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Cyprus

State mulling appeal to civil servants’ returned bonuses

Finance Minister Harris Georgiades said the aim is to reduce public debt to 90 per cent of GDP by the end of 2020

The state has not decided yet whether it would appeal a court judgement in favour of civil servants who challenged a decision to dock their one-off bonus for which they were eligible on retirement, Finance Minister Harris Georgiades said on Wednesday.

The minister reiterated however, that civil servant court claims relating to the austerity measures put in place as the economy hurtled towards collapse, were considered severe risks.

“It has not been decided yet,” he said when asked if the state planned to appeal the decision. “I am waiting for an analysis on the effects. I suspect it is a possibility we will examine with the Legal Service as was already done on the case of the civil servants’ pensions.”

In a judgment this week, the administrative court found in favour of the four 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).

The decision followed 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.

Civil servants also filed a suit against pay cuts.

“Depending on what the courts decide we will see how we implement their decisions,” Georgiades said, declining to say more because of the ongoing case.

“What I can say is that it is noted as a severe potential risk,” he said.  Risks to the economy are included in the annual reports accompanying the state budget and fiscal planning.

Georgiades said he was worried but the government had proposed the gradual reinstatement of the salaries in a bid to preserve the economy’s steady course.

The proposal, which has been approved by parliament, provides for the cuts to be lifted by January 2023.

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