Greece: Supreme Court rules that salary cuts for judges are unconstitutional

Meeting in closed-door session, the plenary session of the Hellenic Court of Auditors has ruled that cuts made retroactively from 1 August 2012 to the pensions of judicial officials, prosecutors and members of the State Legal Council are unconstitutional and contrary to the European Convention on Human Rights, following a similar decision by the Salary Tribunal and the Council of State (both for judges and the uniformed services).

Regulation re salaries and pensions of uniformed services

The provisions of Law 4093/ 2012 and the ministerial decisions issued by order of it, include cuts in salaries and pensions for the uniformed services (the military, the police, firefighters, port employees, etc) as well as judicial officials, of the order of 2.5% to 25%, with mandatory retroactive effect from 1 August 2012. In parallel, reductions are imposed on allowances (for family separation, hazardous occupations and special conditions), while abolishing automatic wage maturation, which also affects pensions. In a series of landmark decisions, the legislature recently characterised the retroactive reimbursement from 1 August 2012 and afterwards as 'unduly paid' earnings.

Outcome of appeal to Council of State

On 13 June 2014, five decisions of the Council of State were published which vindicated all branches of the uniformed services.

In decisions 2192–2196/2014, the Council of State in plenary ruled, almost unanimously, that cuts in the earnings of active and retired members of the armed forces dating from 1 August 2012, which were imposed by order of Law 4093/2012 and ministerial decisions, were unconstitutional, and that they must be returned to the levels of July 2012.

According to the Court of Cassation, constitutional bans and special restrictions on individual rights governing the uniformed services, as well as special working conditions, imply favourable treatment, while their earnings must 'be sufficient for a decent living and proportionate to the importance of their mission for the State'. The Court notes that the principle of special treatment, regarding the salary of the uniformed services, derives from Articles 23, 29 and 45 of the Constitution.

According to the Court, the State can reduce the basic salary or allowances, but this reduction cannot take place without the financial benefit being weighed against the effect of the reduction on the operation of the armed forces and a consideration of whether the reduction is necessary or can be offset by other measures which have an equal result and have a smaller cost on the personnel of the sector concerned.

As the Court emphasises, the obligation to assess the situation before making reductions in earnings 'is stronger in the case of the military'. It concludes that 'cuts imposed by the Memorandum Act exceed the limit set by the constitutional principles of proportionality and equality in the public burden'.

In this context, the basic salaries of the police, the military, firefighters and port employees will see an increase of up to 25%, while allowances will rise by 10% to 37% once the decision is implemented.

The case reached the Council of State after appeals brought by seven bodies:

  • The Association of Military Personnel for the Region of Attica (ESPEA) and another nine regions (Thessaloniki, Peloponnese, Eastern Macedonia and Thrace, Central Macedonia, Western Macedonia, Crete, Epirus, Evros and Central Greece),
  • The Panhellenic Federation of Police Officers (POASY)
  • The Panhellenic Federation of Associations of Port Authority Employees (POEPLS)
  • The Association of Retired Army Officers (EAAS)
  • The Association of Retired Navy Officers (EAAN)
  • The Association of Retired Air Force Officers (EAAA)
  • The Coordinating Council of Associations of Retired Officers, along with 590 members of the military and port employees.

Cuts in pensions for judiciary deemed unconstitutional

According to articles in the Greek press, the plenary session of the Court of Auditors following the above decision, with an almost unanimous ruling in a closed-doors session, on 23 June that retroactive cuts applying from 1 August 2012 to the pensions of judges, prosecutors and members of the State Legal Council, in the framework of the Memorandum Act (Law 4093/2012), are unconstitutional and contrary to the European Convention on Human Rights.

Indeed, the Court has ruled that the cuts imposed on retired judges under the Memorandum Act exceed the limits set by the constitutionally safeguarded rule of equality and the constitutional principle of proportionality regarding share of the public burden.

In parallel, it recognises the right of the State to reduce the pensions of judicial officials (and their earnings) but this reduction cannot be implemented without also taking into consideration the financial benefit arising from it and the possibility of it being offset by other measures having an equivalent effect at lower social cost.

However, according to press reports, the Court of Auditors has upheld an appeal by the Ministry of Finance, ruling that the limitation of actions on judges’ pensions claims is two rather than five years, thereby effectively reducing the time for which retroactive claims can be made.

In excess of 150 million euro must retroactively be returned to retired judges but the exact sum is not known, because pensions vary according to degree of seniority, family status, length of service, prior insurance in other Funds, etc.

It should be noted that this decision follows majority rulings already made by the Salary Tribunal at the end of 2013, that reductions in the earnings of active judges are unconstitutional and that 25% of judges’ net earnings must be untaxed, since the Constitution requires parity between the three branches of government (the executive, the legislature and the judiciary). Specifically, the members of the Salary Tribunal (three judges, three academics from university law schools and three lawyers) held that the Constitution recognises 'directly and expressly in Article 87 paragraph 2, the operational and personal independence of judges that compose the courts and equates the independence of justice (and thereby parity with the other two branches, through which effective separation of the branches is achieved) with the independence of the judges. Indeed, again according to the Constitution, the special treatment of the salaries of judicial officials is considered a guarantee of their independence. In this light, judges’ earnings must not only be at least equal to the earnings of equivalent functionaries in the other two branches of government, but must also be 'sufficient to guarantee a decent living'.

Budgetary implications

The decision of the Council of State that wage cuts for judicial officials and the uniformed services are unconstitutional creates a fiscal gap of the order of about 600 million euro for the government (the budget for judicial officials and the uniformed services is calculated to be 270 million euro, while 600 million euro (100 million for judicial officials and 500 million for the uniformed services) will be needed for retroactive payments. This development is considered a foregone conclusion and it cannot be ruled out that it will be extended to pending cases – active and retired – that come under special salary regimes, such as doctors in the National Health System, university teachers, diplomats, etc.

In this context, according to latest data, additional taxation for the two sectors and for Greek taxpayers is being examined. The two possible scenarios for meeting the shortfall from the uniformed services are 1/ either to redefine the salary regime retroactively from 1 August 2012, so that salaries will be higher in comparison with the cuts but lower than those that applied before July 2012; 2/ to apply a measure to all taxpayers as a whole to meet the remaining gap that has been created.

 

 

 

 

 

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