Sala IV will hear appeal of ruling on tips as income

The employers’ chamber said Wednesday that the Sala IV constitutional court has agreed to study its appeal of the high labor court’s ruling that restaurant tips are salary.

The decision by the Sala II had a big impact on the restaurant business, and some popular food outlets said they closed to make changes to avoid the economic fallout from the decision.

Tips as salary require operators of food outlets to pay social security charges on the tip income of waiters and waitresses. Costa Rican law requires restaurant operators to add an additional 10 percent to what they charge for food as a tip. The diner has no choice but can supplement the tip with additional money. Most do not.
Considering tips as income also means that the employer will have to include that income when computing the annual Christmas bonus, which also is required by law.

The Unión de Costarricense de Cámaras y Asociaciones del Sector Empresarial Privado noted it appealed the Sala II decision June 22 and said that it conflicted with certain international treaties, including one with the International Labor Organization. The appeal also said that the decision also conflicted with the Costa Rican constitution because only the legislature is empowered to make and interpret law.

The chamber said that it just learned that the Sala IV will review the appeal. The court does not do this with every appeal, so the chamber sees this as a favorable development.

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