The Constitutional Court Terminates Judicial Proceedings in the Case on Establishing Remuneration in State Capital Companies
On 8 December 2012 the Constitutional Court adopted the decision to terminate judicial proceedings in the Case No. 2012-04-03 “On Compliance of Section 6 and Section 7 of 30 March 2010 Cabinet of Ministers Regulation No. 311 “Provisions Regarding Number of Members of the Board of State or Local Government Capital Companies and Remuneration of a Member of the Council or the Board, a Representative of a Local Government Shareholder and the Chief Employee” with Section 96 (2) of the Law “On State and Local Government Capital Shares and Companies” and Article 107 of the Satversme of the Republic of Latvia.”
Contested Norms
Section 6 of 30 March 2010 Cabinet of Ministers Regulation No. 311 (hereinafter – the Regulation): “Chairman of the Board of a capital company shall have a common wage for the work in the Board and fulfilment of officiary duties in the capital company. To establish wage of the Chairman of the Board of a capital company, the coefficient shall be applied pursuant to the annex of the present Regulation.”
Section 7: “A member of the Board of a capital company shall have a common wage for the work in the Board and fulfilment of officiary duties in the capital company up to 90 per cent of the wage of the Chairman of the Board.”
Norms of Higher Legal Force
Section 96 (2) of the law “On State and Local Government Capital Shares and Companies”:
“The monthly salary of a member of the Board shall be set in accordance with the amount of average monthly remuneration for work in the previous year of the workers in the state published in the official statistical report of the Central Statistical Bureau, rounded in full lats and to which, in accordance with the criteria characterising the size of the company, a coefficient may be applied, which cannot exceed 6. The monthly salary of a member of the Board shall be re-calculated every year and the payment of the re-calculated monthly salary shall commence with 1 April of the respective year. The criteria characterising the size of the company and the maximum coefficient to be applied to establish the monthly salary in accordance with the size of the company shall be set by the Cabinet of Ministers.”
Article 107 of the Satversme: “Every employed person has the right to receive, for work done, commensurate remuneration which shall not be less than the minimum wage established by the State, and has the right to weekly holidays and a paid annual vacation.”
The Facts
The Applicants – Edvīns Bērziņš, Aivars Strakšas, Ēriks Šmuksts are the members of the Board of the State Joint Stock Company (hereinafter – SJSC) “Latvijas dzelzceļš”, whilst Uģis Magone – the Chairman of the Board of SJSC “Latvijas dzelzceļš”.
The Board established a Council of Presidents, which approved its Statute, envisaging the positions of the members of this Board – the President and Vice-Presidents. These positions were occupied by the Applicants. Thus, the members of the Board fulfilled officiary duties both in the Board of the capital company and the Council of Presidents.
The contested norms, which envisage a common wage for the work in the Board and fulfilment of officiary duties in the capital company, allegedly infringe the Applicants’ rights guaranteed in Article 107 of the Satversme to receive remuneration for the fulfilment of the officiary duties of the president and the vice-presidents. The contested norms are allegedly incompatible with the authorisation included in Section 96 (2) of the law “On State and Local Government Capital Shares and Companies”.
The Cabinet of Ministers, however, holds that the members of the Board of SJSC “Valsts dzelzeļš” as members of the Council of Presidents fulfil the same obligations and tasks falling within the competence of the Board.
The Court Findings and Ruling
The Constitutional Court in its decision assessed, whether the contested provisions infringe upon the Applicants’ fundamental rights guaranteed in Article 107 of the Satversme [10]. The Constitutional Court also analysed, whether the competence and officiary duties of the SJSC “Latvijas dzelceļš” Council of Presidents, set for the Applicants in this competence, differed from the competence of the Board and the respective officiary duties of the Board members [12].
The Court concluded that the legislator had provided exhaustive enumeration of the governing bodies of state and local government joint stock companies in regulatory enactments [13]. The board of the company acts in the general interests of the capital company, inter alia, overseeing all issues of corporation management within the competence of the board. Thus, the management of the company and its corporation is an inseparable process. The court concluded that the management and the representation of the company was solely the board’s competence [14].
Assessing the competence of the Board and the Council of Presidents of SJSC “Latvijas dzelzceļš, the Court concluded that actually the rights and obligations transferred to the Council of Presidents essentially fell within the competence of the Board. [16.2].
The Court has not obtained confirmation that the Applicants were performing work in the Council of Presidents that would differ from their work in the Board and would exceed the scope of the duties of the Board members. Therefore the Court recognised that the duties of the President and Vice-Presidents fall within the duties of the Board members of SJSC “Latvijas dzelzceļš”, for the performance of which the Applicants receive monthly salary, which exceeds the minimum monthly wages established in the state [17.3].
Thereby the Constitutional Court recognised that the contested norms did not violate the fundamental rights of the Applicants and that continuation of judicial proceedings in the case was impossible.[18].
Thus, the Constitutional Court terminates judicial proceedings in Case No. 2012-04-03 “On Compliance of Section 6 and Section 7 of 30 March 2010 Cabinet of Ministers Regulation No. 311 “Provisions Regarding Number of Members of the Board of State or Local Government Capital Companies and Remuneration of a Member of the Council or the Board, a Representative of a Local Government Shareholder and the Chief Employee” with Section 96 (2) of the Law “On State and Local Government Capital Shares and Companies” and Article 107 of the Satversme of the Republic of Latvia.”
The decision of the Constitutional Court is final and not subject to appeal.
Linked case: 2012-04-03