A serviceman won a recalculation of payments through the court: the use of the 2018 subsistence minimum was recognized as illegal
The Zhytomyr District Administrative Court obliged the military unit to recalculate the monetary allowance of the serviceman for the period of service, recognizing the use of the subsistence minimum as of January 1, 2018, when calculating the official salary and rank salary as unlawful.
Circumstances of the case
A serviceman applied to the Zhytomyr District Administrative Court with a claim against the military unit to recognize the inaction regarding the non-accrual and non-payment in the proper amount of monetary allowance and other due payments for the period from May 18, 2022, to May 19, 2023, as unlawful, and to oblige the unit to carry out the appropriate recalculation and payment. The plaintiff requested a recalculation of the official salary and rank salary by applying the subsistence minimum for able-bodied persons established by the laws on the State Budget of Ukraine for 2022 and 2023 as of January 1 of the respective year, with simultaneous compensation of personal income tax amounts according to Cabinet of Ministers Resolution No. 44.
The claim was justified by the fact that the military unit applied the subsistence minimum for able-bodied persons established as of January 1, 2018, when determining the amount of monetary allowance. According to the plaintiff, this led to an understatement of both the monthly monetary allowance and all payments calculated based on the official salary and rank salary, including monetary assistance for health improvement, material assistance for social and domestic issues, bonuses, and compensation for unused annual leave.
In its response, the military unit stated that after the court recognized certain provisions of Cabinet of Ministers Resolution No. 103 as unlawful, the legislation does not provide for automatic restoration of the previous version of the normative legal act. According to the defendant, for this reason, there were no legal grounds for recalculating the monetary allowance using the subsistence minimum established by law as of January 1 of each calendar year.
The court established that the plaintiff served in the defendant’s military unit from May 18, 2022. It was also established that in response to a lawyer’s inquiry, the military unit confirmed the application of the subsistence minimum of 1762 UAH as of January 1, 2018, when determining the official salary and rank salary, and refused to recalculate. These circumstances were the basis for the serviceman’s appeal to the court.
Position of the court
In giving a legal assessment of the disputed relations, the court noted that according to part two of Article 19 of the Constitution of Ukraine, state authorities and their officials are obliged to act only on the basis, within the powers, and in the manner defined by the Constitution and laws of Ukraine. Article 9 of the Law of Ukraine "On Social and Legal Protection of Servicemen and Their Families" guarantees servicemen a sufficient level of monetary allowance, which includes the official salary, rank salary, monthly and one-time additional types of monetary allowance.
The court noted that Cabinet of Ministers Resolution No. 704 dated August 30, 2017, in its original version, provided in paragraph 4 for determining official salaries and rank salaries by multiplying the subsistence minimum for able-bodied persons established by law as of January 1 of the respective calendar year by the corresponding tariff coefficient. A similar procedure was also fixed in the notes to the annexes to the resolution. The court emphasized that paragraph 4 of Resolution No. 704 is the normative provision to be applied, and the notes only accompany its content and cannot contradict it.
However, Cabinet of Ministers Resolution No. 103 dated February 21, 2018, amended paragraph 4 of Resolution No. 704, according to which the calculation was to be made using the subsistence minimum established as of January 1, 2018. However, by the decision of the Sixth Administrative Court of Appeal dated January 29, 2020, in case No. 826/6453/18, paragraph 6 of Resolution No. 103, which introduced these changes, was recognized as unlawful and canceled. The court noted that from that date the original version of paragraph 4 of Resolution No. 704 was restored, which provides for the application of the subsistence minimum established by law as of January 1 of each calendar year.
The court found that the defendant did not dispute the fact of applying the subsistence minimum as of January 1, 2018, during the disputed period when determining the official salary and rank salary of the plaintiff. As a result, the monetary allowance and all derivative payments were calculated in a smaller amount than provided by law. Under these circumstances, the court concluded that the actions of the military unit regarding the calculation and payment of monetary allowance in a reduced amount without applying the subsistence minimum established by the laws on the State Budget of Ukraine for the respective years are unlawful.
The court separately noted that according to the Procedure for Payment of Monetary Allowance to Servicemen, approved by the Ministry of Defense Order No. 260, the official salary and rank salary are basic components on which most monthly and one-time payments to servicemen depend. These payments include allowances, bonuses, premiums, material assistance for social and domestic issues, monetary assistance for health improvement, and other types of monetary allowance. Therefore, incorrect determination of the official salary affects the amount of all these payments, which are also subject to recalculation.
Regarding the claim for compensation of personal income tax amounts, the court noted that the procedure for such compensation is defined by Cabinet of Ministers Resolution No. 44. According to its provisions, servicemen have the right to simultaneous reimbursement of tax amounts withheld from monetary allowance and other due payments, so in case of recalculation of monetary allowance, such compensation is also subject to payment.
Conclusions of the court
Having assessed the evidence and substantive law in case No. 240/29647/25, the court concluded that the claim should be satisfied. The court noted that after the entry into force of the decision of the Sixth Administrative Court of Appeal dated January 29, 2020, in case No. 826/6453/18, the original version of paragraph 4 of Cabinet of Ministers Resolution No. 704 was restored. Therefore, from that date, official salaries and rank salaries must be determined by multiplying the subsistence minimum for able-bodied persons established by law as of January 1 of the respective calendar year by the corresponding tariff coefficient, and not by applying the figure as of January 1, 2018.
The court found that the defendant unlawfully applied the subsistence minimum as of January 1, 2018, when calculating the plaintiff’s monetary allowance for the period from May 18, 2022, to May 19, 2023. This led to an understatement not only of the official salary and rank salary but also of all types of monetary allowance directly dependent on these components.
Therefore, the court recognized the inaction of the military unit, which consisted in not applying paragraph 4 of Cabinet of Ministers Resolution No. 704 in the version effective since January 29, 2020, when determining the official salary and rank salary of the plaintiff, as unlawful.
Moreover, the court obliged the military unit to recalculate the monetary allowance and all payments due to the plaintiff for the disputed period using the subsistence minimum for able-bodied persons established by the laws "On the State Budget of Ukraine for 2022" as of January 1, 2022, and "On the State Budget of Ukraine for 2023" as of January 1, 2023, multiplied by the corresponding tariff coefficient. The recalculation must take into account previously paid amounts.
The court also concluded that simultaneously with such recalculation, the military unit is obliged to compensate the amounts of personal income tax according to the Procedure approved by Cabinet of Ministers Resolution No. 44 dated January 15, 2004, since such compensation is part of the mechanism of reimbursing losses of servicemen related to withholding personal income tax from monetary allowance.
As a result of the case consideration, the court fully satisfied the administrative claim, recognized the inaction of the military unit as unlawful, and obliged the defendant to recalculate and pay the due amounts of monetary allowance and other payments in compliance with Cabinet of Ministers Resolution No. 704 in the version effective after January 29, 2020.
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