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On the government resolution concerning the increase of work remuneration

Case No. 14/96

 

 

THE CONSTITUTIONAL COURT OF

THE REPUBLIC OF LITHUANIA

 

R U L I N G

 

On the compliance of Item 3.1 of the Resolution of the Government of the Republic of Lithuania (No. 1004) “On Increasing Minimum Work Remuneration” of 23 August 1996 with the Constitution of the Republic of Lithuania, Paragraph 1 of Article 499 of the Civil Code of the Republic of Lithuania and Article 2 of the Republic of Lithuania’s Law on Work Pay

 

20 January 1997, Vilnius

 

The Constitutional Court of the Republic of Lithuania, composed of the Justices of the Constitutional Court: Egidijus Jarašiūnas, Kęstutis Lapinskas, Zigmas Levickis, Augustinas Normantas, Vladas Pavilonis, Jonas Prapiestis, Pranas Vytautas Rasimavičius, Teodora Staugaitienė, and Juozas Žilys

The court reporter—Daiva Pitrėnaitė

Benjaminas Merčaitis, Head of the Labour Relations Division of the Ministry of Social Security and Labour, and Vita Safjan, Head of the Analysis and Prognosis Division of the Ministry of Social Security and Labour, acting as the representatives of the Government of the Republic of Lithuania, the petitioner

The Constitutional Court of the Republic of Lithuania, pursuant to Paragraph 1 of Article 102 of the Constitution of the Republic of Lithuania and Paragraph 1 of Article 1 of the Law on the Constitutional Court of the Republic of Lithuania, in its public hearing, on 20 December 1995, considered case No. 14/96 subsequent to the petition submitted to the Court by the Rokiškis District Local Court, the petitioner, requesting an investigation into whether Item 3.1 of the Resolution of the Government of the Republic of Lithuania (No. 1004) “On Increasing Minimum Work Remuneration” of 23 August 1996 is in compliance with the Constitution of the Republic of Lithuania, Paragraph 1 of Article 499 of the Civil Code of the Republic of Lithuania and Article 2 of the Republic of Lithuania’s Law on Work Pay.

The Constitutional Court

has established:

I

On 18 October 1996, the Rokiškis District Local Court, the petitioner, was investigating a civil case subsequent to the action of the plaintiff B. Balčiūnas against the respondent the private company “Kavoliškis” concerning damage compensation on the grounds of harmed health. By its ruling, the said court suspended the investigation of the case and applied to the Constitutional Court with the petition requesting an investigation into whether Item 3.1 of the Resolution of the Government of the Republic of Lithuania (No. 1004) “On Increasing Minimum Work Remuneration” of 23 August 1996 (Official Gazette Valstybės žinios, 1996, No. 81-1956; hereinafter referred to as the impugned resolution) is in compliance with the Constitution of the Republic of Lithuania, Paragraph 1 of Article 499 of the Civil Code of the Republic of Lithuania and Article 2 of the Republic of Lithuania’s Law on Work Pay.

II

The petitioner grounds its request in its ruling and its explanatory paper on the following legal arguments.

The petitioner points out that Item 3.1 of the government resolution establishes that “beginning from 1 September 1996, the calculated damage compensation to persons who suffered injury when at work may not be less than the portion of the amount of 420 Lt which corresponds the loss of the percentage of professional working capacity”. The petitioner is of the opinion that this norm contradicts Paragraph 1 of Article 499 of the Civil Code wherein it is prescribed that “providing an employee has been crippled or otherwise his health has been harmed when fulfilling his work (or official) duties through the fault of the organisation or natural person that must pay social insurance contributions for him, then the said organisation or natural person must compensate the damage to the person who has suffered injury so that the inflicted damage does not exceed the amount of money which was designated and the pension actually received. Exceptions of this rule may be established only by means of laws of the Republic of Lithuania”. The petitioner concludes from this norm that “it is the difference between the inflicted harm to the person who suffered injury and the money amount of pension which was designated to him and which he actually receives that constitutes damage compensation which must be paid by the organisation through the fault of which the said damage was inflicted”. As the average monthly remuneration of the plaintiff is 369.64 Lt, then, in the opinion of the petitioner, conforming to Paragraph 1 of Article 499 of the Civil Code, the respondent should monthly repay the damage by paying 67.32 Lt which is constituted by the difference between the inflicted harm and the designated and actually received pension.

