A fired insurance agent will receive about NIS 730,000 from the agency where he was employed, along with 12% of the future profits of a health insurance venture he helped develop, the Tel Aviv Labor Court ruled recently. Judge Ofira Dagan-Tuchmacher rejected the company’s counterclaim seeking compensation for alleged heavy losses incurred during his employment.
In July 2009, the plaintiff and the agency signed an agreement to establish a joint venture focused on brokering health insurance. It was agreed that the agent would serve as head of the health insurance division and would be entitled to a quarter, or 25%, of the venture’s income. In addition, he was to receive a monthly salary and related benefits, to be paid from the venture’s revenues.
For about six years, he was employed by the agency and worked to market health insurance policies to private clients, as well as to provide collective health insurance services. In 2015, relations between the sides deteriorated, and in mid-2016, he was given notice of dismissal.
Following his termination, both sides filed lawsuits against one another. The agency claimed the employee caused it significant damage during and after his employment, arguing that the venture suffered dramatic losses that warranted compensation. Addressing the agent’s claim, the company argued that the agreement referred to entitlement to a percentage of profits, not revenues, and added that the agent had no right to receive commissions after the end of his employment.
The agent, for his part, argued that the agreement granted him a share of revenues rather than profits. He stressed that the contract was drafted by a lawyer on behalf of the agency and should therefore be interpreted against its drafter. He also claimed that his former employer still owed him about NIS 80,000 for sick leave.
Judge Dagan-Tuchmacher dismissed the agency’s claim in its entirety, ruling that it failed to prove that it suffered losses as a result of the venture’s activity, “let alone that such losses were caused by acts or omissions of the agent.”
On the contrary, she wrote, the evidence showed that the agent was widely praised at the time for his achievements, was considered the agency’s leading authority in health insurance and was even nicknamed “a jewel.”
Attorney Liran KfirPhoto: Michal KushrovAs for the agent’s claim, the court ruled that he is entitled to a share of the venture’s profits, both retroactively and going forward. The ruling noted that during the early years of his employment, he played a highly significant role in establishing the venture without receiving appropriate compensation from the agency. It added that he “reasonably relied on the explicit provisions of the agreement regarding entitlement to future profits of the venture, even after the termination of the employment relationship.”
The judge set the agent’s share at 12%, based on a clause in the agreement stating that he would be entitled to that percentage if the partnership did not succeed. Since the venture’s profits for the years 2015 to 2021 totaled about NIS 4.6 million, she awarded him NIS 550,000.
Finally, the agency was ordered to pay an additional NIS 80,000 for sick leave-related commissions and NIS 100,000 in legal costs. In total, excluding his share of future profits, the agent will receive about NIS 730,000.