Bonum Certa Men Certa

Workers of the European Patent Office Take the Office to Court Over Pension

posted by Roy Schestowitz on Jun 22, 2024,
updated Jun 22, 2024

Appeals Committee favours staff and pensioners in salary adjustment litigation

European Patent Office (EPO) pensions still precarious

SEVERAL hours ago the Staff Union of the European Patent Office (SUEPO) published and circulated a new publication about the ongoing attack on pensioners and future pensioners by António Campinos and his predecessor Benoît Battistelli.

As a little bit of background consider the following:

The latest publication is dated Friday and it was accompanied/spread with the message in the abstract/overview: "SUEPO has been actively contesting the new salary adjustment procedure introduced in 2020, which has led to reduced or halted annual adjustments of salaries and pensions. A test-case procedure before the Enlarged Chamber of the Appeals Committee has now resulted in an opinion favouring staff and pensioners, which has been sent to the President. In a recent publication, the President has downplayed the opinion and indicated a preference for a judgment from ILOAT. SUEPO criticises the inflated financial provisions of EUR 2 billion cited by the President and emphasises the Office’s strong financial position. The President should follow the opinion of the Appeals Committee, as generally foreseen in the Service Regulations."

Here's the full thing as HTML, plain text, and GemText:

INTERNATIONALE GEWERKSCHAFT IM EUROPÄISCHEN PATENTAMT
STAFF UNION OF THE EUROPEAN PATENT OFFICE
UNION SYNDICALE DE L'OFFICE EUROPEEN DES BREVETS

Zentraler Vorstand Central Executive Committee Bureau central
Staff Union of the European Patent Office (SUEPO) www.suepo.org

21 June 2024
su24012cp 0.2.1 – 5.2

Appeals Committee favours staff and pensioners in salary adjustment litigation

SUEPO has been actively contesting the new salary adjustment procedure introduced in 2020, which has led to reduced or halted annual adjustments of salaries and pensions. A test-case procedure before the Enlarged Chamber of the Appeals Committee has now resulted in an opinion favouring staff and pensioners, which has been sent to the President. In a recent publication, the President has downplayed the opinion and indicated a preference for a judgment from ILOAT. SUEPO criticises the inflated financial provisions of EUR 2 billion cited by the President and emphasises the Office’s strong financial position. The President should follow the opinion of the Appeals Committee, as generally foreseen in the Service Regulations.

Dear SUEPO members,

Since the introduction of the new salary adjustment procedure in 2020, SUEPO has been supporting appeals and complaints against it. The Office has regularly reduced or even halted the annual adjustments of salaries and pensions, which should normally reflect the average development of the purchasing power of national civil servants, and has excluded pensioners from the redistribution pool.

Recent developments: Internal appeal procedure

An important positive development has now taken place in this dispute. On 13 April 2022, the presiding member of the Enlarged Chamber of the Appeals Committee announced the possibility of initiating a test-case procedure for appeals against the salary adjustment procedure and its implementation for 2021 (86,8% cut in adjustments). SUEPO considered this proposal adequate and informed its members accordingly. The initiation of the test- case procedure was then announced on 8 August 2022.

After several submissions of observations by the test appellants and the Office, a hearing before the Enlarged Chamber on 15 November 2023, and further exchanges of information, the Appeals Committee sent its reasoned opinion to the President on 7 June 2024. This opinion shall apply to every appeal in which a similar issue has been raised (see Article 9b of the Implementing Rules for Articles 106 to 113 ServRegs). Pursuant to Article 110(4) ServRegs, the President shall take a final decision on the appeal, of which the appellants shall receive a copy.

President’s response and implications

Although latter has not yet taken place, the President published on the Intranet on 13 June 2024 that the Enlarged Chamber had concluded that the application of the sustainability clause (cut in adjustments) had gone against the principle of purchasing power parity. In addition, the Enlarged Chamber considered it fair and advisable that the periodical settlement clause should not exclude pensioners.

The President shall in general follow the opinion of the Appeals Committee. If not, he shall set out in writing the reasons for deviating from the opinion. Interestingly, in this legal context (Article 110(4) ServRegs), the President minimised the opinion of the Enlarged Chamber in a test-case procedure as a “non-binding opinion” and declared, without further reasoning, that the Office did not share this opinion. Instead, he suggested that the lawfulness of the current salary adjustment procedure would ultimately be cleared by an ILOAT judgment.

