C-211/80

J U D G M E N T OF T H E COURT (FIRST CHAMBER) 19 JANUARY 1984 l

Michel Advernier and Others v Commission of the European Communities (Official — Revision of salary scales)

Case 211/80

Officials — Remuneration — New method of adjustment — Incorporation of weightings in the salary scales — Rectification of distortions resulting from such incorporation — Council Regulation No 160/80— Objection of illegality — Dismissal

In Case 211/80,

MICHEL ADVERNIER AND OTHERS, officials of the Commission of the European Communities, represented by Georges Vandersanden of the Brussels Bar, with an address for service in Luxembourg at the Chambers of Janine Biver, 2 Rue Goethe, Luxembourg, applicants,

composed of: T . K o o p m a n s , President of Chamber, A. O'Keeffe and G. Bosco, J u d g e s ,

Advocate G e n e r a l : S. R o z è s

Registrar: A. W . H . Meij, Legal Secretary-

gives the following

JUDGMENT

Facts and Issues

weighting, which amounted at the time for each step of each grade of officials to 148.7 as regards Belgium and Luxem- and for each class in every group of bourg, into the basic salary scales. other servants. Without concomitant measures such incorporation would have involved a reduction in net remuneration since the basic salaries as increased are also the basis for the Community tax and other The new scale in gross terms shall be mandatory deductions. drawn up by calculating for each step or class the gross amount which, after deduction of tax and compulsory contri- butions, gives the new net amount referred to above. To remedy that situation the staff repres- entatives in the course of meetings with the Council preceding the adoption of the new method had proposed to weight the portions of remuneration liable to tax This conversion of net amounts into and other deductions not only with gross amounts shall be based on the the new weighting to be decided but situation of an unmarried official who also with the weighting incorporated. does not receive the various allowances. Moreover, they had drawn attention to the risk of distortion arising from the incorporation of weightings if the least advantageous situation, for example that of an unmarried official not receiving The incorporation of the net rate into any of the various allowances, were the salary scale shall result in the taken as a basis. Nevertheless the weighting for Belgium and Luxembourg Council took a different course to avoid being fixed at 100% and the weightings a reduction in net remuneration without for other countries of employment being providing for adjustment of the portions adjusted on the basis of the ratio liable to Community tax along with the between the cost-of-living indices." increase in basic salaries.

the salary scales in accordance with the thereto (Official Journal L 330, p. 1) an aforesaid conditions; the weighting for amendment to Regulation N o 280/68 of Belgium and Luxembourg thus becomes the Council of 29 February 1968 laying 100 % and the weightings for the other down the conditions and procedure for countries of employment are to be applying the tax for the benefit of adjusted accordingly. the European Communities (Official Journal, English Special Edition 1968 (I), p. (37). The amendment subjected the amounts liable to Community tax, for the period from 1 July 1977 to 30 June 1978, to a weighting of 106.084. There is also a review clause "with a view in particular to determining possible further improvements and rectifying any distortions." Subsequently, by a decision dated 26 June 1978 the Council amended the method of adjustment adopted on 29 June 1976 and introduced a formula for correcting the amounts liable for tax as The weightings were incorporated into provided in the aforesaid Regulation N o the salary scales for the first time by 260/68 of the Council. Council Regulation No 3177/76 of 21 December 1976 adjusting the remuner- ation and pensions of officials and other servants of the European Communities and the weightings applied thereto (Official Journal L 359, p. 1). That regu- Although the Council thus avoided a lation reduced the weighting for Belgium repetition of the distortion which and Luxembourg, fixed at 157.8 from appeared in applying Regulation No 1 July 1976, to 100 with effect from 3177/76 in the period from 1 January to 1 January 1977 at the same time as new 30 June 1977, nevertheless since sub- scales were introduced with effect from sequent adjustments of remuneration the same date. were based on the scale adopted in that regulation, the distortion to which that led was repeated from year to year.