The petitioner indicates that Paragraph 2 of Article 2 of the Law on Work Pay provides that “An employee’s hourly remuneration (monthly salary) may not be less than the minimum hourly wage (monthly salary) established by the State”. The average monthly salary of the plaintiff B. Balčiūnas was 369.64 Lt. On the day when he lost his working capacity, i.e., on 16 May 1996, the minimum monthly salary was established as 210 Lt by Item 1.2 of the Government Resolution (No. 1635) “On Increasing Minimum Sizes and Other Payments” of 28 December 1995. The petitioner is of the opinion that the salary which was received by the plaintiff exceeded the said minimum monthly salary, therefore, the rights of the plaintiff were not violated.

The petitioner also points out that according to Paragraph 1 of Article 499 of the Civil Code, exceptions of these provisions may be established only by means of laws of the Republic of Lithuania. In the opinion of the petitioner, such exceptions must be provided by the Republic of Lithuania’s Law on Insurance against Accidents at Work as it is established in Paragraph 1 of Article 78 of the Republic of Lithuania’s Law on Labour Protection.

The petitioner alleges that it is not clear why, according to the impugned resolution, “for one group of employees only minimum monthly salary, i.e., at present 300 Lt, is guaranteed by law, whereas for another group of employees, i.e., those who suffered from harmed health at work are provided with 420 Lt as a minimum social guarantee.” In addition, the petitioner concludes on the grounds of the Republic of Lithuania’s Law on Individual Income Security that the Government is entitled to index constant payments (grants, salaries, pensions, social benefits) but not to change the size which must be compensated for damage.

III

When the case was being prepared for judicial investigation, as well as during the court hearing, the representatives of the party concerned presented the following counter-arguments.

1. They indicated that, under the Government Resolution (No. 527) “On Increasing the Damage Compensation Which is Received for Harmed Health or Because of the Death of the Person Who Suffered Injury” of 4 December 1991, damage compensation for harmed health was indexed by using a coefficients’ table. The sizes of the said coefficients were grounded on the changes in the average yearly work remuneration in Lithuania.

In pursuance of the Government Resolution (No. 129) “On the Indexation of Work Remuneration, Pensions and Other Payments” of 26 February 1992, its Resolution (No. 210) “On the Indexation of Work Remuneration, Pensions and Other Payments” of 31 March 1992, as well as its Resolution (No. 295) “On the Indexation of Work Remuneration, Pensions and Other Payments” of 27 April 1992, the indexation was accomplished by increasing calculated damage compensations by respective percentage.

The Government established by its Resolution (No. 629) “On the Indexation of Work Remuneration, Pensions and Other Payments” of 21 August 1992 that when indexing damage compensation, a minimum guarantee must be applied to the indexed damage compensation, i.e., it established minimum size of the indexed damage compensation and this size depended on the percentage of the loss of the harmed professional working capacity and minimum monthly wage.

2. The representatives of the party concerned allege that it was necessary to increase the minimum damage compensation as the prices in December 1992, if compared to those of December 1991, were higher 12.6 times, and in 1993—respectively 2.8 times. The accomplished indexation could not entirely cover the lost income, due to the increase in prices, of the persons who suffered injury because of harmed health. Thereby the factual size of damage compensation which had been calculated 10–20 years before and which decreased considerably.

In an attempt to cover the lost income of the said persons, the Government established by its Resolution (No. 629) “On the Indexation of Work Remuneration, Pensions and Other Payments” of 17 August 1993 new minimum size of the indexed damage compensation, whereas the calculation of the said size depended on the percentage of loss of the professional working capacity of the harmed person and double minimum monthly salary.

However, after the Government established by its Resolution (No. 1635) “On Increasing Minimum Sizes and Other Payments” of 28 December 1995 that the minimum monthly wage shall be 210 Lt and that the minimum hourly remuneration shall be 1.23 Lt, the actual size of damage compensation has been changing much more rapidly than that of other social payments (pensions, illness benefits, benefits paid to families, etc.).

The representatives of the party concerned are of the opinion that the actual size of damage compensation will change even more because the Government adopted the impugned Resolution of 23 August 1996 and Item 1 thereof confirms that beginning from 1 September 1996 the minimum monthly wage shall be 300 Lt and the minimum hourly remuneration shall be 1.76 Lt. If the order established by government resolution No. 629 of 17 August 1993 concerning the calculation of compensation of inflicted damage were left unchanged, i.e., if the damage were calculated taking account of the loss percentage of the working capacity and double minimum monthly wage, the actual size of damage compensation would be changing more swiftly than that of other social payments (pensions, illness benefits, the benefits paid to families, etc.). Therefore, the Government established by Item 3.1 of the impugned resolution that beginning from 1 September 1996, the calculated damage compensation to persons who suffered injury when at work may not be less than the portion of the amount of 420 Lt which corresponds to the loss of the percentage of the professional working capacity.

