## j2023-5

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---

### Overview and scope of the dispute
- Parties: Applicants Mr. Thomas Elkjaer, Mr. Jonathan Manning, Mr. Joannes Mongardini, Mr. James McHugh, Ms. Linchun Li, and Ms. Haiyan Shi v. Respondent International Monetary Fund (“Fund” or “Respondent”).
- Tribunal composition: Judge Nassib G. Ziadé, President; Judges Edith Brown Weiss and Andrew K.C. Nyirenda.
- Subject matter: Challenges to Board decisions dated April 15, 2022 (effective May 1, 2022) concerning the Fund’s staff compensation system:
  - Modification of the “safeguard mechanism” rule to specify use of end-January (rather than end-financial year) salary data for calculating the comparatio.
  - Adoption of the FY2023 staff compensation decision based on Management’s proposal calculating the comparatio under the modified rule.
- Procedural basis for challenge: Article VI(2) of the Tribunal’s Statute (direct challenges to regulatory decisions within three months of the later of announcement or effective date).

### Applicants’ principal claims and requested relief
- Main legal claims:
  - The modification to use end-January data violates the Fund’s “rules-based” compensation system, which Applicants assert is a fundamental condition of staff employment.
  - Alternatively, if the Board had discretion, the Board abused that discretion by adopting the end-January cutoff as arbitrary, lacking rational justification, and made without necessary information from Management (including meaningful analysis of effects and feasible less-detrimental alternatives).
- Specific relief sought:
  - Invalidate the April 2022 modification requiring end-January rather than end-April salary data in the safeguard calculation.
  - Require Management to:
    - Rerun the safeguard analysis in the 2022 Review using end-April salary data as mandated by the 2019 safeguard rule;
    - Alert the Board, SAC, and staff to any resulting change in the safeguard calculation;
    - Take any other actions warranted under the 2019 safeguard rule based on any change in the calculation, including reconsidering the April 2022 salary increase decision and the higher increase originally proposed by Management.
  - In Reply, request that future implementations failing to account for a full year’s wage erosion be presumptively invalid.
  - Legal fees and costs under Article XIV(4) of the Statute if Applications are well-founded in whole or in part.

### Respondent’s principal positions
- Legal defense:
  - The 2019 safeguard rule provision specifying use of end-of-financial-year salary data was a technical provision and not a fundamental condition of Fund employment.
  - The Board’s April 15, 2022 modification to use end-January data was a reasonable exercise of policy discretion: based on appropriate consideration of relevant facts, reasonably related to its objectives, and not improperly motivated.
- Justifications advanced:
  - Setting the comparatio calculation earlier provides greater certainty and predictability; the Board concluded these benefits “outweigh this small difference in the calculation compared to end-April data, and the Board continues to review the effects of this policy change on the compensation system.”
  - In Rejoinder Respondent contested standing and asserted Applicants were not “adversely affected” because the safeguard mechanism was triggered using end-January data for FY2023 and the Board adjusted compensation in response.

### Key procedural chronology and filings
- July 29, 2022: Applicants filed identical Applications.
- September 2, 2022: President suspended pleadings pending related Judgment; suspension lifted after IMFAT Judgment No. 2023-1 (January 30, 2023).
- March 20, 2023 (supplemented March 31, 2023): Respondent filed consolidated Answer.
- April 28, 2023: Applicants filed Reply.
- May 31, 2023: Respondent filed Rejoinder.
- July 27, 2023: Oral proceedings conducted.
- August 8–10, 2023: Supplemental requests for costs exchanged.
- December 29, 2023: Tribunal issued Judgment.

### Document production and information requests
- Document Request No. 1 (emails/documents re: use of end-January data): Denied April 13, 2023 — Respondent represented no responsive documents exist except privileged materials; Applicants did not proffer to the contrary.
- Document Request No. 2 (wage erosion last quarter data for past ten years): Dismissed as moot April 13, 2023 — Respondent had produced relevant data in its Answer.
- Applicants’ Supplemental Request (materials from Technical Review Working Group; supplementation to account for full twelve months of salary erosion): Provisionally denied July 10, 2023; denial made permanent after oral proceedings — Tribunal referenced Working Group activities but did not rely on March 2023 analysis to decide the challenged 2022 decisions and found the requested information not relevant to the controversy.

### Factual highlights and FY2023 safeguard application
- 2019 CCBR adopted a safeguard mechanism specifying end-of-financial-year salary data for the comparatio calculation; safeguard corridor set at 98–102 percent.
- Management’s 2022 Board Paper (EBAP/22/9) proposed explicitly using January 31 data in comparatio calculations to balance internal labor dynamics with completing budget and compensation reviews before fiscal year end.
- FY2023 comparatio calculated using January 31, 2022 data resulted in 97.4 percent (below 98 percent safeguard floor).
- Management completed the four-factor supplemental analysis (Paragraph 21 factors) and recommended a 5.0 percent salary increase; the Board adopted a 4.6 percent average salary increase and a 2.2 percent salary-structure adjustment.

### Tribunal issues for consideration and legal standards applied
- Issues framed:
  - Standing: whether Applicants were “adversely affected” under Article II(1).
  - Whether the safeguard rule is a “fundamental and essential” condition of employment.
  - Whether the Board abused its discretion in modifying the rule to use end-January data and in adopting the FY2023 compensation decision under the modified rule.
- Standard of review: de Merode standard (WBAT Decision No. 1 (1981)) — Board changes must be based on proper consideration of relevant facts; reasonably related to objectives; made in good faith; not improperly motivated; avoid excessive/unnecessary harm to staff. Tribunal affords greatest deference to policy/regulatory Board decisions.

### Tribunal findings on admissibility, fundamental condition, and abuse of discretion
- Standing:
  - Applicants meet the threshold of admissibility — as staff whose salaries were affected by the FY2023 decision predicated on the modified safeguard rule, they have an adequate stake.
- Fundamental condition inquiry:
  - The safeguard mechanism rule is an implementation method of the Fund’s “rules-based” and “comparator-based” system and is not itself a “fundamental and essential” condition of employment; thus it is amendable by the Board subject to lawful discretionary review.
- Motive and proportionality:
  - The Board’s stated motive—to balance reflection of internal labor dynamics with the need to complete annual budget and compensation reviews in time for consultations (including Rule J-4’s April 1 budget proposal deadline)—was within the Fund’s discretionary authority and not improperly motivated.
  - Truncating data collection at January 31 (first nine months) was within the range of reasonable alternatives and reasonably related to the objective of timely deliberation and consultation despite producing an “upward bias” in the comparatio.
- Consideration of relevant facts:
  - Unlike Elkjaer et al. (No. 2), the applicable safeguard text at the time of the FY2023 decision did not require end-of-financial-year data; the Tribunal found the Board had relevant facts and did not abuse its discretion in adopting the modification.
  - The Tribunal did not rely on the Working Group’s March 2023 Technical Review for assessing the lawfulness of the April 15, 2022 decisions because that analysis post-dated the contested decisions.
- Application to the FY2023 compensation decision:
  - Applicants did not allege the Fund failed to follow required post-comparatio steps (including the four-factor analysis).
  - For the same reasons the modification was lawful, the Tribunal sustained the Board’s FY2023 staff compensation decision.

