The worker’s right to receive a salary as compensation for the work performed for an employer, as well as the employer’s obligation to make such remuneration, is an irrenounceable right, constitutionally protected by Article 57 of the Constitution.
However, in today’s labor context, workers’ salaries can be affected and modified for various reasons. For instance, when an employee requests advances or salary prepayments, asks for a loan from the employer, or when the employer makes overpayments due to an obvious error, such as paying salary during periods of incapacity or leave.
In such situations, the employer has the right to “recover the payment”; that is, to have the money paid for advances or overpayments reimbursed. The Labor Code provides a mechanism that authorizes and safeguards salary deductions. The relevant provision is article 173 of the Labor Code, which expressly states the following:
“ARTICLE 173. The advance made by the employer to the worker to induce them to accept employment shall be limited, in terms of its amount, to one-quarter of the agreed monthly salary; if it exceeds the specified limit, it shall be legally uncollectible and cannot be recovered by offsetting it against amounts owed to the worker.
Debts incurred by the worker with the employer for advances or overpayments shall be amortized during the term of the contract in a minimum of four payment periods and shall not accrue interest. It is understood that upon termination of the contract, the employer may make the final settlement that applies.”
The above rule has been considered and its implementation authorized by the Jurisprudence of the Second Chamber of the Supreme Court, through the following rulings: Ruling No. 904, at 14:30 on October 25, 2000; Ruling No. 938, at 10:00 on November 10, 2000; Ruling No. 743, at 10:20 on December 12, 2001; Ruling No. 22, at 10:00 on January 29, 2003; and Ruling No. 868, at 9:55 on September 12, 2006. All these rulings expressly state that the employer is permitted to reduce the worker's salary, provided the terms of Article 173 of the Labor Code are met.
From reading the referenced rule and the interpretation given by the Second Chamber of the Supreme Court, the requirements for the employer to make salary deductions are as follows:
- - Advances must be limited to those intended to induce the worker to accept a job and do not cover the case of salary advances.
- - Advances must not exceed one-quarter of the agreed salary.
- - Overpayments must be due to errors made by the employer, which does not include other debts arising from damages or losses caused by the worker in performing their duties or debts incurred by mutual agreement.
- - Deductions for advances or overpayments must occur over at least four payment periods.
- - Amounts for advances or overpayments shall not accrue interest.
- - Such amortization should occur while the employment relationship lasts.
Similarly, the Constitutional Chamber of the Supreme Court has expressed in Ruling No. 16545, at 8:36 on November 29, 2005 (although referring to public employment relationships), the following:
“Regarding this, the Chamber has reiterated in various rulings that: The right to a salary has been conceived as the compensation due to the worker under the employment contract, as payment for the work performed or to be performed, or for services provided or to be provided; for the employer, it constitutes an obligation that, due to its utility to the worker, must be paid fully and at regular intervals. However, this constitutionally protected right does not prevent the employer, in cases of advances or payments made in error, from reclaiming the money paid. Thus, Article 173 of the Labor Code establishes that debts the worker incurs with the employer due to advances or overpayments will be amortized during the contract’s term in at least four payment periods and without accruing interest. The Chamber has established that actions by the Public Administration to recover excess amounts from its officials are not, in principle, unconstitutional but rather a power granted by the legal system to protect public funds available to it (Ruling No. 02-4842).”
The above ruling from the Constitutional Chamber of the Supreme Court is binding for everyone, except for the Court itself (applicable “erga omnes”), as per Article 13 of the Law of Constitutional Jurisdiction.
According to the aformentioned, it is logical that the worker must return to the employer the amounts paid in advances or overpayments that were utilized, as accepting the opposite would not only violate Costa Rican regulations but also imply unjust enrichment in favor of the employee, to the detriment of the good faith principle that governs labor relations.
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