A long-established computer importer sued its former accounts manager for ₪401,000, saying he had borrowed money and never paid it back. The Tel Aviv Regional Labor Court dismissed the claim and ruled that the money had been part of his pay. The details were published on 29 October 2026.
Any business owner who hands an employee money outside the payslip should pay attention: an advance, personal help, a "loan" between friends. With no signed document and no repayment date, a labor court may treat that money as wages, and the business cannot get it back.
Two versions of the same money
The company said that around 2008 the owner agreed to lend the employee money to invest in land and property in Romania. It was to be repaid after seven years, with interest. The employee received ₪266,151 in total, and the company booked it as a loan.
The employee told it differently. He said the money he received between 2007 and 2010 was wage differences and bonuses, because his workload and responsibilities had grown. According to him, the payments were booked as a loan only so the company could show its banks better financial statements.
In 2008 he also switched from payslips to tax invoices and received a ₪85,131 retirement grant. The company argued the employment relationship ended then. The court found it lasted until 2013. He worked mostly from the company's offices, reported to the owner, got holiday gifts like the rest of the staff, and from 2009 worked for no one else. The owner himself testified that the work before and after the switch was "the same."
The accountant's testimony
The deciding evidence came from the company's accountant at the time. He testified that he did not record the money as a loan but as a debit balance. In his words, a loan is something formal, with repayment dates and an interest rate, and it appears as a separate line in the financial statements.
The court found more signs against a loan. No document was ever signed, which the owner admitted. The employee had taken three small loans before and repaid them quickly with post-dated cheques. The disputed sums, by contrast, came in relatively small instalments with no paperwork. The court said that pattern looks more like ongoing pay than a loan to buy land.
The company also never tried to collect. The relationship ended in 2013, and its first step was the lawsuit itself, filed in the Magistrates' Court in 2020 and moved to the labor court. The only document it produced was a 2018 email, in which the court found no demand for payment. The court added that the company is not a lender and never explained on what basis it was handing out loans.
A counterclaim nine years late
The employee counterclaimed for about ₪250,000. It covered damages for defamation, a ₪52,193 VAT refund on his invoices, pay for July and August 2013, and the balance of his severance. He filed it in July 2022, about nine years after the relationship ended, and it was dismissed as time-barred.
The court said it would have failed on the merits anyway. He did not say what was said about him, when or to whom. He sent no invoices for summer 2013 and produced nothing showing he worked then. Severance was out because the court found he had not been dismissed. His last letter said that on the current terms, with no pay and no signed agreement, he was not willing to keep working.
Both claims were dismissed in full, and each side pays its own costs.
Money a business gives an employee
A loan to an employee should be in writing and signed, with the amount, repayment dates and the interest rate if there is one. The accountant should record it as a loan, not as a general debit balance. Once a repayment date passes, a written demand sent at the time is worth far more than a lawsuit filed years later.
The owner and the employee were close friends, and the court noted that a relationship like that can lead to less formal recording of payments. In this case the informal recording is what made the money wages, and the ₪266,151 stayed with the employee.