Journal L 20, p. 1). That regulation lays The Commission expressly rejected the down a new table of gross monthly complaints by letter dated 28 July 1980 salaries and abolishes the distortions in and the applicants brought the present question. It entered into force on 27 joint action on 27 October 1980. January 1980 with effect from 1 July 1979. It provides however that no part of the salaries paid between 1 July 1979 and Upon hearing the report of the Judge- the date on which the regulation entered Rapporteur and the views of the into force should be required to be Advocate General the Court (First repaid. On the other hand it lays down a Chamber) decided to open the oral transitional scheme for the benefit of procedure without any preparatory officials who might suffer a loss of inquiry. income on application of the new scale. So long as the new scale would involve However, at the request of the applicants them in a loss of income the regulation the President of the First Chamber provides that they are to continue to adjourned the opening of the oral enjoy the benefit of the former scheme. procedure until after the judgment of the Court in Case 59/81 Commision v Except for certain special cases the Council which was given on 6 October reduction in basic salaries resulting from 1982. the adjustment of the scale Avere reabsorbed following the adjustment made on the same day by Council Regu- lation No 161/80 effecting the annual II — C o n c l u s i o n s of the p a r t i e s adjustment of remuneration on the basis of the revised scales (Official Journal L 20, p. 5) which also applied as from The applicants claim that the Court 1 July 1979. should :

The applicants' second submission is that the adoption of Regulation No 160/80 is In support of that objection the incompatible with Article 65 of the Staff applicants put forward six submissions. Regulations and with the new method of adjustment established in 1976. According to the judgment of 5 June 1973 (Case 81/72 Commission v Council In the first place Regulation No 160/80 [1973] ECR 575) on the annual is based on an erroneous statement of adjustment of salaries for 1979 the reasons. Contrary to what is stated in the Council was bound to observe the second recital in the preamble thereto it criteria which it established itself in cannot be claimed that the regulation adopting the new method of adjustment. was adopted to correct "unintended That method does not allow the Council increases" in remuneration resulting to reopen the issue of the salaries during from the incorporation of the weighting the reference period, in the present case into the salary scales. the period from 1 July 1978 to 30 June 1979. The Council was not therefore empowered to make the adjustment for 1979 on the basis of amended scales. The only grounds capable of justifying in the It was in spite of an opinion to the present case a derogation from the contrary by the Commission, the staff method of adjustment would be an error representatives and the Working Party previously made in drawing up the on the Staff Regulations and after staff scales. In adopting Regulation N o representatives expressly drew attention 160/80 the Council was however in no to the problem of distortions that the way correcting an error; on the contrary Council adopted Regulation N o 3177/76 it had gone back on its assessment of which was to be at the origin of the salary policy as determined in 1976. increases in salary corrected by Regu- lation No 160/80. Moreover the Council has already in the past tried on two occasions the same method, which produced the same effects. In the In those circumstances the applicants in applicants' view the Council was fully their fourth and fifth submissions also alerted to the risks of distortion inherent rely on the principle of the protection of in the course of action contemplated. legitimate expectation and vested rights.

As to the lack of due care alleged against The applicants' sixth submission is that the Council, the Commission answers Regulation No 160/80 was adopted in that the existence of a different opinion breach of essential procedural require- is not capable of affecting the legality of ments. The Council formed an intention a regulation. Moreover in its capacity as to adopt the regulation before the the competent authority for laying down opinion of the European Parliament, the Staff Regulations the Council is which was unfavourable, was known. entitled at any time to make such Furthermore, the Council observed amendments thereto as it considers to be neither the conciliation procedure in the interests of the service. demanded by the Parliament pursuant to the Joint Declaration of 4 March 1975 (Official Journal C 89, p. 1) nor the procedure for consultation with the staff which the Council terminated before the opinion of the Parliament was given. Nor is the revision of the scale incompatible with Article 65 of the Staff Regulations or with the decision of 29 June 1976. The object of fixing new scales is only to remove the original As regards the statement of the grounds cause of the distortions, repeated from on which Regulation No 160/80 was year to year, and thus to prevent certain

JUDGMENT OF 19. 1. 1984 — CASE 211/80

In support of their claim that the Council could not but be aware of the distortions The Commission then observes that which Regulation No 3177/76 would Regulation No 160/80 has no retroactive cause they referred to two additional effect to the detriment of staff. Although documents. the revised scales were applicable from 1 July 1979 the regulation provides that in the case of officials and other servants whose entitlements are in consequence reduced, no part of the amounts paid The statement of reasons contained in during the period between 1 July 1979 the proposal to amend Regulation N o and the date on which the regulation 3177/76 presented by the Commission to entered into force should be required to the Council on 18 July 1977 runs as be repaid. It therefore does not adversely follows : affect vested rights. On the contrary, by introducing a transitional scheme for the benefit of such employees the Council assured them that in future their previous net remuneration would be maintained. "This manner of incorporating the In consequence of the annual adjustment weighting has in some cases involved of remuneration for 1979 by Regulation considerable increments for officials in No 161/80 it was moreover hardly employment and also considerable necessary to apply the transitional reductions for quite a high number of system. those in receipt of pensions or the