### Additional observations, risks, and continuing review
- The 2022 modification introduced an additional objective—practicability within the budget timetable—distinct from the 2019 architecture that specified end-of-financial-year data.
- The Tribunal noted the Technical Working Group’s recognition of an “upward bias in the comparatio calculation when using less than full year data” and that the Fund “should consider options to address this shortcoming or risk triggering the safeguard mechanism each year and undermining its credibility” (as recorded in EBAP/22/9; Review of Staff Compensation EBAP/23/21 (March 27, 2023) is part of the record).
- The Tribunal warned persistent variability in application of safeguard rules could risk abuse of discretionary authority, while declining to find abuse in this case.

### Disposition and outcome
- The Tribunal’s conclusions:
  - Applicants have standing.
  - The 2019 safeguard mechanism rule is not a “fundamental and essential” term of employment; the Board could modify it.
  - The Board did not abuse its discretion by modifying the safeguard mechanism rule to calculate the comparatio using end-January data rather than end-financial year data:
    - The modification was not improperly motivated.
    - The modification was reasonably related to its intended objective.
    - The modification was based on appropriate consideration of relevant facts.
  - The Board did not abuse its discretion in adopting the FY2023 staff compensation decision based on the modified rule.
- Decision: The Applications of Mr. T. Elkjaer, Mr. J. Manning, Mr. J. Mongardini, Mr. J. McHugh, Ms. L. Li, and Ms. H. Shi are denied in their entirety.
- Signatories and date: Nassib G. Ziadé, President; Edith Brown Weiss, Judge; Andrew K.C. Nyirenda, Judge; Celia Goldman, Registrar — Washington, D.C.; December 29, 2023.

*Administrative Tribunal of the International Monetary Fund, JUDGMENT No. 2023-5*

### INTRODUCTION ...........................................................................................................

### INTRODUCTION

### Overview and scope of the dispute
- Parties: Applicants Mr. Thomas Elkjaer, Mr. Jonathan Manning, Mr. Joannes Mongardini, Mr. James McHugh, Ms. Linchun Li, and Ms. Haiyan Shi (staff members of the Fund; most current or former principals of the Staff Association Committee (“SAC”)) v. Respondent International Monetary Fund (“Fund” or “Respondent”).
- Tribunal composition: Judge Nassib G. Ziadé, President; Judges Edith Brown Weiss and Andrew K.C. Nyirenda (pursuant to Article VII(4) of the Tribunal’s Statute).
- Subject matter: Challenges to Board decisions dated April 15, 2022, effective May 1, 2022, concerning the Fund’s staff compensation system:
  - Modification of the “safeguard mechanism” rule to specify use of end-January (rather than end-financial year) salary data for calculating the comparatio.
  - Adoption of the FY2023 staff compensation decision based on Management’s proposal calculating the comparatio under the modified rule.
- Procedural basis for challenge: Article VI(2) of the Tribunal’s Statute (direct challenges to regulatory decisions within three months of the later of announcement or effective date).

### Applicants’ principal claims and requested relief
- Main legal claims:
  - The modification of the safeguard mechanism rule to use end-January data violates the Fund’s “rules-based” compensation system, which Applicants assert is a fundamental condition of staff employment.
  - Alternatively, if the Board had discretion to modify the rule, the Board abused that discretion by adopting the end-January cutoff: the change was arbitrary, lacked rational justification, and was made without necessary information from Management (including meaningful analysis of effects and feasible less-detrimental alternatives).
- Specific relief sought:
  - Invalidate the April 2022 modification requiring end-January rather than end-April salary data in the safeguard calculation.
  - Require Management to:
    - Rerun the safeguard analysis in the 2022 Review of Staff Compensation using end-April salary data as mandated by the 2019 safeguard rule;
    - Alert the Board, SAC, and staff to any resulting change in the safeguard calculation;
    - Take any other actions warranted under the 2019 safeguard rule based on any change in the calculation, including but not limited to reconsidering the April 2022 salary increase decision and the higher increase originally proposed by Management to the Board.
  - In Reply, Applicants additionally requested a forward-looking remedial component stating that any implementation that fails to account for a full year’s worth of wage erosion will be deemed presumptively invalid going forward.
  - Legal fees and costs under Article XIV(4) of the Statute if Applications are well-founded in whole or in part.

### Respondent’s principal positions
- Legal defense:
  - The 2019 safeguard rule provision specifying use of end-of-financial-year salary data was a technical provision of the staff compensation system and did not constitute a fundamental condition of Fund employment.
  - The Board’s April 2022 modification to use end-January data was a reasonable exercise of policy discretion: based on appropriate consideration of relevant facts, reasonably related to its objectives, and not improperly motivated.
- Justification advanced:
  - Setting the comparatio calculation earlier in the annual consultation and deliberation process provides greater certainty and predictability; the Board concluded that these benefits “outweigh this small difference in the calculation compared to end-April data, and the Board continues to review the effects of this policy change on the compensation system.”
  - In Rejoinder, Respondent additionally contested Applicants’ standing, asserting Applicants were not “adversely affected” because the safeguard mechanism was triggered using end-January data for FY2023 and the Board adjusted compensation in response.

### PROCEDURE

### Key procedural chronology and filings
- July 29, 2022: Applicants filed identical Applications.
- August 1, 2022: Applications transmitted to Respondent.
- August 4, 2022: Registrar circulated within the Fund a notice summarizing the issues (Rule IV(f)).
- August 23, 2022: Respondent requested modification of time limit for Answer (Rule VIII(1)), seeking suspension pending the Tribunal’s Judgment in Elkjaer et al. (No. 2).
- August 31, 2022: Applicants non-objected to suspension request.
- September 2, 2022: President suspended pleadings until notification of Judgment in the related case.
- February 2, 2023: Tribunal, having notified parties of Judgment in Elkjaer et al. (No. 2) (IMFAT Judgment No. 2023-1 (January 30, 2023)), requested a joint procedural proposal.
- February 7–8, 2023: Joint proposal filed and accepted.
- March 20, 2023: Respondent filed consolidated Answer (supplemented March 31, 2023).
- April 28, 2023: Applicants filed Reply (seven-day extension granted under Rule IX(1) due to supplementation).
- May 31, 2023: Respondent filed Rejoinder.
- June 12 and 15, 2023: Parties responded to Tribunal’s queries on oral proceedings; Tribunal notified parties on July 7, 2023, that oral proceedings would be held.
- July 27, 2023: Oral proceedings conducted.
- August 8, 2023: Applicants submitted supplemental request for costs; Fund responded August 10, 2023.

