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Cyprus

Four civil servants have docked bonus reinstated

Four civil servants have won a court case after challenging the government’s decision to dock their one-off bonus to which they were eligible upon retirement.

In a judgment this week, the administrative court found in favour of the plaintiffs, and ruled that the decision by the finance ministry and the treasury, pursuant to a law passed in 2012, was null and void.

The plaintiffs must now be compensated, that is, receive the full one-off retirement bonus as if the 2012 law never existed.

The plaintiffs had completed their pensionable service, but in 2012 did not opt to retire at the age of 60, electing to serve until the mandatory retirement age of 63.

Via the government decision, their bonuses were docked by €4,086, €4,222, €4,178 and €7,228, respectively.

The court found that the reductions were in breach of article 23.3 of the constitution (restrictions to the right to property).

It said the government decision to dock the pensions did not satisfy the reasons cited in the constitution for restricting a person’s right to property, which includes a pension.

Under article 23.3: “Restrictions or limitations which are absolutely necessary in the interest of the public safety or the public health or the public morals or the town and country planning or the development and utilisation of any property to the promotion of the public benefit or for the protection of the rights of others may be imposed by law on the exercise of such right.”

Moreover, the court ruled that the decision to reduce the pension bonuses violated the principle of proportionality as well as the legal doctrine of legitimate expectation, enshrined in EU law.

The doctrine of legitimate expectation was developed to protect a procedural or substantive interest when a public authority rescinds from a representation made to a person.

In its decision, the court agreed with the plaintiffs’ argument that they had planned out their retirement (including taking out loans) based on the expectation they would have received their full pension payouts. These legitimate expectations were “suddenly” dashed by the government decision to dock their bonuses.

For all the above reasons, the court ruled that the provisions of the relevant 2012 law are devoid of legal effect.

“I consider that the plaintiffs’ contractual and crystallised pension rights… were violated,” presiding judge Maria Kalligerou stated in the judgment.

The ruling was welcomed by the civil servants union Pasydy. In its newsletter, the union cited an excerpt from the judgment of the European Court of Human Rights in Azinas v Cyprus, delivered on April 28, 2004.

The excerpt reads: “The applicant submits that pension constitutes an integral part of the employment contract that the Government offers to all of its employees, namely the civil servants. A civil service position is accompanied by a compulsory retirement scheme, which includes a monthly pension and a lump sum. This is part of the overall employment package which the Government undertakes to finance and pay at the end of one’s employment; civil servants contribute with their years of service and by having a certain amount cut off from their salary by way of taxes.”

The recent ruling follows another judgment delivered last November when again the administrative court declared void a 2012 law which had imposed cuts on the pensions of public sector employees. The government was ordered to reimburse the plaintiffs to the tune of €2m.

In that case, a group of 115 former civil servants and people employed in the broader public sector had challenged the 2012 law, enacted then to rein in the state payroll as part of an austerity drive.

That case concerned the monthly pension payouts, unlike this most recent case, which related to the one-off bonus.

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