Oslo Plaza and Bristol Hotel may not make deductions from employees' tips.

In 2019, rules were introduced that required employers to report how much employees receive in tips, make advance deductions and report payroll tax. After this, two hotels deducted costs for payroll tax and administration before paying the employees net tips after withholding tax. The Supreme Court, like the Court of Appeal, concluded that the hotels were not allowed to do this. The starting point was that the guests' tips are a payment from them to the employees and not a payment to the undertaking. The regulatory changes that came into force in 2019 did not change this legal starting point. The administration costs must be equated with other operating costs that the undertaking has to fulfill the obligations imposed by the authorities. Nor did the employer's managerial prerogative provide a legal basis for the established deduction scheme. The hotels' appeal against the Court of Appeal's judgment was dismissed.

Read the whole judgment (Norwegian only)

Area of law: Employment law

Key paragraphs: 53, 63-64, 67-70, 76-86, 89

Justices: Kallerud, Ringnes, Høgetveit Berg, Steinvik og konstituert dommer Elsheim