### REQUESTS FOR PRODUCTION AND INFORMATION

### Document Request No. 1
- Applicants sought: “All emails or other documents relating to management’s proposal as reflected in Board Paper EBAP/22/9 . . . , paragraph 30, to use end-January salary data rather than March 1 or end-fiscal year (April 30) salary data in the comparatio calculation required by the safeguard mechanism.”
- Respondent’s position: No responsive documents exist, except those over which attorney-client privilege is asserted.
- Tribunal ruling: On the basis of Respondent’s representations and absence of contrary proffer by Applicants, Applicants had not shown denial of access to responsive, relevant documents as required by Rule XVII(1); accordingly, on April 13, 2023, the Tribunal denied Request No. 1.

### Document Request No. 2
- Applicants sought: “A document showing the actual amount of wage erosion at the Fund for the last quarter of each fiscal year (i.e., February 1 through April 30) for the past ten years.”
- Respondent’s position: Relevant data had been produced in its Answer.
- Tribunal ruling: On April 13, 2023, the Tribunal dismissed Request No. 2 as moot.

### Supplemental Request for Information (made in Applicants’ Reply)
- Applicants sought:
  - Any report and material (for instance power point) produced by the Technical Review Working Group relating to the historical comparatio analysis presented to the Board (referencing EBAP/23/21 (March 27, 2023), para. 45 and box 2).
  - If such materials did not supply necessary answers, Respondent should supplement Management’s analysis to provide an accurate historical baseline for assessing the impact of changes to the data cutoff date, including:
    1) Account for a full twelve months of salary erosion for each fiscal year so pre-FY2021 results are directly comparable to FY2021 and FY2022 results reported to the Board; and
    2) Supply any other information needed to explain discrepancies between comparatios reported to the Board for FY2013-22 and the corresponding merit increases for those fiscal years.
- Applicants’ rationale: They asserted Management’s ten-year historical analysis of annual wage erosion “appears to be flawed” relative to historical merit increases because it looked at only ten months of data rather than twelve for each year prior to FY2021, potentially misdirecting the Board.
- Respondent’s Rejoinder:
  - Challenged premise as “unfounded”; what matters is average wage erosion for the February-April period, and that data “confirms the Board’s decision that the effect of excluding this period was so insignificant that it was acceptable to balance other operational needs of the organization.”
  - Argued the Supplemental Request was “objectionably overbroad and unduly burdensome.”
  - Stated the Working Group had held regular meetings with SAC and materials have been shared with SAC; thus Supplemental Request should be dismissed as “moot.”
- Tribunal observation: The Supplemental Request relates to a Technical Review reported to the Board in March 2023 (a year after the contested decisions). Respondent introduced the Working Group’s March 2023 analysis (described in EBAP/23/21) into the record and relies on that analysis as confirming reasonableness of the Board’s April 15, 2022 decision.

### FACTUAL BACKGROUND (select highlights)
- 2019: Comprehensive Compensation and Benefits Review (“CCBR”) and adoption of the “safeguard mechanism” rule specifying use of end-of-financial-year salary data for the comparatio calculation.
- Prior litigation: A previous challenge concerned application of the safeguard mechanism rule in the context of the FY2022 staff compensation decision (alleging use of March 1 rather than end-financial-year data).
- 2022 actions:
  - 2022 Review of Staff Compensation (Management proposal).
  - HRD consultation with SAC.
  - Management’s responses to technical questions of the Board.
  - SAC statement to the Board.
  - Board decisions of April 15, 2022 (effective May 1, 2022): modified safeguard rule to use end-January data and adopted the FY2023 compensation decision based on that modification.

### TRIBUNAL’S ISSUES FOR CONSIDERATION (as framed)
- Whether Applicants have standing to challenge the modification of the safeguard mechanism rule.
- Whether the Board violated a “fundamental and essential” condition of Applicants’ employment by modifying the safeguard mechanism rule to use end-January rather than end-financial year salary data for the comparatio.
- Whether the Board abused its discretion by:
  - Modifying the safeguard mechanism rule to use end-January data (considering improper motivation; relation to objectives; consideration of relevant facts).
  - Adopting the FY2023 staff compensation decision based on the modified rule.
- Additional observations by the Tribunal.

### TRIBUNAL PROCEDURAL DETERMINATIONS (document production)
- Document Request No. 1: Denied (April 13, 2023) because Respondent represented no responsive documents exist except privileged materials; Applicants did not proffer to the contrary.
- Document Request No. 2: Dismissed as moot (April 13, 2023) because Respondent produced relevant data in its Answer.
- Supplemental Request for Information: Disputed; Tribunal noted temporal relation of the Working Group’s March 2023 analysis to the contested April 2022 decisions and that Respondent introduced the March 2023 analysis into the record and relies on it.

*Administrative Tribunal of the International Monetary Fund, JUDGMENT No. 2023-5*

### 23. As  considered  further  below,  the  essence  of  Respondent’s  defense  of  the impugned

### j2023-5 - 23. As  considered  further  below,  the  essence  of  Respondent’s  defense  of  the impugned

### Parties’ positions on the use of end-January salary data in the comparatio calculation
- Respondent’s defense:
  - The Board reasonably balanced competing considerations by using end-January salary data to calculate the comparatio.
  - The decision weighed a purportedly “small difference in the calculation compared to end-April data” against the “benefits of certainty and predictability” in the staff compensation decision-making process.
- Applicants’ contention:
  - Assuming the Board had discretion to modify the safeguard rule, the Board was not fully informed because historical data did not accurately capture the effects of using end-January data vis-à-vis using end-April data.
  - The historical analysis should encompass twelve-month periods, rather than focusing on the February-April segment.

