Changing staff regulations and acquired rights

In Judgment 4465 of 27 January 2022, the Administrative Tribunal of the International Labour Organization (ILOAT) rendered a decision in a case where the IAEA amended its Staff Regulations and Staff Rules on education grants. In its decision, the Tribunal provides a comprehensive overview of its earlier case law on acquired rights. While confirming its restrictive view on the scope of the acquired rights doctrine for international civil servants, the Tribunal observes that even in case there is no acquired right, an international organisation has a duty of care not to place staff in financial difficulty when implementing new arrangements. In the present case, the Tribunal considered that there was no acquired right. It also considered, however, that the amendment to the staff rules did not foresee any bridging arrangements and that the complainant did not have any real option to alter or reduce the significant financial burden arising from the amendment. As a consequence, the Tribunal awarded damages ex aequo et bono for the breach of the duty of care.  

On the acquired rights doctrine:

The Tribunal refers to ILOAT Judgment 4381 for a discussion on acquired rights. In this judgment, the Tribunal observed that the concept of breach of acquired rights has its genesis in the first decision given on 15 January 1929 by the ILOAT, then called the Administrative Tribunal of the League of Nations. In that decision (In re di Palma Castiglione v. International Labour Office), the Tribunal held: “The Administration is at liberty to establish for its staff such regulations as it may see fit, provided that it does not in any way infringe the acquired rights of any staff member.”

 “Over the decades since, the basis for recognising and protecting acquired rights has evolved and, in particular, principles developed for demarking what are and are not such rights. In the same Judgment 4381, the Tribunal quoted the applicable legal principles as summarised in Judgment 4195, consideration 7:

 “According to the case law, ‘[i]n Judgment 61 [...] the Tribunal held that the amendment of a rule to an official’s detriment and without his consent amounts to breach of an acquired right when the structure of the contract of appointment is disturbed or there is impairment of any fundamental term of appointment in consideration of which the official accepted appointment’ (see Judgment 832, under 13).

Judgment 832, under 14 (cited in part, below), poses a three-part test for determining whether the altered term is fundamental and essential. The test is as follows:

(1) What is the nature of the altered term? ‘It may be in the contract or in the Staff Regulations or Staff Rules or in a decision, and whereas the contract or a decision may give rise to acquired rights the regulations and rules do not necessarily do so.’

(2) What is the reason for the change? ‘It is material that the terms of appointment may often have to be adapted to circumstances, and there will ordinarily be no acquired right when a rule or a clause depends on variables such as the cost-of-living index or the value of the currency. Nor can the finances of the body that applies the terms of appointment be discounted.’

(3) What is the consequence of allowing or disallowing an acquired right and the effect it will have on staff pay and benefits, and how do those who plead an acquired right fare as against others?”

“Also, as the Tribunal observed in Judgment 4028, consideration 13, international civil servants are not entitled to have all the conditions of employment or retirement laid down in the provisions of the staff rules and regulations in force at the time of their recruitment applied to them throughout their career and retirement. Most of those conditions can be altered though, depending on the nature and importance of the provision in question, staff may have an acquired right to its continued application.”

In consideration 10, the Tribunal then points out that “the Tribunal’s case law recognises that the alteration of a benefit can operate to the detriment of staff and this, of itself, does not constitute the breach of an acquired right. It plainly did operate to the complainant’s detriment in the present case. A further element was needed, as discussed in the opening paragraph of the quotation in consideration 7: the complainant must demonstrate that the structure of the employment contract was disturbed or that the modifications impaired a fundamental term of appointment in consideration of which he accepted employment. The complainant has not established, to the Tribunal’s satisfaction, that either element exists in the present case in relation to the changes impugned in these proceedings.”

On the duty of care:

In consideration 13, the Tribunal observed “that the complainant could expect to lose approximately 10,000 United States dollars in board and lodging claims and 3,000 dollars for education grant travel. It was against this background that the Joint Appeals Board concluded that the IAEA administration should have provided some bridging arrangements for staff in the position of the complainant “such that the immediate effects of the new policy would be introduced in a more gradual fashion”. It recommended that the IAEA do so. This recommendation was rejected by the Director General in his impugned decision.”

Referring to ILOAT Judgment 3373, the Tribunal observed “that the organisation had to ensure, in accordance with its duty of care owed to its staff, that the implementation of the arrangements did not place staff in financial difficulty, as it had for the complainant.” The Tribunal concluded that the organisation should pay the complainant an indemnity ex aequo et bono referable to the amount he would otherwise have earned (but for the changes) in the preceding three years. The rationale for the indemnity was stated by the Tribunal to be to “enable the complainant to adjust to his changed financial circumstances”. The Tribunal rejected a claim by the complainant that he should be fully compensated until his salary reached the level of remuneration he had received immediately before the changes.”

This brings the Tribunal to decide that “in the present case, the complainant embarked upon the tertiary education of his son at a university in the United States of America in 2014. This was the complainant’s home country and involved travel and boarding. By the time the amendments were made to the education grant scheme, the son had completed three of the four years of his course at that university. The complainant had no real option to alter these arrangements in order to reduce the significant financial burden arising from the amendment to the scheme”. 

The Tribunal then continues to award damages to the complainant for the breach of the duty of care. 

 Observations:

 Although the Tribunal decided in favour of the complainant, the Tribunal once again confirmed its restrictive view on the scope of the acquired rights doctrine for international civil servants. This is good news for international organizations that consider amending their staff regulations or overhauling their benefit schemes, but not so good news for the international civil servant confronted with such changes.

By limiting the scope of the acquired rights doctrine and opting to address undesired consequences through the duty of care doctrine, the Tribunal effectively discourages international civil servants to take any such claims to court. Why? Because the duty of care doctrine as outlined in ILOAT Judgment 3373 stating that “the organization had to ensure, in accordance with its duty of care owed to its staff, that the implementation of the arrangements did not place staff in financial difficulty, as it had for the complainant”, is intrinsically subjective and difficult to assess or predict. Moreover, even a positive decision for the international civil servant will only lead to an ex eaquo et bono compensation merely “to adjust to his changed financial circumstances”, which is equally difficult to assess or predict. In any event, a decision based on the duty of care will leave amendments to the staff regulations untouched, which is ultimately what the international organisation usually is after.

Bert Theeuwes - Brussels - 2024