Austerity cuts to entry-level remuneration in the civil and judicial service of the Land Baden-Württemberg were unconstitutional

Press Release No. 82/2018 of 28 November 2018

Order of 16 October 2018
2 BvL 2/17

In an order published today, the Second Senate of the Federal Constitutional Court has declared void a statutory provision on civil and judicial service remuneration in the Land Baden-Württemberg providing for a lowering of the remuneration level in certain remuneration grades (Besoldungsgruppen) for civil servants and judges during the first three years of service. In its reasoning, the Court stated that in the context of budgetary consolidation measures, civil servants cannot be subjected to greater burdens than other groups. Impairments of the principle of appropriate alimentation (Grundsatz amtsangemessener Besoldung) that are based on purely financial considerations are only permissible in exceptional situations where the measures taken are part of a coherent and comprehensive concept for budget consolidation. The necessary budget savings must be generated in keeping with the principle of equality. Moreover, when determining the level of remuneration, the legislature has to comply with certain procedural requirements. Where the legislature enacts a series of measures within a short time frame in order to reduce public expenditure, it is imperative that the accumulated overall effect on civil servants be taken into consideration.

Facts of the case:

§ 23(1) of the Remuneration Act of the Land Baden-Württemberg (Landesbesoldungsgesetz Baden-Württemberg – LBesGBW) of 9 November 2010 as amended by Art. 5 no. 1 of the Budget Accompanying Act 2013/14 of 18 December 2012 provided for an eight-percent cut to the basic remuneration and any additional allowances paid inter alia to judges in Remuneration Grade R 1 during the first three years of service; prior to that, a four-percent cut had already been put in place. The claimant in the initial proceedings has been employed by the Land Baden-Württemberg since 2013; he served first as a prosecutor and later as a judge. During the first three years of service, the remuneration he received in Remuneration Grade R 1 had been reduced by eight percent. Following his unsuccessful objection (Widerspruch) in administrative proceedings, he brought an action before the Karlsruhe Administrative Court (Verwaltungsgericht). The Administrative Court suspended the initial proceedings and referred the question whether § 23(1) LBesGBW in the relevant version is compatible with Art. 33(5) of the Basic Law (Grundgesetz – GG) to the Federal Constitutional Court.

Key considerations of the Senate:

§ 23 LBesGBW violates Art. 33(5) GG in conjunction with Art. 3(1) GG.

1. It deviates from the requirement, derived from the principle of alimentation, that the level of remuneration be assessed based on criteria directly related to the office and linked to the internal functioning of the civil service. The provision is applicable to all persons entering the civil and judicial service of the Land Baden-Württemberg for the first time, including civil servants and judges that were previously employed by the Federation or by another Land. For up to three years, these persons receive a remuneration that is lower than the amount the Land legislature itself had deemed appropriate when enacting the regular remuneration schedule.

2. The referred provision does not satisfy the requirement of equal remuneration under Art. 33(5) GG in conjunction with Art. 3(1) GG. Unequal treatment arises from the fact that the remuneration cuts affect only certain groups of civil servants and judges. Remuneration grades up until Grade A 8, promotion-track positions in the higher remuneration grades and Remuneration Grades R 2 and W 2 and above are all exempted from the measure. In addition, the principle of equality is impaired due to the fact that not all officials employed in the same remuneration grade are affected by the measure. Specifically, civil servants and judges that already held their positions when the provision was enacted are not or only marginally subjected to remuneration cuts. Thus, persons holding positions of equal status within the civil and judicial service receive differing amounts of remuneration.

3. These impairments are not justified by factual reasons.

a) The aim of budget consolidation, as stated in the legislative proceedings, does not suffice to justify the provision. According to the Court’s case-law, it is a necessary prerequisite for burdening civil servants and judges with austerity measures that such measures be based on a coherent and comprehensive concept of budget consolidation, which must be outlined in sufficient detail in the preparatory legislative materials. Such a concept is lacking here. At the very minimum, the concept must define the envisaged savings goal and set out, in a comprehensible manner, the necessary measures chosen to achieve this goal. The challenged provision does not satisfy these requirements.

First of all, the savings volume considered necessary by the legislature is not clearly ascertainable. Determining the scale of budget savings is left to the legislature’s political discretion, however, sufficient information is required in this regard to allow for a review of whether the intended measures serve a coherent concept. For instance, it remains unclear in the present case whether at the time the provision was enacted a specific savings goal had been defined in quantitative terms at all, or what share of the overall necessary budget reduction the remuneration cuts would account for; in this regard, the only information discernible from the explanatory memorandum to the draft act is the savings volume that was considered likely to be achieved by the legislature. While it is possible to discern the relationship between the budget cuts and the other austerity measures set out in the Budget Accompanying Act, the legislative materials do not answer the question whether any further measures would be necessary for consolidating the budget or whether the envisaged measures as such would already suffice to meet the intended savings goal.