### Tribunal procedural decisions on Applicants’ Supplemental Request and reliance on the Working Group
- July 10, 2023: The Tribunal provisionally denied Applicants’ Supplemental Request and invited parties to address at oral proceedings:
  - Whether the Working Group’s Technical Review as reported to the Board in March 2023 is relevant to the Tribunal’s consideration of the issues of the case; and
  - If so, whether the information sought by Applicants’ Supplemental Request is relevant to those issues.
- After oral argument and further consideration:
  - The Tribunal made the provisional denial permanent.
  - The Tribunal referenced Working Group activities later in the Judgment but did not rely on the Working Group’s March 2023 analysis—which was reported after the events at issue—in deciding whether to sustain Applicants’ challenges.
  - The Tribunal denied Applicants’ Supplemental Request because it seeks information not relevant to the controversy decided in the case.

### Oral proceedings: statutory framework, decision to hold open proceedings, and access to pleadings
- Legal framework:
  - Article XII of the Tribunal’s Statute: Tribunal shall “decide in each case whether oral proceedings are warranted.”
  - Rule XIII(1) of the Tribunal’s Rules of Procedure: “Oral proceedings shall be held if, on its own initiative or at the request of a party and following an opportunity for the opposing party to present its views . . . , the Tribunal deems such proceedings useful.”
- Procedural history:
  - Neither party requested a hearing, but both parties favored holding oral proceedings and making them available to Fund staff via audio-video link.
  - The Tribunal decided oral proceedings limited to oral arguments of the parties and their counsel would be “useful” (Rule XIII(1); Rule XIII(6)).
  - The Tribunal considered the challenges raise important issues of consequence to Fund staff generally; oral pleadings would allow parties to respond to Judges’ questions (see Elkjaer et al. (No. 2), para. 44).
  - Parties were notified on July 7, 2023.
  - The Tribunal decided staff members of the Fund would be given exceptional access to written pleadings in conjunction with oral proceedings “open to all interested persons” (Statute, Article XII; Tribunal’s Rules of Procedure, Rule XIII(1)).
  - Procedural orders and invitations:
    - July 14, 2023: Procedural Order governing protocol for oral proceedings.
    - July 21, 2023: FUNDALL announcement inviting staff to observe oral proceedings via audio-video link and to access written pleadings.
  - Oral proceedings were held on July 27, 2023; the Tribunal found oral representations helpful.

### Factual background: CCBR and the “safeguard mechanism”
- 2019 CCBR and safeguard mechanism:
  - 2019 Comprehensive Compensation and Benefits Review (“CCBR”) decoupled adjustments to the Fund’s salary structure (payline) from increases to staff salaries.
  - The CCBR framework:
    - One set of comparator-based calculations to establish midpoints of pay grades (structural adjustment).
    - A separate analysis of salary increase budgets of comparator institutions to set average Fund salary increase.
    - Individual salary increases allocated by performance and placement within grade ranges.
  - Safeguard mechanism objective: “to ensure that average salaries continue to track the midpoints well and maintain the current international competitiveness test.” (CCBR Overview Paper, p. 12.)
  - Safeguard mechanism tests whether average staff salaries remain within a range of 98-102 percent of market-adjusted pay-grade midpoints, based on the comparatio (average of salaries for each pay grade relative to its midpoint, weighted by number of staff by grade).
  - If average salaries fall below the 98 percent threshold, a four-factor test is applied; if unmet, the Board would be expected to adjust the salary increase.
  - As formulated in 2019, the safeguard mechanism specified that the calculation of the comparatio was to be made utilizing salary data collected at the end of the Fund’s financial year.
- Full text elements (preserved excerpts from the 2019 decision):
  - The safeguard mechanism comprises three steps:
    - Step 1. Determine the ratio of average salaries at the end of the financial year to the midpoints at the end of the previous financial year. This will determine the end-year comparatio.
    - Step 2. Determine the ratio of average salaries at the end of the financial year to the new midpoints after adjustment of the salary structure.
    - Step 3. Determine if the salary increase indicated by the market is sufficient to maintain or restore a comparatio in the range of 98–102 percent.
  - Paragraph 21 sets out the four-factor considerations that could justify adjustments if the indexation formula would not allow a comparatio in the indicated range.
  - Footnote 10: “The comparatio measures actual salary relative to the salary range midpoints. When used for aggregate salaries, a comparatio of 100 indicates that average actual salaries are equal to the average of the midpoints—that is, average salaries are at the market.”

### Prior litigation reference
- August 2, 2021: Some of the same staff challenged the FY2022 staff compensation decision alleging use of salary data that terminated on March 1, rather than at the end of the Fund’s financial year (April 30); that challenge resulted in the Tribunal’s Judgment in Elkjaer et al. (No. 2).
- Note in Elkjaer et al. (No. 2): applicants also challenged use of a 2.8 percent average total salary increase in comparatio calculation without accounting for the 1.8 percent salary increase applicable to Grades B4-B5.

### Modification of the safeguard mechanism rule and the FY2023 staff compensation decision (2022 Review of Staff Compensation)
- Management proposals and Board adoption during the 2022 Review of Staff Compensation (EBAP/22/9, March 21, 2022):
  - Proposed modifications to the safeguard mechanism to respond to issues raised in pending applications.
  - Proposed formal amendment to explicitly recognize dates and data used in safeguard calculations:
    - Data used in the comparatio calculation will be as of January 31 of the calendar year in which the Board adopts the Fund’s budget. “January 31 was chosen as an appropriate date to balance the objective of substantively reflecting internal labor dynamics during the year that impact the comparatio and hence the safeguards assessment, with the need to ensure that the annual budget and compensation reviews could be completed . . . before the end of each fiscal year, and”
    - It was proposed that footnote 10 of the CCBR Revised Proposed Decision be deleted because its reference to “actual” salaries generated confusion; the comparatio analysis’ objective is to ensure aggregate staff salaries across all grades remain aligned with comparator markets based on the salary increase index, without regard to any discretionary adjustments for grades B4-B5.
  - The 2022 Board Paper repeated verbatim Steps 1, 2 and 3 from the 2019 CCBR decision, which refer to data from the “end of the financial year.”
- Application of the safeguard mechanism for FY2023:
  - Despite 2019 Steps referring to end-of-financial-year data, the 2022 Board Paper disclosed that “data from January 31, 2022” was used in Step 1 and “salaries as of January 31, 2022” were used in Steps 2 and 3.
  - The 3-Step analysis for the FY2023 staff compensation decision resulted in a comparatio of 97.4 percent (below the 98 percent safeguard floor).
  - Management undertook the four-factor supplemental analysis prescribed by Paragraph 21:
    - First factor (indexes represent general salary trends): Management concluded indexes are representative but noted a “tight labor market when entering a period of high and accelerating inflation, elevates the risk that data lags may not capture recent competitive pressures in labor costs,” and concluded it would be prudent to add an upward adjustment to the salary increase indicated by the index.
    - Second factor (U.S. tax policy): Management concluded no recent changes likely to materially affect Fund net salaries.
    - Third factor (exchange rates): Management concluded Euro-U.S. dollar and Yen-U.S. dollar exchange rates had been relatively stable.
    - Fourth factor (recent recruitment and retention experience): Management found the Fund was “experiencing competitive pressures to recruit in important areas of its mandate”; staff with particular skills were “increasingly difficult to attract”; and the rejection rate of offers to Economist Program (EP) recruits “rose to a record high.”
  - Management recommended: “[I]n light of the safeguard mechanism’s ultimate objective of ensuring that aggregate Fund salaries remain aligned with the U.S. comparator markets, it is recommended that a 5.0 percent salary increase be approved by the Executive Board.” (2022 Board Paper, p. 19.)
  - The proposed 5.0 percent increase would bring the comparatio to 98.9 percent, “safely within the safeguard range,” and help “mitigate the risk of falling outside the range in the year ahead, especially in a period of high and uncertain inflation and when the Fund is launching a major recruitment effort to support the new strategic priorities and replace the significant number of staff that are about to retire.”
  - The 2022 Board Paper emphasized that the staff compensation system remains both “comparator-based” and “rules-based,” and that the rules-based system allows some scope for management and the Executive Board to exercise judgement within defined parameters.

