The Tel Aviv Regional Labor Court has ruled that a manager who worked for a real estate group for two years and billed it through invoices was in fact its employee. Judge Doron Yafet gave the judgment on 3 November 2026, and it was published on 9 November. The group was ordered to pay him ₪99,338 in employee rights. He had claimed ₪3,963,574.
The case speaks to both sides of a common arrangement in Israel: a business that fills a central, ongoing role with someone paid against an invoice, and a self-employed person who works for a single client for a long stretch. The invoice alone did not settle the question here.
A registered business with companies of his own
The facts were not simple in the claimant's favor. He is a registered osek murshe (a VAT-registered business) from 1991 to 2010 and again since 2020. He owns two companies abroad, one in Italy and one in Bulgaria, and one of them provided services to the defendants' companies and their clients. The defendants argued he was an independent service provider who ran his own businesses and issued invoices.
On the other side, from April 2022 to March 2024 he served as the group's CEO and then as its sales and marketing manager. The judge called it a borderline case and found that the circumstances as a whole tipped the balance toward an employment relationship. The two factors cited were that his work was vital to the companies' operations and that he was integrated into their organizational structure. Having his own business and issuing invoices did not rule out employee status.
From ₪4 million to ₪99,000
Most of the claim, over ₪3 million, was compensation for late payment of wages and severance. The court rejected that part, because there was a genuine dispute over whether he had been an employee at all. A claim for compensation over the lack of a pre-dismissal hearing was rejected too.
What he won came in four parts: ₪45,536 in severance pay, ₪23,758 in lieu of notice, ₪15,823 in wage differences and ₪14,221 in compensation for pension contributions that were never made. The court ordered him to pay ₪30,000 in costs, offset against the award. That leaves him about ₪69,000, roughly 1.75% of what he claimed.
He represented himself. The judge criticized him for citing court rulings that do not exist, raised concern about unchecked use of AI in his pleadings, and noted that his many filings dragged the case out for no reason. A separate claim of his, for ₪412,500 in sales commissions on a project in Austria, is pending in the Herzliya Magistrate's Court.
Paying a key role against an invoice
A small business that pays a manager, a salesperson or a coordinator a monthly fee against an invoice, in a role the business cannot run without, is taking a risk. In this case the court weighed the full picture and did not stop at the invoices and the business registration. The ruling adds to a run of recent decisions in which Israeli labor courts looked at a payment and found it was wages in every sense, such as the ruling that a per-day attendance incentive counts toward pension and severance.
For the self-employed, the lesson runs the other way. Someone who works for years for one client, on an employee's hours and inside an employee's structure, may find that their rights depend on long litigation and a judge's call on a borderline case. A freelancer setting a rate should build in what an employer would otherwise pay for, including vacation, sick days and pension contributions, as the guide to pricing an hourly rate explains.
The judgment also carries a warning for anyone who uses an AI tool to draft a legal document, a demand letter or a reply to a tax office: every reference to a ruling or a section of law needs checking at the source before it goes out.