3. The representatives of the party concerned allege that such a minimum social guarantee as established by the Government manifests itself so that the amount of money on which the damage compensation is calculated may not be less than 420 Lt. Provided the average work remuneration of the person who suffered injury and on which damage compensation is calculated is higher than 420 Lt, then damage compensation is calculated on the earnings actually received.

The representatives of the party concerned are of the opinion that Item 3.1 of the impugned government resolution is in compliance with the Constitution, Paragraph 1 of Article 499 of the Civil Code and Article 2 of the Law on Work Pay. The said item “established a minimum guarantee of the compensation for the calculated damage, i.e., the amount of money on which damage compensation is calculated but not the manner of damage compensation. The latter is established by the Paragraph 1 of Article 499 of the Civil Code.” The impugned Item 3.1 of the government resolution is in compliance with the Law on Work Pay as the minimum guarantee of damage compensation which is established by the said item is not linked with a minimum average remuneration.

In addition, the representatives of the party concerned allege that the issues raised by the petitioner are the matter of application of legal provisions while investigating a civil case regarding damage compensation but never the object subject to investigation as provided in Article 1 of the Law on the Constitutional Court.

The Constitutional Court

holds that:

1. On 23 August 1996, the Government adopted the Resolution (No. 1004) “On Increasing Minimum Work Remuneration” and confirmed by Item 1 thereof that beginning from 1 September 1996 the minimum monthly wage shall be 300 Lt, and the minimum hourly remuneration shall be 1.76 Lt.

By establishing a minimum monthly wage and minimum hourly remuneration, the Government implemented Item 2 of the Supreme Council Resolution (No. 1-925) “On the Enforcement of the Law on Work Pay” of 9 January 1991 by which it was established that “the Government of the Republic of Lithuania shall establish the minimum hourly remuneration (minimum monthly salary), taking into consideration the approved minimum cost living”.

It is established in Item 3.1 of the said impugned government resolution that beginning from 1 September 1996, the calculated damage compensation to persons who suffered injury when at work may not be less than the portion of the amount of 420 Lt which corresponds the percentage of loss of the professional working capacity.

The petitioner alleges that Item 3.1 of the said resolution contradicts the Constitution, Article 2 of the Law on Work Pay and Paragraph 1 of Article 499 of the Civil Code wherein it is established that compensation for material damage due to harmed health when at work may be regulated only by law. In the opinion of the petitioner, compensation for material damage due to harmed health when at work may be established only by law. The Government is entitled to index constant payments (grants, wages, pensions, social benefits) but it has no right to change the size which must be compensated for damage.

2.1. In the doctrine of law damage is generally understood as an injury of a person, deprivation of his life, or harm made to his rights or interests that are protected by law, as well as damage or wreckage of property due to which the person who suffered losses may not get back respective values or he loses them.

Paragraph 2 of Article 30 of the Constitution stipulates: “The law shall establish the procedure for compensating material and moral damage inflicted on person.”

When interpreting the content of this constitutional provision, one must hold that the necessity to compensate material and moral damage inflicted on person is a constitutional principle. By means of the implementation of this constitutional principle, an attempt is made to ensure that the persons who suffered material or moral damage be compensated for it. This must be considered in the law-making work, too.

Paragraph 2 of Article 30 of the Constitution also clearly indicates the form of legal act by which compensation for material and moral damage must be regulated. By establishing the form of the legal regulation based on law, an attempt is made to create unchanging legal preconditions for securing the rights and legitimate interests of the person who has been crippled or his health was otherwise harmed.

2.2. The provisions of Paragraph 2 of Article 30 of the Constitution are realised in laws. For instance, Paragraph 1 of Article 78 of the Law on Labour Protection prescribes: “The damage compensation of working capacity loss, as well as that of treatment, nursing, prosthetics and other expenses of the employee who due to an accident at work, occupational disease or other type of harmed health connected with his work has lost his working capacity, and in case of the death of the person who suffered injury, the damage compensation to his family or other persons shall be regulated by the Republic of Lithuania’s Law on Insurance against Accidents at Work as well as other laws.”

Paragraph 1 of Article 483 of the Civil Code prescribes: “The damage which was inflicted to the personality or property of a natural person, as well as the damage which was inflicted to an organisation, must be fully compensated by the person that inflicted it with the exception of the cases provided by means of laws of the Republic of Lithuania.” This norm establishes an important principle of damage compensation: the damage inflicted to the person or property must be fully compensated. Alongside, it must be noted that, however, the law may also provide for other cases when the inflicted damage must be compensated not in full, or the person who inflicted the damage is exonerated from damage compensation (e.g., provided the person who suffered injury is guilty himself (Article 497); in case of indispensable defence (Article 487), etc.).

