The supreme court on Monday held its first hearing on the appeals filed by the state against three administrative court decisions reversing civil servants’ pay cuts imposed around six years ago at a time when Cyprus hovered on the brink of economic collapse.
Earlier this month, the state also filed a request to suspend execution of the decisions.
The state has also asked for the appeals to be expedited and to be heard by the full bench of 13 judges. Currently, the appeals as filed are being examined by a three-bench court.
In March 29 decisions, the administrative court had ruled that a freeze on incremental pay rises, a 3 per cent contribution to pensions, and a reduction in civil servants’ pay was in violation of article 23 of the constitution regarding the protection of the right to property.
This applied to civil servants as well as persons employed in the broader public sector, such as semi-governmental organisations.
As such the pay reductions were deemed null and void and the applicants entitled to compensation.
During Monday’s proceedings lawyers representing the civil servants argued in court that a circular that has since been issued by the finance ministry – instructing all civil service bodies to withhold payment of compensation pending the appeals – is unlawful.
Various estimates have been cited on how much the decisions might cost the state should the administrative court’s ruling be upheld.
The most conservative scenario sees a few million euros as immediate backpay, compensating only those civil servants who sued, plus €200m annually from restoring full salaries to all civil servants.
The fiscal consolidation measures affecting exclusively the public sector, passed by parliament before Cyprus agreed the terms of its 2013 bailout with international creditors, included a general wage and hiring freeze, a 10 per cent drop in hiring salaries, and a permanent up-to 12.5 per cent reduction in pay.
On top came an extraordinary levy on wages in both the private and public sector which was phased out in 2016.
The measures helped bring down the government’s staff expenses to €2.2bn in 2015 from €2.9bn in 2011.