*Judgment of the Tribunal.*

### 44. Prior to finalizing the 2022 Board Paper, on February 25, 2022, HRD officials circulated a

### Direct review of regulatory decisions — Modification of the Safeguard Mechanism Rule and FY2023 Staff Compensation (Board decisions of April 15, 2022)

### SAC consultations and submissions
- HRD circulated a draft to the SAC for comments on February 25, 2022, with comments requested by March 2, 2022; SAC provided comments on March 7, 2022, and additional comments on March 11, 2022.  
- SAC initial position (March 7, 2022):  
  - “strongly disagree[d] with the proposals in the paper.”  
  - Proposed an increase for staff salaries of 8.3 percent to “bring the comparatio of the Safeguard Mechanism up to 102 percent.”  
  - Asserts the CCBR framework produced “insufficient salary increases to maintain competitiveness” and that “The Safeguard Mechanism is meant to account for this CCBR deficiency and protect staff from excessive salary erosion.”  
- SAC objections to the proposed rule change:  
  - The proposed change “came without forewarning” and the consultation window was “far too short.”  
  - Codifying “end of the financial year” as end-January is “a bridge too far” and a “manipulation” of the CCBR safeguard intent to control wage drift during the full fiscal year.  
- SAC additional comments (March 11, 2022):  
  - Management and the Board “may have the authority to change the Safeguard Mechanism rules to reflect practice,” but SAC argued that practice should instead “be changed to reflect the agreed rules consistent with a rules-based system.”  
  - “Re-opening the CCBR at this point is not proper.”  
  - Disagreed that January 31 can reasonably be viewed as the end of the fiscal year when it is “a full three months before the end of the fiscal year.”  
- SAC Statement to the Board (April 15, 2022):  
  - Reiterated call for an 8.3 percent salary increase to raise salaries to 102 percent of the comparatio (the safeguard corridor ceiling).  
  - Opposed changes to the safeguard mechanism rule because they “will systematically underestimate salary erosion against comparator labor markets and introduce a bias against triggering the safeguard mechanism.”  
  - Noted that salaries had dropped below the 98 percent comparatio and that the safeguard mechanism “should have been activated, but it was not.”  
  - Proposed to “find a way to include 12 full months of salary erosion instead of a shorter period.”

### Management’s responses to Executive Directors’ technical questions
- Management provided written responses before the April 15, 2022 Board meeting.  
- Rationale for choosing January 31: to “balance the objective of substantially reflecting internal labor dynamics during the year that impact the comparatio and hence the safeguards assessment, with the need to ensure that the annual budget and compensation reviews could be completed—including with sufficient time for consultations with stakeholders—before the end of each fiscal year.”  
- Management noted calculations showing “the comparatio does not change significantly between January and March (for example, the comparatio is calculated at 97.4 percent at January 31, 2022 and March 15, 2022).”

### Board decisions (April 15, 2022)
- Board approved three Decisions with effect from May 1, 2022:  
  1. Modification of the safeguard mechanism rule (as proposed in Paragraph 30 of the 2022 Board Paper).  
  2. Adjustment to the salary structure by 2.2 percent (as proposed in the 2022 Board Paper, Annex IV).  
  3. An average salary increase of 4.6 percent for staff in Grades A1-B5.  
- The Board-adopted average salary increase of 4.6 percent differed from Management’s 5.0 percent proposal and was characterized as a “middle outcome” among Executive Directors’ views.  
- The Human Resources Director notified staff of the 2.2 percent salary-structure adjustment and the 4.6 percent average salary increase via FUNDALL announcement on April 15, 2022.

### Procedural context and litigation timing
- Article VI(2) of the Statute of the Administrative Tribunal permits an application challenging the legality of a “regulatory decision” to be filed within three months of its announcement or effective date, whichever is later.  
- The Board took the contested decisions on April 15, 2022, effective May 1, 2022.  
- Applicants filed their Applications with the Tribunal on July 29, 2022.

### Applicants’ principal contentions (summary)
- The modified safeguard mechanism rule is invalid because it breaches a fundamental condition of Fund employment: entitlement to a rules-based staff compensation system; the 2019 safeguard mechanism is such a rule.  
- The modified rule accounts only partially for annual wage erosion and is inconsistent with the CCBR framework, enabling further decoupling of Fund salaries from market-based payline and weakening safeguard effectiveness.  
- The Board may revisit the rule but may not “chip away” at its effectiveness while it is in force; the safeguard’s purpose is to signal when annual salaries drift too far from comparator payline so corrective action can be considered.  
- The amendment reduces the likelihood that the comparatio will fall below the 98 percent threshold and, if it does, reduces the likelihood that any resulting adjustment will fully account for erosion.  
- Management, by changing the rule, enabled manipulation of an objective starting point for discretionary decisions; sustaining the amendment would permit moving the goal posts at will.  
- The claimed balance between operational/budgetary concerns and comparatio accuracy is not contemplated by the 2019 safeguard mechanism.  
- If discretion existed to change the rule, Management abused it: using end-January data is arbitrary, lacks rational justification, is not reasonably related to the reform objective, was not studied with sufficient care, and was not adopted reasonably to avoid unnecessary harm to staff.  
- The Board’s decision relied on incomplete information about the extent of salary erosion when using end-January versus end-financial-year data.  
- Management omitted a critical material fact: rerunning the safeguard analysis using end-April rather than end-February data caused the comparatio to drop below the safeguard floor.  
- The Fund failed to explore alternatives for taking the compensation decision before the financial year end that would not modify the safeguard rule detrimentally.  
- Applicants suffered actual harm: deprivation of an integral aspect of the rules-based compensation framework and potential effect on the Board’s salary increase determination.  
- Relief sought by Applicants includes:  
  - Invalidating the April 2022 modification to the safeguard rule that calls for end-January rather than end-April salary data.  
  - Requiring Management to rerun the safeguard analysis using end-April data, alert the Board, SAC, and staff to any resulting change, and take warranted actions under the 2019 rule, including reconsideration of the April 2022 salary increase decision and Management’s originally proposed higher increase.  
  - A “forward-looking remedial component” in Reply: that any implementation failing to account for a full year’s wage erosion will be presumptively invalid while the 2019 safeguard rule remains in effect.  
  - Legal fees and costs under Article XIV(4) of the Statute if Applications are well-founded in whole or in part.

