The Israeli Regional Labor Court has found that under the good faith doctrine, an employer must evaluate its anticipated ability to meet its obligations towards its employees. To the extent that an employer is aware of a substantial concern that the corporate entity will fail to meet such obligations, it must avoid further employment of these employees.
Where the controlling shareholder is responsible for the disorder in the company’s financials, and the above good faith doctrine in not followed, the principles of good faith and public interest justify broadening the doctrine of limited liability, and levying personal liability onto the controlling shareholder.