Moreover, it is not possible to discern the considerations informing the decision to choose these specific measures to realise the envisaged savings goal. The Budget Accompanying Act 2013/14 introduces a “debt ceiling” into the Budget Code of the Land Baden-Württemberg (Landeshaushaltordnung) and provides for several other austerity measures. Yet, even when read in conjunction with the legislative materials, these measures appear to have no meaningful connection to each other. The mere formalistic considerations laid down in the explanatory memorandum do not sufficiently justify the legislative concept. At the very least, it would have been incumbent upon the legislature to specifically identify alternative means that were taken into consideration and to state the reasons why these alternatives were ultimately rejected. From an equality perspective, and also in light of the social impact of the measure, the legislature would have been required to provide comprehensible explanations as to how the affected groups were selected and why the remuneration cuts were increased from four to eight percent in relation to the civil servants and judges that had already been subject to the austerity measure.

b) The fact that the persons affected by the referred provision have less professional experience does also not justify the measure. By linking the remuneration schedule to experience levels, the Land legislature did already factor the professional experience of civil servants and judges into the remuneration system. In this regard, the remuneration cuts in dispute are not permissible on the grounds that they merely specified details of the existing framework. Rather, they amount to effectively introducing an individual waiting period. In this respect, the Court affirmed in a previous decision that remuneration of civil servants is not considered a compensation for specific services rendered; rather, the remuneration received constitutes a “correlate” provided by the employer in return for the duty of civil servants, effective upon entry into service, to dedicate their entire work capacity, including their full personal commitment, to the state – in principle for life. The official function assigned to the civil servant – not the specific tasks and responsibilities that may still leave room for development – must be the assessment basis for their remuneration under the principle of alimentation.

c) Insofar as the Land legislature essentially contends that the referred provision was justified on the grounds that it rewards civil servants and judges that dedicated long years of service to the employer, this reasoning does not hold. The principle of loyalty demands that civil servants and judges show unconditional loyalty to the state employer from the first day of service. Thus, these considerations do not support differentiations in remuneration matters.

d) Furthermore, the burdening of only certain groups of civil servants and judges cannot be justified by social considerations. In the present case, it is ruled out from the outset given that by excluding Remuneration Grades from R 2 and W 2, it is precisely persons receiving a higher remuneration than the persons affected by the referred provision that are in fact exempted from the measure. To the extent that lower remuneration grades are exempted as well, it is not comprehensible why the legislature chose to draw the line specifically between the remuneration grades for intermediate-level civil service positions and the grades applicable to higher intermediate civil service positions, i.e. Remuneration Grade A 9 and above. In principle, it may be justified to impose a higher burden on persons receiving higher levels of remuneration; however, civil servants belonging to Remuneration Grade A 9 can clearly not be considered to fall within this category.

4. Moreover, the referred provision is unconstitutional due to the fact that the Land legislature failed to satisfy the procedural requirements deriving from the Constitution. When regulating the subject matter at issue, the legislature is, exceptionally, obliged to provide more than just the statutory basis. Generally speaking, where the legislature adopts measures for consolidating the budget, it may be required to coordinate austerity measures affecting different sectors of public administration by way of a coherent and comprehensive savings concept; it is sufficient that this can be ascertained based on the legislative materials. Yet, where legislative measures concern remuneration matters, certain procedural requirements arise, regardless of the legislative objective pursued. Even if new legislation on remuneration matters is not aimed at reducing public expenditure, these procedural requirements must be satisfied. Where a legislative measure relates to both budget savings and remuneration matters – as in the present case – it must meet both the standard applicable to the former as well as the one pertaining to the latter. In the present proceedings, the legislative materials lack any specific considerations regarding, in particular, the substantive content of § 23 LBesGBW and regarding the economic impact the provision has, by itself and in conjunction with other provisions, on affected civil servants and judges. For instance, it is not explained why the remuneration cut affecting remuneration grades that were already subject to a four-percent cut was further increased to specifically eight percent, i.e. twice the original amount. Furthermore, the explanatory memorandum does not contain any information on the interrelation between the referred measure and other austerity measures provided for under the same law. Not least given the tangible impact of other austerity measures affecting the employee benefit scheme for civil servants (Beihilfe), it would have been incumbent upon the Land legislature to address, in a comprehensible manner, whether (additional) remuneration cuts could be justified at all against this backdrop, and if so, on what scale.