shareholders who own a significant stake in the bankrupt company.

Your Rights

Bituach Leumi may compensate for the following outstanding debts:

• Wages: Unpaid salary.
• Severance Pay: Compensation upon dismissal (Pitzu'ei Piturin).
• Social Contributions: Debts for contributions to a pension fund and advanced study fund (keren hishtalmut).
• Additional Payments: Compensation for unused vacation days, convalescence pay (dmei havra'a), and others.

Important: The total payment amount is limited by a maximum ceiling (tikra), which is updated periodically. Any amount exceeding this limit can only be claimed through the general bankruptcy proceedings, which is a rare occurrence.

Step-by-Step Guide

1. Verify the Existence of an Order. The primary condition is the existence of a court order for the company's liquidation. This information is provided by the court-appointed liquidator (Mefarek or Menahel Meyuchad).
2. Obtain the Claim Form. Find and download the special form "Claim for Payment of Wage Debt and Severance Pay" (תביעה לתשלום חוב שכר עבודה ופיצויי פיטורים) from the Bituach Leumi website.
3. Complete the Claim Form. Enter your personal details, information about the employer, periods of employment, and the exact amounts owed for each item (wages, severance, etc.).
4. Gather the Documents. Prepare a complete set of documents as per the list below.
5. Submit the Claim to the Liquidator. Attention: The claim, along with all documents, must be submitted directly to the court-appointed liquidator, not to Bituach Leumi. The liquidator will review your claim and forward it to Bituach Leumi for payment.
6. Await the Decision. After the documents are reviewed by the liquidator and Bituach Leumi, the payment will be deposited directly into your bank account. The process can take from several months to a year or more.

List of Documents

• Completed and signed claim form from Bituach Leumi.
• Photocopy of your identity card (Teudat Zehut) including the appendix (sefach).
• Recent pay stubs (Tlushei Maskoret) confirming your salary.
• Form 161 (Tofes 161), if you received it from your employer upon dismissal.
• Proof of bank account details (a printout from your online banking portal or a voided check).
• Any other documents that substantiate the debt (e.g., employment contract, letter of dismissal).

Pitfalls

• The Main Mistake: Never submit the claim directly to a Bituach Leumi branch. Your claim must first be reviewed and approved by the court-appointed liquidator.
• Deadlines: There are strict time frames for filing a claim after the court order is issued. Missing the deadline will result in the forfeiture of your right to payment. Clarify the exact deadline with the liquidator.
• Payment Limit: Remember that the payment from Bituach Leumi is capped. Do not expect to receive 100% of the debt if it exceeds the state-mandated maximum.
• Patience: The bankruptcy and payment process is very lengthy. Be prepared for a wait of many months.

Contacts and Links

• Official Bituach Leumi Website: All current forms, instructions, and maximum payment amounts can be found on the official website of the National Insurance Institute.
• Liquidator's Contact Information: The contact details for the liquidator responsible for your company's case can be found in court registries or through the lawyers handling the bankruptcy case.

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