### Respondent’s principal contentions (summary)
- Applicants lack standing because they were not adversely affected: the safeguard mechanism was triggered for FY2023 when using end-January data and the Board exercised discretion to adjust compensation upward in response.  
- The safeguard mechanism rule is not a fundamental, immutable term of Fund employment; the Board has authority to amend it unilaterally; the modification does not violate “international competitiveness” or a “rules-based” system.  
- There is no constraint within the rule preventing amendment; no longstanding practice or formal commitment required keeping the 2019 rule unchanged.  
- The amendment was a reasonable exercise of Board discretion and entitled to high deference; the Tribunal should not question policy advisability.  
- The Board acknowledged the modified rule introduces an “upward bias” but reasonably found this outweighed by the benefits of certainty and predictability from fixing the calculation earlier.  
- The thoroughness of pre-decision study is not by itself a basis to overturn a policy decision.  
- The modification was reasonably related to its objectives: to align the rule with actual practice of compensation reviews and budget preparation and to balance internal labor dynamics with operational needs to complete reviews before fiscal year end.  
- The decision represented a practical balance, considering the need to submit the administrative budget by April 1 and that April 30 data did not reflect operational timing; March 15 was considered and found not to differ materially from January 31.  
- The Board was fully informed by SAC of the potential “upward bias” and by Management of the objectives to balance relevant considerations.  
- The March 2023 Technical Working Group review “confirmed the reasonableness” of the Board’s April 15, 2022 decision.  
- The amendment was not improperly motivated and none of Applicants’ sought remedies is warranted.

### Issues framed for Tribunal consideration
- Standing: whether Applicants have standing to challenge the safeguard rule modification and the FY2023 compensation decision.  
- Legality: whether the Board violated a “fundamental and essential” employment condition by changing the rule to require end-January (rather than end-financial-year) salary data for the comparatio.  
- Abuse of discretion: if the Board had discretion to modify the rule, whether it abused that discretion in the manner adopted.  
- Decision under modified rule: whether the Board abused its discretion in adopting the FY2023 compensation decision based on the modified safeguard rule.  
- Distinction from prior case Elkjaer et al. (No. 2): earlier Tribunal found Management failed to comply with the 2019 rule when using March 1 data for the FY2022 decision; the present case concerns the lawfulness of the 2022 amendment to specify end-January data for the comparatio and the subsequent FY2023 compensation decision.

*International Monetary Fund — excerpt from j2023-5 (IMF Administrative Tribunal proceedings concerning the 2022 modification of the safeguard mechanism rule and the FY2023 staff compensation decision).*

### 60. The Tribunal addresses at the outset Respondent’s contention, raised for the first time in

### The Tribunal addresses at the outset Respondent’s contention, raised for the first time in

### Standing and admissibility (Article II(1): “adversely affect[ed]”)
- Respondent contends (first advanced in its Rejoinder and pursued at oral proceedings) that Applicants lack standing because they were not “adversely affect[ed]” within the meaning of Article II(1) of the Tribunal’s Statute, arguing the safeguard mechanism was triggered using end-January salary data for the FY2023 compensation decision and the Board exercised discretion to adjust compensation upward.
- Applicants contend they have standing because the modified “safeguard mechanism” rule and its application in FY2023 either violated their right to a rules-based compensation system or constituted an abuse of regulatory discretion, and they allege actual financial harm from a comparatio calculation that “does not fully account for annual wage erosion.”
- Jurisprudence cited by the Tribunal:
  - The “‘adversely affect[ed]’ requirement ... to assure, as a minimal requirement for justiciability, that the applicant has an actual stake in the controversy.” Ms. “G”, Applicant, and Mr. “H”, Intervenor, v. International Monetary Fund, IMFAT Judgment No. 2002-3, para. 61; Baker et al. v. IMF, IMFAT Judgment No. 2005-3, para. 17.
  - The Tribunal has rejected similar Respondent assertions in regulatory contexts (e.g., Ms. “G”, Baker et al., Mr. M. D’Aoust (No. 3), and has distinguished admissibility from merits inquiries (Daseking-Frank et al., para. 87; D’Aoust (No. 3), para. 32).
- Tribunal finding on admissibility:
  - The fact the safeguard mechanism was triggered under the modified rule is not dispositive of adverse effect (cf. Elkjaer et al. (No. 2), para. 110).
  - The Tribunal concludes Applicants meet the threshold of admissibility: as staff whose salaries were affected by the FY2023 compensation decision predicated on an allegedly unlawfully modified safeguard mechanism rule, Applicants have an adequate stake to press their claims.

### Whether the safeguard mechanism rule is a “fundamental and essential” condition of employment
- Legal framework:
  - Tribunal distinguishes “fundamental and essential” conditions (not subject to unilateral amendment) from non-fundamental/non-essential terms (may be amended subject to lawful exercise of discretion), drawing on WBAT de Merode, WBAT Decision No. 1 (1981), and Tribunal precedents (Elkjaer et al. (No. 2), Daseking-Frank et al.).
  - The Tribunal adopts the distinction between a principle and its implementation (de Merode, para. 43; Daseking-Frank et al., para. 60).
- Identified “fundamental and essential” principles for the Fund’s staff compensation system:
  - That the system will be “rules-based.”
  - That it will be “comparator-based.” Elkjaer et al. (No. 2), para. 82.
- Tribunal’s analysis and conclusion:
  - The safeguard mechanism rule is an implementation method of the “rules-based” and “comparator-based” system, not itself a “fundamental and essential” condition of employment.
  - Therefore, amendment of that rule falls to the Fund’s discretionary authority and is reviewable for abuse of discretion.

