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Cyprus / Supreme Court of Cyprus / Αppeals against Administrative Court decisions n. 177/18, 75/19, 76/19, 77/19, 79/19, 80/19, 84/19 και 85/19

Republic of Cyprus v. Avgousti et al

Deciding Body type:
National Court/Tribunal
Deciding Body:
Supreme Court of Cyprus
Decision date:
10/04/2020
ECLI:
ECLI:CY:AD:2020:C122
Key facts of the case:

The Supreme Court examined an appeal submitted by the government seeking to reverse a trial court ruling of the Administrative Court, which had found that the deduction of salaries, pay rises and cost of living adjustments in the salaries of public sector employees, as part of the austerity agenda to address the financial crisis, was unlawful. The trial court had ruled that that since pensions were found by judicial precedent to amount to ‘property’ and therefore deserving protection in the same way as property,  then salaries, increment and other pay increases also met the definition of ‘property’, as such, deserving the same level of protection as property.   

The Supreme Court reversed the trial court decision and established that the reduction of salaries does not infringe the right to property, since the Constitution permits specific limitations to this right aimed at safeguarding public benefit or the protection of the rights of others.1   The Supreme Court did not dispute the trial court finding that a salary is property and as such it is protected. However it moved on to analyse the right along the lines of the different wording between the Cypriot Constitution (article 23) and article 1 of the ECHR Protocol 1: whilst Protocol 1 permits restrictions to property rights for reasons of public benefit, the Cypriot Constitution does not include public benefit or public interest in the reasons for restricting the right to property. Instead the Constitution provides for an incidental regulation of the right, leading to a closed number of permitted exceptions: restrictions must be absolutely necessary for public safety, public health, public morals or townplanning or development or utilisation of any property to the promotion of the public benefit or for the protection of the rights of others. By contrast, Protocol 1 to the ECHR  permits deprivation if it is lawful, in the public interest, in accordance with the general principles of international law and reasonably proportionate ("fair balance" test), which is a less stringent test than the ‘absolutely necessary’ test provided in the Cypriot Constitution.

On the basis of that, the Constitution provides a higher degree of protection than ECHR Protocol 1.  The Supreme Court accepted that article 53 of the ECHR and article 53 of the Charter do not permit a limitation of rights protected at national level by invoking the ECHR.

Key legal question raised by the Court:
Whether the salary of public sector employees can be reduced where the circumstances are such that necessitate reduction. The Supreme Court found that the point where the trial court had erred was the meaning of ‘salary’ protected by the Constitution. Relying on judicial precedent 2 which established that the right to property under article 23 does not refer to a salary of a specific amount, the Supreme Court concluded that a change in the salary under conditions which are critical for the economy does not infringe article 23 of the Constitution, provided that the employee’s dignified living is not prejudiced. In light of this, what remains to be determined is whether the surrounding circumstances justify the salary reduction and the restriction is not arbitrary. The Court proceeded to examine the reasonableness of the salary reductions, taking into consideration the fact that the salary decreases were gradual and proportionate depending on the level of the income. The Court noted that no salary deductions were made for low-income employees and generally found the measure proportionate, since the reductions commenced in 2019 and are scheduled to terminate in 2023 and the aim was to reinforce the viability of the state pension scheme or another similar scheme.
Outcome of the case:
The Court concluded that the salary deductions did not affect the nucleus of the right to a salary and to a pension nor did they jeopardise the dignified subsistence of the respondents, who did not themselves raise such an issue. The appeals succeeded and the trial court decisions were nullified, thus legitimising the salary deductions of the public sector employees, which had commenced in 2019.