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Legal Perspective on the ICSC’s Decision to Drastically Reduce Pay for Professional Staff in Geneva-based International Organizations

LAURENCE FAUTH
REPRESENTING INTERNATIONAL CIVIL SERVANTS SINCE 2002


APRIL 2017 – TIPS AND INFORMATION NEWSLETTER


The ICSC recently decided to drastically reduce the post adjustment multiplier affecting the pay of some 5,700 staff in the Professional and higher categories serving in Geneva-based international organizations following its 2016 baseline cost-of-living surveys conducted in Geneva (and other duty stations).  In effect, these serving staff members will see a pay-cut of 7.5% if the decision is implemented.  This pay-cut comes on top of the reduction in pay, benefits and allowances recently adopted to the common system compensation package.

Many international organizations have collectively objected to this decision on the grounds that it harms its staff members and families and is otherwise not in the interests of the organizations to recruit and retain talented staff, and indicate they may not implement the pay-cut.  They have also requested the ICSC to provide justification for the decision. Nevertheless, it is likely that the decision will be implemented.  

This article provides information about the steps that may be taken to challenge this pay-cut in the justice system available to affected staff.  In this regard, there are two applicable justice systems: the United Nations Dispute and Appeals Tribunals that decide appeals by United Nations staff members; and the ILO Administrative Tribunal that decides appeals by staff members of specialized agencies in the common system, and other international organizations.

A. ILO Administrative Tribunal

Unlike the UN Tribunals discussed in section B, the ILOAT does provide meaningful judicial review of the decisions implementing recommendations and decisions of the ICSC.  The ICSC decisions are not automatically binding on the organizations that subscribe to the jurisdiction of the ILOAT.  Article 24(2) of the ICSC Statute provides:  “2. The decisions taken thereon by the General Assembly shall be communicated by the Secretary-General to the executive heads of the other organizations for action under their constitutional procedures.”  In other words, the decisions of the ICSC become binding on these other organizations insofar and in accordance with the applicable rules of the organization (Constitution, Staff Regulations and Rules, etc.). Some organizations may also have an express agreement with the ICSC that must be reviewed and considered.  There is discretion, based on the interests of the organization, not to implement the pay-cut in many organizations.

  1. Appeal Procedures.  Staff members can begin the appeal process as soon as they receive a payslip reflecting the pay-cut.  See Judgment No. 2571, consideration 1 (“the complainant is entitled to challenge her payslip, which constitutes an individual decision affecting her personally, and in so doing she may incidentally challenge the lawfulness of the general decision (regarding the salary scale) on which that individual decision is based (see Judgments 1840, under 2, and 1329, under 7)”).  It is recommended that the staff member with the assistance of staff representatives request consent from their administration to proceed with an appeal directly to the ILO Administrative Tribunal with a test case utilizing the Tribunal’s fast-track procedure under Article 7bis of its rules of procedure.  The Tribunal would then be able to issue a judgment within a year.  In this vein, the staff member should request the administration to wait until the judgment is issued before taking any action on the post adjustment.  If the administration is not willing to allow a direct appeal to the Tribunal, the staff member then first has to file an internal appeal and exhaust internal administrative remedies.  Once the final decision is received on the internal appeal, the staff member has 90 days to file an appeal with the ILOAT.
  2. Grounds for Challenging the Pay-Cut.  
    a. Acquired Rights.  With respect to acquired rights, it is well-settled that items of compensation (salary, benefits and allowances) set forth in the employment contract (letter of appointment) may be considered a fundamental term of appointment and therefore may represent an acquired right.  See Judgment No. 426. The ILOAT recently summarized the current state of the law and the test it applies to judge whether an acquired right is at stake in Judgment No. 3571:

    “the amendment to an official’s detriment of a provision governing her/his status constitutes a breach of an acquired right only if it adversely affects the balance of contractual obligations by altering fundamental terms of employment in consideration of which the official accepted an appointment, or which subsequently induced her/him to stay on.”