### Standard of review for alleged abuse of discretion (de Merode standard)
- The Tribunal applies the de Merode standard (WBAT Decision No. 1 (1981), para. 47) as articulated in Tribunal precedent:
  - Changes must be based on a proper consideration of relevant facts.
  - Changes must be reasonably related to the objective they intend to achieve.
  - Changes must be made in good faith and not prompted by improper motives.
  - Changes must not discriminate unjustifiably and must avoid excessive/unnecessary harm to staff.
  - The care with which a reform has been studied and conditions attached to a change are relevant.
  - Tribunal’s deference is greatest for regulatory and policy decisions of the Board. Elkjaer et al. (No. 2), para. 80; Daseking-Frank et al., para. 46.

### Motive for the 2022 modification (end-January cutoff)
- Respondent’s stated motive (2022 Board Paper, Paragraph 30; Management’s Technical Responses to the Board):
  - “to balance the objective of substantively reflecting internal labor dynamics during the year that impact the comparatio and hence the safeguards assessment, with the need to ensure that the annual budget and compensation reviews could be completed—including with sufficient time for consultations with stakeholders—before the end of each fiscal year.”
- Applicants’ contention:
  - The modified rule accounts only partially for annual salary erosion and purportedly “weaken[s] the safeguard rule,” alleging the Board “lacks the authority to weaken the safeguard rule through technical changes while purporting to adhere to core principles established in 2019.”
- Respondent’s defense:
  - The modification strikes a balance between competitiveness of salaries and operational need for timely budget and compensation review; acknowledges an “upward bias” from an earlier cutoff but regards it as outweighed by “certainty and predictability” and facilitation of consultation with SAC.
- Tribunal’s evaluation of motive:
  - The Tribunal finds the Board’s incorporation of an additional purpose—providing a practicable approach to taking the annual compensation decision within the Fund’s budget timetable (including Rule J-4 requirement that Management propose the annual budget by April 1)—was within the Fund’s discretionary authority.
  - Conclusion: the 2022 decision to calculate the comparatio using end-January (rather than end-financial year) salary data was not improperly motivated.

### Proportionality and reasonable relation to objective
- Issue: whether truncating data collection after the first nine months of the Fund’s financial year is reasonably related to the objective of balancing competitiveness and operational timetable (de Merode para. 47).
- Tribunal principles applied:
  - The Fund’s policy-making discretion allows choices among more than one reasonable alternative; a rational nexus between distinctions drawn by the rule and policy goals suffices even without a perfect fit. Daseking-Frank et al., paras. 49, 101; Mr. A. Billmeier, para. 86; Ms. “G”, paras. 79-80.
- Factual observations pertinent to proportionality:
  - Since enactment of the safeguard mechanism in 2019, the Fund had never calculated the comparatio on end-financial year data (Elkjaer et al. (No. 2), para. 90).
  - The Fund incorporated into the 2022 reform an additional objective: practicability for deliberation and consultation within the Fund’s budget timetable, including Rule J-4’s April 1 budget proposal deadline.
  - Applicants and Respondent agree that an earlier cutoff captures less erosion and yields a higher comparatio (an “upward bias”), but Respondent regards the tradeoff as acceptable for greater certainty and predictability.
- Tribunal’s assessment:
  - The Tribunal recognizes the legitimacy of seeking a practicable approach to allow timely consultation and budget preparation.
  - The Tribunal finds the choice to use end-January data falls within the Fund’s range of reasonable alternatives and is reasonably related to the stated objective.

### Conclusions and procedural disposition
- Admissibility:
  - Applicants have standing under Article II(1) to challenge the FY2023 compensation decision predicated on the modified safeguard mechanism rule.
- Fundamental condition inquiry:
  - The safeguard mechanism rule is not a “fundamental and essential” employment term; it implements fundamental principles (“rules-based” and “comparator-based”) but is itself amenable to amendment subject to lawful discretionary exercise.
- Abuse of discretion inquiry (preliminary conclusions):
  - The 2022 modification to calculate the comparatio using end-January rather than end-financial year salary data was not improperly motivated.
  - The modification is reasonably related to the objective of reconciling reflection of internal labor dynamics with the need to conduct compensation and budget reviews in a timely manner to permit consultation (including satisfying Rule J-4’s April 1 budget proposal timing).
- Next steps:
  - The Tribunal turns to the merits of Applicants’ remaining claims (further abuse of discretion analysis and related substantive contentions) beyond the threshold issues addressed here.

*International Monetary Fund Administrative Tribunal — judgment excerpts and analysis as set out in the Tribunal’s discussion of admissibility, fundamental conditions of employment, and review for abuse of discretion regarding the 2022 safeguard mechanism amendment and its application to the FY2023 compensation decision.*

### 90. The Tribunal is persuaded that there is a rational nexus between a rule that truncates data

### 90. The Tribunal is persuaded that there is a rational nexus between a rule that truncates data

### Tribunal finding on nexus between truncating data collection and Fund objectives
- The Tribunal found a rational nexus between: (a) a rule that truncates data collection for purposes of calculating the comparatio after the first nine months of the Fund’s financial year, and (b) the Fund’s policy goal of taking the annual staff compensation decision with due deliberation and consultation in the context of the budget timetable.
- The decision to cut off data collection at January 31 was characterized as not a “perfect fit” but reasonably related to the objective it serves (reference to Ms. “G”, para. 79).

### Lawfulness of the 2022 modification to the “safeguard mechanism” rule
- The Tribunal concluded the decision to modify the “safeguard mechanism” rule:
  - Was reasonably related to the objective it intended to achieve.
  - Was within the Board’s discretionary authority to balance competing goals.
  - Was not arbitrary and fell within the Fund’s authority to choose among reasonable alternatives.
- Conclusion: Applicants’ challenge to the 2022 modification of the safeguard mechanism rule is denied.

