The Supreme Court has recently held that Section 14-15(2) of the Norwegian Working Environment Act prohibits an employer from making deductions from an employee’s wages in order to recover previously overpaid subsistence allowances (per diem payments).
The employment contract in question contained a clause stating that, if the employer made an error in payroll processing, any necessary correction could be made through subsequent salary payments. The employer therefore relied on the exception in Section 14-15(2)(c) of the Working Environment Act, which permits deductions from wages where such deductions have been agreed in advance in writing.
The Supreme Court held that the statutory provision must be interpreted to require that the agreement on which the wage deduction is based specifically identifies and authorises the particular deduction in question. Since the employment contract had been entered into long before the overpayments occurred, this requirement was not satisfied.
The Supreme Court further found that the contractual clause did not govern the employer’s substantive claim for repayment. The repayment claim therefore had to be assessed under the unwritten legal doctrine of recovery of mistaken payments, commonly referred to as condictio indebiti. In the present case, the employer was aware that the subsistence allowances were being paid incorrectly. The overpayments resulted from delays in updating the company’s payroll system following changes to the applicable rules. As the employee had received the payments in good faith and the employer had neither notified the employee nor reserved the right to reclaim the amounts on the basis that the payments were erroneous, the employer’s claim for repayment was held to have been extinguished.
Source: Supreme Court
Martin Edelsteen Woll
mwoll@melo.no
+47 414 87 832