    In this case, the ILOAT found a breach of an acquired right on account of the “magnitude” of the change in financial position.  The staff member, who was working part-time, had elected under the existing rule at his time of appointment to pay into the pension system as if he were working full-time, and the organization changed the rule and decided he could only contribute based on his actual part-time status.   The ILOAT found this breached the acquired right to pay into the pension system at the full-time rate.  In a letter to the ICSC, the Heads of International Organizations in Geneva noted the “exceptional magnitude of the impact on the conditions of employment” which is good evidence that the organizations consider the implementation of the decision will breach an acquired right.

    Accordingly, staff members should focus on the initial appointment and whether the amount of the post adjustment was critical in accepting the appointment, and examine whether the post adjustment has remained steady or increased over the years and by what percentage the changes have been, and whether certain financial commitments were undertaken based on the expectation that the post adjustment would remain at least the same or increase over time.  The 7.5% reduction in net remuneration in this case may cross the threshold for the Tribunal, especially since the administrations also consider the magnitude of the change exceptional.

    b. Challenging the ICSC Methodology.  It may be possible with the assistance of an expert on the ICSC post adjustment methodology to prove errors in the methodology applied by the ICSC.  In the letter to the ICSC, the Heads of the international organizations in Geneva also noted concern about the “changes to the survey methodology and the relevant operation rules”, and have requested the ICSC to provide information regarding how the changes in the methodology impacted the 2016 survey results. 

    c. Good faith.  Even if there is not a breach of acquired rights or flaws in the methodology, staff members may still be able to show the decision breached the principle of good faith and mutual trust, which requires the organization from taking any action that causes needless injury.  Given that many organizations are already on record stating that the pay-cut will cause hardship to its staff, the ILOAT may be convinced that the decisions to implement the pay-cut breached the principle of good faith.   

B. The United Nations Justice System

Despite the summary of the appeal process given below, the UN Tribunals have decided that “decisions of the General Assembly are binding on the SecretaryGeneral [and therefore a]ny administrative decision based on the decision of the General Assembly is lawful and cannot be challenged.”  Judgment No. UNDT/2016/119; and Judgment No. 2015-UNAT-530 (“Decisions of the General Assembly are binding on the Secretary-General and therefore, the administrative decision under challenge [maintaining post adjustment multiplier] must be considered lawful, having been taken by the Secretary-General in accordance with the content of higher norms.”).  This appears to mean in practical terms that meaningful judicial review of the implementation of the pay-cut by the SecretaryGeneral may not be possible.

  1. Appeal Procedures.  The United Nations Office of Staff Legal Assistance (OSLA) provides free legal services to UN staff members and should be consulted early in this process.  The appeal of the pay-cut decision must be initiated upon receipt of the first payslip reflecting the pay-cut[1].  Under the UN appeal rules, the staff member must first request a management evaluation from the SecretaryGeneral or the office with delegated authority.  After receipt of the management evaluation (due within 45 days for Geneva staff) the staff member has 90 days to lodge an appeal with the United Nations Dispute Tribunal.  After the UNDT issues its judgment, either party may appeal to the United Nations Appeals Tribunal within 60 days of the UNDT.
  2. Grounds for Challenging the Pay-Cut.  

    a. Acquired Rights.  Certain terms in the contract of employment are considered inviolable, i.e., the administration may not unilaterally change them without the staff member’s consent.  Salary, benefits and allowances can in certain circumstances be considered acquired rights.  The UN Tribunals will not allow a unilateral change where the modification entails extremely grave consequences for the staff member; however, with respect to financial changes it must be more serious than a mere prejudice to the staff member’s financial interests?  This test would require the staff member to show that the pay-cut has resulted in extreme financial harm, e.g., that it is no longer possible to pay for housing.

    b. Challenging the ICSC Methodology.  It may be possible with the assistance of an expert on the ICSC post adjustment methodology to prove errors in the methodology applied by the ICSC.  

Staff members considering appealing the implementation of the pay-cut should consult with their staff representatives and consult with OSLA or another lawyer.  This article is provided for information purposes only.  


[1] There is an open legal issue as to whether the decision is taken based on the advice of a technical body, in which case a request for management evaluation is not required.  See Judgment No. 2015-UNAT-530.