Top court strikes down pay hike for EU staff - Main contents

BRUSSELS - EU governments were entitled to strike down a 1.7 percent pay rise for EU staff during the economic crisis, the bloc's top court ruled Tuesday (19 November.)

The Luxembourg-based European Court of Justice (ECJ) backed a decision by governments to reject the salary hike to 2011 wages proposed by the European Commission.

Under the EU's staff regulations, the European Commission made an annual proposal on officials' pay and pensions to governments.

The so-called 'method', which will expire next month, consisted of a formula based on changes to the cost of living in Brussels and the purchasing power of salaries of national civil servants in eight EU countries.

However, the court found that governments were within their rights in 2011 to invoke the 'crisis clause' in the regulations allowing them to override the 'method' in the event of a recession hitting the EU economy.

The commission proposal had provoked anger among governments forced to impose domestic austerity programmes for civil servants. EU officials benefit from a much lower rate of tax than most national civil servants, in additional to allowances to cover the extra costs of living in Brussels.

In its judgement, the court found that governments were "not obliged" to rubber-stamp the commission's pay request because of the "serious and sudden deterioration" in the EU economy.

The ruling is a setback to the commission, which refused to be drawn on whether it would make a fresh proposal aimed at giving staff the extra pay. It also, unusually, overrules an opinion published in September by the court's Advocate General which sided with the EU executive.

Spokesman Anthony Gravili said that the EU executive would "study and reflect on the decision," adding that "we welcome the legal clarifications that it provides."

The revised EU staff regulations to come into force from January will include a 'moderation clause' will limit the adjustment from a very high increase or decrease in purchasing power to 2 percent alongside a revised 'crisis clause'. EU officials will also face freezes to both pay and pensions in 2013 and 2014.

"Whether we come forward with a new proposal is something we're going to have to reflect on and it's too early to say," said Gravili, although he stated that the commission would not go against the court.

The ruling was quickly welcomed by London which, at the time, had strongly protested the wage increase.

UK treasury minister Nicky Morgan said that the ruling "stopped the unjustifiable increases to EU salaries and pensions for 2011."

"When governments and families across Europe are taking difficult decisions to make savings, it would be wrong and irresponsible for the EU to not show similar restraint.”