An employee of a company who also serves as its director is not entitled to overtime pay

A shareholder and director in a company was employed as the manager of a store owned by the company. As part of his work as the store manager, the employee also kept attendance records for the other employees but lacked to do so for himself. Following a dispute between the shareholders and revelations regarding a theft by the director, the company decided to terminate his employment and dismiss him as a director.
The Labor Court held that because the employee held a managerial position that required a special degree of personal trust, the Israeli Hours of Work and Rest law does not apply to him and therefore he is not entitled to overtime pay. The basic premise regarding the status of shareholders is that there are no employer-employee relations between a company and its shareholders or directors. Although such relations can occur when, for instance, a director receives pay slips and is paid social rights, Israeli Law stipulates that, generally, an employee who holds a managerial position or a position which requires a special degree of personal trust, such as a director, is not entitled to overtime pay. Here, the very fact that the employee was a director of the company indicates the holding of a role which requires a special degree of personal trust. In addition, the fact that the employee did not bother to keep attendance records for himself indicates that he did not believed to be entitled to such payments. Therefore, the Hours of Work and Rest law does not apply to the employee who is thus not entitled to overtime pay.