Shabbat Parashat Shemini 5777

P'ninat Mishpat: Withheld Payment During Financial Crisis

Case: The plaintiff (=pl) worked for a yeshiva (=def) for a monthly wage of 3,500 shekels plus an 800 shekel travel allowance. When one of def’s main rabbis died, def entered difficult financial times, and salaries were not paid in full. Def decided to cut all salaries by 500 shekels, to which pl agreed, and later def and pl decided that he would not continue working there. While those who continue teaching are receiving some payments, pl received no back pay once he left the job. Pl is demanding 33,371 shekels in back pay, 8,500 shekels for severance pay, and 41,871 as penalty for late payment. Def agrees in principle to the first two payments, but is not sure how they will be able to make the payments in practice.

Ruling: It is a very serious obligation to pay on time (Shulchan Aruch, Choshen Mishpat 339:10), and therefore def is to make the payment of late salary immediately. Regarding the laws of workmen, one of the greatest principles is that one follows the customs prevalent in society (Shulchan Aruch, CM 331:2). In Israel, there is both a law and a common practice of severance pay. By law, this is one month’s pay for every year of service (base salary, not including travel allowance). When the salary changes over time, it goes by the salary at the end of the period of employment. Therefore, the severance payment is set at 5,625 shekels.

Regarding payment for withholding salary, some want to claim that the law that requires it is binding based on dina d’malchuta or the enactments of society, or that that the agreement between the employer and employee is based on the assumption of such extra payments. However, it is difficult to base the obligation on these sources, because the law leaves the extent of any such payment to the jurist’s better judgment. The logic of the payment is: 1. Payment for inflation and for interest on holding someone’s money is normal. 2. It is a penalty for one who illegally shirks his obligation. However, regarding #1, it is not permitted to legislate a forbidden interest payment (ribbit). Regarding #2, we do not have evidence that def acted in an unethical or irresponsible manner, considering the circumstances.

Rishonim dispute whether extra payment for withholding pay is ribbit. The Chatam Sofer (Shut V:144) says that since the point of ribbit is to allow the borrower to live reasonably, when the one taking the extra payment is a worker, whose receiving of salary is a basic need, ribbit does not apply. Similarly, Rav S.Z. Auerbach said that the payment is not for the value of the money over time but for the iniquity of withholding due worker’s salary. Rav Y. Ariel says that when litigants authorize beit din to rule based on law or compromise and beit din obligates for late payment, the ruling is not subject to the full laws of ribbit because the sides did not agree to it. Again, though, in this case, we saw no evidence requiring punishment of def with penalty payment since, according to all indications, simply did not have the money to pay.

Therefore, def must pay pl 38,996 shekels. Due to the dynamics of the case, beit din gave a couple options for payment plans.

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