Last December, the Council adopted, a regulation adjusting, with effect from 1 July 2009, the remuneration and pensions of the EU civil servants. It has decided to amend the Commission’s proposal “in light of the financial and economic crisis.” The Member States agreed, therefore, to cut the proposed wage increase of the EU civil servants, including ECJ judges, from 3.70 percent to 1.85 percent.

According to the Commission the Council by failing to agree the pay rise based on the staff regulation’s calculation method was in breach of its legal obligations to respect EU law. Consequently, the European Commission decided to bring an action for annulment before the European Court of Justice against the Council decision.

There was a similar situation in the 70s, during the oil crisis, which ended up with the Commission winning the case at the ECJ. This has happened again. The Commission has asked the court to treat the case under the accelerated procedure hence a decision was reached in 11 months.

On 24 November, the European Court of Justice ruled that the Council “exceeded the powers conferred on it by the Staff Regulations” by fixing an increase of 1.85% and not a 3.7% as proposed by the European Commission.

The ECJ recalled that there is “an exceptional clause providing for a special salary adjustment procedure to be followed in case of a serious and sudden deterioration in the economic and social situation” and such provision is “the only possibility open to the Council, under the Staff Regulations, should it wish to take into account an economic crisis in the context of the annual salary adjustment and to depart from the criteria laid down” in the Regulation. However, the Court noted that the Council has not invoked the special procedure “in case of a serious and sudden deterioration in the economic situation.”

Consequently, the Court concluded that “the Council has no margin of discretion allowing it to decide upon a salary adjustment different to that proposed by the Commission on the basis of the criteria laid down in …the Staff Regulations alone.”

Hence, the Court annulled the Council Regulation’s provisions cutting the proposed wage increase of the EU officials with effect from July 2009 to June 2010.

Member States have opposed to such pay rise due to the economic crisis. Several Member States have introduced wage freezes for their national civil servants, and now, because the ECJ says so, they have to accept it.

The existing regulation remains in effect until the Council adopts a new regulation in line with the ECJ’s ruling. Once the new regulation enters into force the EU civil servants will get their 3.7% pay rise, and six months will be paid retrospectively. According to the EuropeanVoice Michael Mann, commission spokesman for EU administration, said that "There is also a legal requirement to pay interest on the salaries we didn't receive…" Such pay rise will cost to taxpayers €72.5 million.

It is important to recall that in October the European Commission announced that the EU officials’ salaries will be reduced by 0.4% next year. However, the European Commission has recently proposed to raise the salaries of 50,000 EU civil servants by 0.4% in 2011.