ADVERNIER v COMMISSION

allowance payable on termination of an "unmarried official not in receipt of employment under special measures the various allowances" the Council, adopted under Regulations Nos 259/68, with full knowledge of the position, 2530/72 and 1543/73. adopted a salary policy favouring heads of family and those in receipt of expatri- ation allowance. The statement of the reasons on which Regulation No 160/80 The Working Party of National Experts is based is therefore inaccurate in so far (the Working Party on the Staff Regu- as the regulation was intended to reserve lations) considered the distortion giving the effects of a method, deliberately rise to increments. selected, of incorporating the weightings.

JUDGMENT OF 19. 1. 1984 — CASE 211/80

introduction in 1978 of a formula for Single Council and a Single Commission adjusting the taxable portions for the of the European Communities and is a future was indeed regarded as a regulation amending the Staff Regu- definitive solution to the problem of lations. It is therefore outside the im- distortions resulting from the incor- plementing provisions under Article 65 of poration of the weightings. the Staff Regulations and the method of adjustment of 29 June 1976. The latter were the basis for Regulation No 161/80. Further, although the review clause relates primarily to the method of Finally, as regards the infringement of adjustment itself there is nothing to show essential procedural requirements the that it cannot be used to remove distor- applicants point out that it was on 17 tions to which the annual adjustments of January 1980, before the Parliament's remuneration made in application of that opinion was known, that the Council method may give rise. Moreover, Regu^ informed the staff that it had decided to lation No 160/80 was intended to re- adjust Regulation No 160/80 and that is establish for the future equality between the date which must be taken into officials and other servants without account in appraising the disregard by seeking repayment of any salary which the Council of the procedure for was paid Under the rules previously in consulting Parliament. In any event the force (cf. judgment of 19 March 1975 in fact that the regulation is dated 21 Case 28/74 Gillet v Commission [1975] January, that is three days, including a ECR at p. 473). Saturday and a Sunday, after the European Parliament gave its opinion, shows that the Council paid no attention tö it. Moreover, in view of the under- takings in relation to the interin- As regards disregard of essential pro- stitutional conciliation and negotiations cedural requirements the Commission with staff representatives it is not for the observes finally that Regulation No Council to determine unilaterally the 160/80 is dated 21 January 1980 and is course of those procedures. therefore subsequent to the Parliament's opinion even if drafts and intentions may have been put forward or declared before that date.

3 The first submission alleges an inaccurate statement of reasons in the regu- lation. The recitals in the preamble thereto refer to the need to correct "unintended" increases in remuneration resulting from the incorporation of the weighting into the salary scales of officials, whereas in fact, it is claimed, the Council had been alerted to the risks inherent in the manner in which the incorporation was effected and the distortions which would result therefrom; in nevertheless proceeding therewith the Council thus acted with full knowledge of the situation.

4 The incorporation of the weighting into the basic salary scales laid down by the Staff Regulations was decided upon by the Council on 29 June 1976 as part of a new method of adjusting the remuneration of officials. The incor- poration was effected by Council Regulation No 3177/76 of 21 December 1976 adjusting the remuneration and pensions of officials and other servants of the European Communities and the weightings applied thereto (Official Journal L 359 p. 1). The regulation introduced new scales with effect from 1 January 1977 and reduced the weighting for Belgium and Luxembourg, which had been 157.8 from 1 July 1976, to 100.

JUDGMENT OF 19. 1. 1984 — CASE 211/80

5 The Commission infers from those circumstances that the Council intended at the time to reduce to 100 the weightings for Belgium and Luxembourg in order to give the weightings back their true function pursuant to Article 64 of the Staff Regulations, namely to compensate for the differences in the cost of living in the various places of employment. Although that operation gave rise to some distortions due in particular to the fact that the increase in the scale intended to neutralize the increase in tax resulting from the incor- poration of the weighting was calculated on the basis of the position of an unmarried official not in receipt of the various allowances, the distortions were only secondary effects and not intended by the reform in question.