Paragraph 1 of Article 498 of the Civil Code stipulates: “Provided a natural person has been crippled or his health was harmed otherwise, then the organisation or the natural person that is responsible for the damage must compensate the earnings of the person who suffered injuries which he lost due to the loss of or a decrease in his working capacity, as well as the expenses made because of the harmed health (improved nourishment, prosthetics, nursing (provided the nursing was accomplished by outsiders), treatment expenses (except for free treatment), etc.).” It is evident from the content of this norm that the earnings of the person who suffered injury prior to his injury and which he lost or it decreased due to the infliction constitutes damage compensation. Additional expenses which had to be made because of the injury must also be compensated to the person who suffered injuries.

The employee’s work remuneration, as a rule, depends on labour demand and supply on the labour market, as well as on the amount and quality of work and the activity results of an enterprise. However, according to Paragraph 2 of Article 2 of the Law on Work Pay, “an employee’s hourly remuneration (monthly salary) may not be less than the minimum hourly remuneration (monthly salary) established by the State”. Hence the conclusion may be drawn that in cases when an employee’s hourly remuneration (monthly salary) prior to the injury was less than the established minimum hourly remuneration (minimum monthly salary), the damage compensation must be calculated according to the minimum work remuneration established by law.

Paragraph 1 of Article 499 of the Civil Code prescribes that “providing an employee has been crippled or otherwise his health has been harmed when fulfilling his work (or official) duties through the fault of the organisation or natural person that must pay social insurance contributions for him, then the said organisation or natural person must compensate the damage to the person who has suffered injury so that than the inflicted damage does not exceed the amount of money which was designated and the pension actually received. Exceptions of this rule may be established only by means of laws of the Republic of Lithuania”.

The following conclusions are to be drawn from the content analysis of Articles 498 and 499 of the Civil Code and that of Article 2 of the Law on Work Pay: 1) the size of damage compensation depends on the earnings received prior to injury at work; 2) the size of the damage is the portion of the amount of the earnings which corresponds to the loss of the percentage of the working capacity; 3) the damage is compensated to the person who suffered injures so that the inflicted damage does not exceed the amount of the benefit received or the pension designated after the health infliction and actually received; 4) provided that prior to the injury the earnings of the employee who suffered infliction were less than the minimum remuneration established by the State, then damage compensation is calculated according to the minimum earnings established by the State.

The said provisions concerning damage compensation must be consolidated and changed only by law. The Government by establishing the minimum compensation of calculated damage to persons due to harmed health at work by Item 3.1 of its Resolution No. (1004) “On Increasing Minimum Work Remuneration” of 23 August 1996, however, changed the provisions of material damage compensation which are established by law and thereby interfered into the sphere regulated by the legislature. Therefore, Item 3.1 of the said government resolution contradicts Paragraph 2 of Article 30 of the Constitution, Paragraph 1 of Article 499 of the Civil Code and Article 2 of the Law on Work Pay.

Alongside, it should be noted that the earnings of a significant number of people decreased due to economic difficulties and inflation, thus, the issue of compensation for harmed health suffered at work is very urgent. However, to resolve issues linked with compensation of such damage is possible only by legal regulation. The Government may influence the aforementioned processes by submitting respective motions to the legislature, by increasing or indexing minimum remuneration pursuant to the procedure provided by law but never by correcting legal norms by its acts.

Conforming to Article 102 of the Constitution of the Republic of Lithuania and Articles 53, 54, 55 and 56 of the Republic of Lithuania’s Law on the Constitutional Court, the Constitutional Court of the Republic of Lithuania gives the following

ruling:

To recognise that Item 3.1 of the Resolution of the Government of the Republic of Lithuania (No. 1004) “On Increasing Minimum Work Remuneration” of 23 August 1996 contradicts Paragraph 2 of Article 30 of the Constitution of the Republic of Lithuania, as well as Paragraph 1 of Article 499 of the Civil Code of the Republic of Lithuania and Article 2 of the Republic of Lithuania Law on Work Pay.

This ruling of the Constitutional Court is final and not subject to appeal.

The ruling is pronounced in the name of the Republic of Lithuania.

Justices of the Constitutional Court:

 

Egidijus Jarašiūnas     Kęstutis Lapinskas      Zigmas Levickis

 

Augustinas Normantas      Vladas Pavilonis      Jonas Prapiestis

 

Pranas Vytautas Rasimavičius      Teodora Staugaitienė      Juozas Žilys