New York’s highest state court has ruled that a broad “no layoff” clause in a public-sector labor contract cannot necessarily be used to prevent job eliminations by a government employer.

By a 4-3 margin, the Court of Appeals rejected an attempt by the firefighters union in the Binghamton area Village of Johnson City to seek arbitration of the village board’s decision last year to lay off six firefighters for budgetary reasons.

In his opinion for the majority, Judge Eugene Pigott acknowledged that the court previously has allowed contractual provisions to interfere with layoffs — most notably in a 1976 case involving Yonkers teachers, whose contract included this provision: “During the life of this contract no person in this bargaining unit shall be terminated due to budgetary reasons or abolition of programs but only for unsatisfactory job performance and provided for under the Tenure Law.”

In the Johnson City case, the firefighters’ contract said: “The Village shall not lay-off any member of the bargaining unit during the term of this contract.” Contrasting it with the Yonkers teachers case, Pigott said the Johnson City language was not explicit enough to prevent layoffs based on budgetary necessity. Pigott wrote:

Contrary to the Union’s contention, the no-layoff clause in this CBA [collective bargaining agreement] is not arbitrable because it is not explicit, unambiguous and comprehensive. From a public policy standpoint, our requirement that “job security” clauses meet this stringent test derives from the notion that before a municipality bargains away its right to eliminate positions or terminate or lay off workers for budgetary, economic or other reasons, the parties must explicitly agree that the municipality is doing so and the scope of the provision must evidence that intent. Absent compliance with these requirements, a municipality’s budgetary decisions will be routinely challenged by employees, and its ability to abolish positions or terminate workers will be subject to the whim of arbitrators.

In a dissenting opinion, Associate Judge Carmen Beauchamp Ciparick said the disputed contract clause was explicit enough to meet the court’s Yonkers test. Concurring in Cipraick’s opinion were Chief Judge Jonathan Lippman and Associate Judge Theodore Jones. Pigott’s majority opinion was joined by Associate Judges Susan Read, Victoria Graffeo and Robert Smith.

The position eliminations in Johnson City are expected to save $500,000 for the cash-strapped Village — which has been struggling for the past three years to cover the cost of an extraordinarily generous and unaffordable firefighters contract.

The case also has implications on the state government level, where Gov. Andrew Cuomo has negotiated new union contracts that include the following “Workforce Reduction Limitation” provisions:

a. For fiscal years 2011-12 and 2012-13, employees shall be protected from layoffs resulting from the facts and circumstances that gave rise to the present need for $450 million in workforce savings.

b. For the term of the agreement, only material or unanticipated changes in the state’s fiscal ciercumstances, financial plan or revenue will result in potential layoffs.

c. Workforce reductions due to closure or restructuring of facilities, as authorized by legislation or Spending and Government Efficiency Commission determinations are excluded from these limitations.