Statutory regulation on pension deduction applicable to part-time civil servants null and void

Press Release No. 72/2008 of 11 July 2008

Order of 18 June 2008
2 BvL 6/07

A civil servant’s pension is determined according to percentages of the pensionable remuneration, known as pension rates. Up until 31 December 1991 a degressive table was used to calculate the pension rate. After completing 10 pensionable years of service, the pension rate amounted to 35 per cent. It increased by two per cent for every additional year of service up to the 25th year of service, thereafter by one per cent of the pensionable years of service up to a maximum pension rate of 75 per cent. A civil servant attained the maximum pension rate after 35 pensionable years of service. In many cases this degressive grading meant that part-time civil servants were better placed financially than full-time civil servants. To compensate for that, a regulation was introduced into the law on civil service benefits in 1984 such that the pension rate for part-time civil servants was to be reduced pro rata temporis. The rate was calculated in accordance with § 14.1 of the Civil Service Benefits Act (Beamtenversorgungsgesetz – BeamtVG) in the version applicable until 31 December 1991 by first calculating the fictitious pension rate which the civil servant would have attained had he worked on a full-time and not a part-time basis. This fictitious pension rate was then reduced in the same ratio as existed between the civil servant’s actual pensionable years of service and the pensionable years of service which he would have achieved had he been employed on a full-time basis (pension deduction for part-time civil servants).

As from 1 January 1992 the degressive pension table was replaced by a linear table. No more pension deductions as described above were made once this new pension table became applicable. However, the provision set out in § 14.1 BeamtVG, old version, continued to apply by virtue of the transitional provision set out in § 85 BeamtVG in regard to calculating the pensions of those part-time civil servants who had been granted civil servant status prior to 31 December 1991.

By judgment of 23 October 2003 the Court of Justice of the European Communities ruled that the regulation set out in § 85 BeamtVG in conjunction with § 14.1 BeamtVG, old version, conflicts with the principle of equal pay for men and women established under Article 141 of the Treaty establishing the European Community (EC Treaty). Applying these provisions could lead to a part-time civil servant receiving a lower pension than a full-time civil servant even when they had served the same number of hours. Where the majority of part-time employees were female, the Court ruled, that constituted indirect discrimination of female employees. For reasons of legal certainty, the European Court of Justice restricted the effect of this ruling to benefits owed for periods of employment after 17 May 1990.

The complainant in the original proceedings was granted civil servant status in 1971. Up until she retired with effect from 1 August 1998 on account of invalidity, she had mainly been employed on a part-time basis. Her pension rate was calculated for the period prior to 17 May 1990 in accordance with § 14.1 BeamtVG, old version, which resulted in the pension deduction taking full effect during that period. The Bavarian Higher Administrative Court (Bayerischer Verwaltungsgerichtshof) suspended the proceedings in the appeal and submitted to the Federal Constitutional Court for a ruling the question of whether the regulation set out in § 14.1 BeamtVG in the version applicable until 31 December 1991 in regard to the pension deduction was compatible with the Basic Law (Grundgesetz – GG).

The Second Senate of the Federal Constitutional Court ruled that the challenged regulation has an indirect gender discriminatory effect within the meaning of Article 3.3 sentence 1 GG and that it is therefore null and void.

In essence, the decision is based on the following considerations:

Calculating the pension rate in accordance with § 85.4 sentence 2 BeamtVG in conjunction with § 14.1 sentence 1 half-sentences 2 and 3 BeamtVG, old version, places women at an indirect disadvantage, since in the overwhelming majority of cases it is women who take advantage of the opportunity to work on a part-time basis. As a consequence of the prescribed method of calculation, part-time civil servants obtain a lower pension rate than full-time civil servants, although they have completed the same number of pensionable years of service. This discrimination cannot be justified on the grounds of other rights given constitutional rank.

1. In view of the cost burden on public budgets associated with creating more opportunities for working part-time, the pension deduction was, among other things, to serve to establish cost neutrality. However, it is not justified to draw precisely on those employed on a part-time basis, the majority of whom are women, to achieve that cost neutrality. In the case of the labour market policy instrument of part-time work, women are in addition taking advantage of a possible form of employment which was also afforded in the state’s interest in creating jobs. There is no justification for requiring that those who take advantage of the opportunity created in that manner to pay a special contribution to finance the system. Even in those cases in which someone takes advantage of the possibility of working part-time for family-related reasons, it is not justified to burden civil servants with such employment contracts by requiring them to pay a special contribution to (co-)finance the pension burdens in the overall system.

2. Nor can the unequal treatment be justified by the fact that the pension deduction serves to prevent part-time civil servants from being better placed financially. Although applying the degressive pension table alone does in individual cases lead to part-time employees being paid the same pension rate despite serving fewer years than full-time civil servants, that situation only arises in those cases in which a civil servant is paid the minimum pension after only a short period of service. However, the minimum pension does not make reference to the fact that the civil servant was in part-time employment. Rather, priority is here given to providing the civil servant with a basic pension which will serve to support him and his family in a manner commensurate with the office even in cases in which he has served for only a short period.

3. Further, the model of the full-time civil servant cannot in fact justify burdening part-time civil servants, the overwhelming majority of whom are women, when it comes to their pension. The legislature can in principle use the fact that a part-time civil servant does not exactly fit the model of the full-time civil servant as the point of reference in respect of regulations governing salaries. However, the legislature’s scope meets its limits where the regulations have a disproportionately disadvantageous effect on civil servants of one gender. Those limits have been exceeded in the present case. Both the far-reaching protective purpose of the prohibition of discrimination under Article 3.3 sentence 1 GG and the objectives pursued by introducing possibilities for working part-time conflict with that. On the one hand, it was in the state’s labour market policy interests to introduce part-time employment contracts. It was especially on account of an oversupply of teachers that additional jobs were to be created in the civil service by creating more opportunities for part-time work. However, it is then inconsistent to indirectly discriminate against those civil servants who have behaved according to the objective by making reference to their gender in a manner which results in women employed on a part-time basis receiving a lower pension. Part-time employment was, on the other hand, permitted for family policy reasons against the background of protecting marriage and the family. It serves to enable employees to combine family life and work, and thus the actual freedom of choice as regards decisions concerning roles and role allocation when it comes to marriage, family and work. Against this background it is not justified to partly undermine the intended protection to be afforded marriage and the family by means of financial disadvantages in the area of civil service pensions.