Paradoxically, the President, who once favoured a shift from a litigation culture to a culture of social dialogue, now seeks resolution from the Tribunal in Geneva. In addition, on the same date, he also published an announcement stating that many measures taken by the Office in recent years have strengthened dialogue, but that the backlog before the Tribunal remains a concern.

Analysis and proposal

The jurisprudence of the Tribunal attributes considerable deference to rational and balanced findings of internal appeal bodies (see Judgments Nos. 2295, 3400, 4697). When rejecting an opinion of the Appeals Committee, the President thus must give clear and cogent reasons (see Judgments Nos. 2699, 4697). We believe that respect for this opinion must be all the greater since this is a test-case procedure in which the Enlarged Chamber of the Appeals Committee has carefully investigated and assessed the matter. SUEPO would therefore not shy away from supporting complaints by the test appellants in Geneva in the event of a negative decision by the President.

Unfortunately, we cannot comment in detail on the opinion because the President has not published it together with his Intranet statement. Neither has he sent a copy to the appellants yet. It seems wrong to publicly criticise a positive opinion in a test-case procedure before it is even published. This approach is lacking transparency and fairness. It appears that that the President wants to ensure the sovereignty of interpretation before allowing the appellants and all other concerned employees and pensioners to make their own assessment.

SUEPO encourages the President to fully implement the opinion of the Appeals Committee and to propose the removal of the sustainability clause (Article 9) from the Implementing Rule for Article 64 ServRegs. This would also render the periodical settlement redundant (Article 10), thus preventing the discrimination of pensioners (which contravenes Article 33(2)(c) EPC). The dispute over the salary adjustment procedure would then be settled with a subsequent payment of the arrears, interests, and costs.

Financial situation

Some colleagues approached us because the President referred in his publication to a provision of circa EUR 2 bn in the Office’s reserves, equivalent to the savings of the salary adjustment procedure. Indeed, the impact of the salary adjustment procedure on the alleged coverage gap was estimated in CA/19/20 at EUR 2 bn under the conditions of the so-called Base 2 scenario. This scenario, which assumed no recovery from a low interest rate environment and a global economic recession in 2020, did not materialise. The savings of EUR 2 bn forecasted in the financial study 2019 assumed the application of limiting the adjustments to the inflation in the Eurozone + 0,2% over a period of multiple cycles of the salary adjustment procedure, but the current opinion of the Appeals Committee should lead to a correction of the SAP already in this first cycle. It follows, that a more realistic figure is at least one order of magnitude lower. The financial situation of the Office is as follows (2023 year-end actuals): RFPSS: EUR 12,1 bn; EPOTIF: EUR 3,5 bn; cash reserve: EUR 0,5 bn; annual surplus: EUR 0,4 bn. This is much better than estimated. The reference to a EUR 2 bn provision is clearly inflated and not aligned with the current financial situation.

Furthermore, the fact that a provision is only mentioned now, despite a four-digit number of requests for review and appeals against the salary adjustment procedure having been filed since 2020, raises the question as to whether the Office has adequately assessed the legal risks and failed to recognise the need to make provisions at an earlier stage. The annual statements according to IFRS for the accounting periods of 2021 and 2022 make it clear that the EPOrg has contingencies arising from the ordinary course of business, mainly due to disputed invoices, pending legal disputes and arbitration procedures or appeals by staff members including those in front of the ILOAT. The Office does not anticipate that these will give rise to any material liabilities other than those for which provision has been made. The provisions for litigation risks amounted to EUR 6,1 million on 31 December 2022 (see CA/60/23, note 26), and to EUR 5,6 million on 31 December 2021 (see CA/60/22, note 25).

Together, we are strong!

We would like to emphasise that the only way we can finance the dispute about the salary adjustment procedure is through your contributions. SUEPO collaborates with reputable lawyers who draft appeals for SUEPO members and who support the appellants. As a union with strong membership, SUEPO is perfectly placed to defend the rights of staff and pensioners.

Your SUEPO Central Bureau

What happens at the EPO in that regard is part of a broader trend.

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