9 The second submission alleges infringement of rules of law inasmuch as the Council did not observe the criteria which it had itself laid down in adopting the decision of 1976 in relation to the method of adjusting remuneration. Whereas Regulation No 3177/76 constituted a correct application of the method of adjustment defined by that decision Regulation No 160/80 was intended to call that application in question, it is claimed, by readjusting the basic salaries and thus breaking undertakings entered into in relation to the adjustment of remuneration.

io According to the Commission, the fixing of new scales of remuneration by Regulation No 160/80 is not contrary to the remuneration policy laid down by the Council decision of 29 June 1976, the purpose of which was to ensure, in the medium term, that the remuneration of European officials kept pace with the average salaries of the various classes of national civil servants in the Member States. The sole purpose of the fixing of new scales in 1980 was to prevent certain officials from obtaining additional increases contrary to the object of the reform of 1976.

n The submission must be dismissed. On the one hand it overlooks the fact that the Council in the decision of 1976 had inserted a review clause relating in particular to distortions which might arise from the incorporation of the weighting into the scale. On the other hand the method adopted by the said decision was intended to implement Article 65 of the Staff Regulations; although it might thus result in circumscribing the exercise by the Council of the discretion conferred upon it by Article 65 in adjusting remuneration, it does not affect Regulation No 160/80, which is a regulation amending the Staff Regulations pursuant to Article 24 of the Treaty Establishing a Single

IC Those submissions are first of all based on the argument that Regulation N o 160/80 substantially departs from the method which the Council had selected in June 1976. It nevertheless appears from the previous considerations that the regulation is outside the field of application of the method adopted for implementing Article 65 of the Staff Regulations.

ADVERNIER v COMMISSION

i7 The two submissions are also based on a slightly different argument, namely that the rights acquired by officials under Regulation No 3177/76 cannot be called in question by the Council save in the event of the adoption of a new method for adjusting remuneration.

ie In that respect it must be remembered that Regulation No 160/80, which has retroactive efect from 1 July 1979, provides that no part of the amounts paid between that date and the date of its entry into force, namely 27 January 1980, is to be required to be repaid. Furthermore, it provides transitional measures intended progressively to reabsorb the distortions without bringing about a reduction in the amounts actually paid. Moreover the effect of Council Regulation No 161/80 of 21 January 1980 effecting the annual review of remuneration under the revised scales (Official Journal L 20, p. 5) was to increase, also from 1 July 1979, the remuneration resulting from the application of Regulation No 160/80 in such a way that, apart from certain special cases, the reductions in basic salaries resulting from the revision of the scale were immediately re-absorbed.

i9 In those circumstances there has been disregard neither of legitimate expectations nor of vested rights. The applicants' argument to the effect that to determine whether there has been such disregard it is necessary to ascertain, not whether or not there has been a reduction in the amounts actually paid but whether the rate of remuneration has been frozen for a certain period, must be rejected in circumstances such as the present, in which the regulation at issue is intended precisely to put an end to unjustified increases such as those resulting from the scale previously applicable.

23 The Commission has claimed that the conditions for applying that procedure were not satisfied in this case since Regulation N o 160/80 is not a measure with appreciable financial implications. The applicants have not challenged that contention. In those circumstances the fact that the Parliament had requested the initiation of the conciliation procedure is not capable of affecting the legality of the regulation at issue. That complaint also must therefore be rejected.

24 It follows from all the foregoing that the action must be dismissed in its entirety.

Costs

25 Under Article 69 (2) of the Rules of Procedure the unsuccessful party is to be ordered to pay the costs. However, under Article 70 of the Rules of Procedure in proceedings brought by servants of the Communities the institutions are to bear their own costs.

ADVERNIER v COMMISSION

On those grounds,

J. A. Pompe T. Koopmans Deputy Registrar President of the First Chamber

O P I N I O N OF MRS ADVOCATE GENERAL ROZÈS DELIVERED O N 10 NOVEMBER 1983 f

Mr President, Council5 and the Parliament4 — seeking Members of the Court, the challenge the lawfulness of Council Regulations No 160/80 of 21 January 1980 amending the Staff Regulations The cases before the Court are brought of Officials and the Conditions of by numerous officials against their Employment of Other Servants of the institutions — the Commission,2 the European Communities and No 161/80 of 21 January 1980 adjusting the ac- 1 — Translated from the French. 2 — Case 211/80 Michel Advernier and Others and Joined 3 — Case 260/80 Ivar Andersen and Others. Cases 219 to 228, 230 to 235, 237, 238 and 240 to 242/80 Maurice André and Others. 4 — Case 262/80 Kirsten Andersen and Others.