### Was the decision based on appropriate consideration of relevant facts?
- Legal standard: decision must be “based on a proper consideration of relevant facts.” (de Merode, para. 47)
- Applicants’ contentions:
  - Given the goal of maintaining international competitiveness of Fund salaries and Management’s goal of making a compensation decision before end of the Fund’s financial year, the Board should have been informed of how excluding a quarter-year of salary erosion would change the comparatio outcome.
  - Management allegedly did not provide the Board with any relevant fact about measuring nine months rather than twelve months of salary erosion for the comparatio calculation or safeguard analysis.
  - Applicants alleged Management omitted a material fact: when Management re-ran the safeguard analysis for the FY2022 compensation decision using end-April rather than end-February data, the comparatio “did drift downward in the final month of the financial year,” falling below the safeguard floor. (Elkjaer et al. (No. 2), para. 108)
  - Applicants highlighted Management’s mistaken prediction in relation to the FY2022 decision that it had “no reason . . . to expect the comparatio [at April 30, 2021] to be substantially different than a few weeks earlier,” a basis on which Elkjaer et al. (No. 2), para. 108 found the Board may have been misdirected.
  - Applicants pointed to Management’s Responses to Technical Questions reporting “calculations demonstrate that the comparatio does not change significantly between January and March (for example, the comparatio is calculated at 97.4 percent at January 31, 2022 and March 15, 2022).”
- Respondent’s position:
  - SAC included to the Board that salaries had dropped below the 98 percent comparatio and therefore the safeguard mechanism should have been activated; SAC’s Statement noted “Last year’s salary did indeed drop below the safeguard. SAC conjectured in its 2021 Board statement that salaries had fallen below the safeguard, which now have been confirmed.” (Emphasis in original.)
  - Management did not include the FY2022 re-run information in its Board Paper or Responses to Technical Questions because it considered it not relevant to the FY2023 decision.
- Tribunal’s assessment:
  - In Elkjaer et al. (No. 2), the prior Tribunal found the Board lacked relevant facts because the then-governing safeguard mechanism rule text required end-of-financial-year data and Management had not provided that calculation.
  - In the instant case the applicable safeguard mechanism text does not include that end-of-financial-year requirement.
  - Given the facts before the Board regarding the modification and the FY2023 decision, the Tribunal finds the Board had the relevant facts and did not abuse its discretion in reaching its decisions.
  - The Tribunal considered but did not rely on the Working Group’s March 2023 Technical Review when assessing the challenged 2022 decisions because the March 2023 Report was not before the Board when it took the April 15, 2022 decisions.

### Consideration of alternatives and policy-review scope
- Applicants argued the Fund failed to explore available alternatives for taking a compensation decision before the end of the financial year without modifying the safeguard rule to limit data collection to three quarters.
- SAC had raised in its Statement to the Board that the Fund should “[f]ind a way to include 12 full months of salary erosion instead of a shorter period,” but did not supply alternatives for consideration.
- Tribunal’s policy review constraints:
  - The safeguard mechanism rule and its 2022 modification were treated as policy decisions. A tribunal may review lawfulness but not the advisability of policy decisions. (Article III, third sentence of the Tribunal’s Statute; Commentary on the Statute, p. 20)
  - The 2019 safeguard mechanism rule was itself a policy decision resulting from stakeholder negotiation; the 2022 modification similarly reflected compromise and deliberation.
- Tribunal conclusion on factual consideration:
  - The Tribunal finds the modification was not improperly motivated, was reasonably related to its objective, and was based on appropriate consideration of relevant facts.

### Did the Board abuse its discretion by adopting the FY2023 staff compensation decision based on the modified rule?
- Prior findings reiterated:
  - The decision to cut off data collection as of January 31 neither violated a “fundamental and essential” condition of employment nor represented an abuse of discretionary authority to amend non-fundamental conditions.
- Process under the safeguard mechanism:
  - The safeguard mechanism sets a sequential process: Management calculates the comparatio per prescribed rules; if the comparatio falls outside the safety corridor, the Board applies a four-factor test to assess market competitiveness and may exercise discretion to adjust the salary increase. (Elkjaer et al. (No. 2), para. 112)
- Applicants did not allege the Fund failed to follow steps required after the comparatio fell below the safeguard floor, including the four-factor analysis in Paragraph 21 of the CCBR decision.
- Applicants did not raise an independent challenge to the FY2023 decision aside from its reliance on the modified comparatio calculation.
- Tribunal conclusion: For the same reasons sustaining the Board’s modification, the Tribunal sustains the Board’s FY2023 staff compensation decision.
- Outcome: The Applications are denied in their entirety.

### Additional observations on design, risks, and continuing review
- Historical purpose of the 2019 safeguard mechanism rule:
  - To maintain alignment between the annual adjustment to the Fund’s payline and the annual salary increase and “to ensure that average salaries continue to track the midpoints well and maintain the current international competitiveness test.” (CCBR Overview Paper, p. 12.)
- The 2022 modification introduced an additional purpose: to provide a practicable approach to taking the annual staff compensation decision with due deliberation and consultation in the context of the Fund’s budget timetable, including Rule J-4’s requirement that the annual budget be proposed by Management to the Board by April 1 each year.
- The Tribunal observed that truncating collection at January 31 excluded three months of the year in assessing wage erosion and represented a significant change from the 2019 architecture that specified end-year comparatio calculation: the 2019 text required determining the ratio of average salaries at the end of the financial year to midpoints at the end of the previous financial year to determine the end-year comparatio. (2019 CCBR paragraph 20, Step 1)
- The Tribunal noted the Fund continues to study methodology design under a delinked compensation system and took notice of the Technical Working Group’s recognition of an “upward bias in the comparatio calculation when using less than full year data” and its suggestion that “the Fund should consider options to address this shortcoming or risk triggering the safeguard mechanism each year and undermining its credibility.” (EBAP/22/9, p. 39; Review of Staff Compensation EBAP/23/21 (March 27, 2023) is part of the record)
- The Tribunal warned that persistent variability in application of safeguard rules could risk abuse of discretionary authority, though it did not find abuse of discretion in the instant case.

### Conclusions of the Tribunal
- Applicants have standing because their salaries were affected by the FY2023 staff compensation decision (Article II of the Tribunal’s Statute).
- The 2019 safeguard mechanism rule is not a “fundamental and essential” condition of Fund staff employment, so the Board could modify it subject to lawful discretionary constraints.
- The Board did not abuse its discretion by modifying the safeguard mechanism rule to calculate the comparatio using end-January (rather than end-financial year) salary data:
  - The modification was not improperly motivated.
  - The modification was reasonably related to its intended objective.
  - The modification was based on appropriate consideration of relevant facts.
- Decision: The Administrative Tribunal of the International Monetary Fund unanimously decided that the Applications of Mr. T. Elkjaer, Mr. J. Manning, Mr. J. Mongardini, Mr. J. McHugh, Ms. L. Li, and Ms. H. Shi are denied.
- Signatories: Nassib G. Ziadé, President; Edith Brown Weiss, Judge; Andrew K.C. Nyirenda, Judge; Celia Goldman, Registrar.
- Location and date of decision: Washington, D.C.; December 29, 2023.

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_Source: https://www.imf.org/-/media/files/imfat/j2023-5.pdf_