## Ari et al., Applicant v. International Monetary Fund, Respondent — IMFAT Judgment No. 2025-3 (June 6, 2025)

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**Canonical URL:** [Ari et al., Applicant v. International Monetary Fund, Respondent — IMFAT Judgment No. 2025-3 (June 6, 2025)](https://www.imf.org/-/media/files/imfat/j2025-3-summary.pdf)

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### Background and procedural posture
- Applicants: eight Fund staff members challenging elements of the FY2024 staff compensation decision.
- Decision at issue: FY2024 staff compensation decision proposed by Management and adopted by the Executive Board on April 20, 2023, with effect from May 1, 2023.
- Applicants alleged non‑compliance with rules established by the Comprehensive Compensation and Benefits Review (CCBR) decision adopted in 2019, particularly regarding the triennial payline adjustment and its effect on the salary increase decision.

### CCBR comparator-based payline rules (summary of relevant provisions)
- Grades A1–A8:
  - Primary comparator market: Washington‑Baltimore region.
  - Year 1 of the three‑year compensation cycle: two‑step comparator-based review.
    - Step 1: compare midpoints at grades A1–A8 to comparator market to develop a provisional payline; perform grade‑by‑grade assessment to maintain progression and align midpoints to market.
    - Step 2: final grade‑by‑grade adjustments considering grades where the Fund recruits most staff (grade A4/A5) and recruitment/retention challenges at A1–A8.
- Grades A9–B2:
  - Primary comparator market: United States (private and public sector components weighted to support recruitment and retention needs).
  - Year 1: three‑step comparator‑based review.
    - Step 1: level‑to‑level comparison with U.S. and international comparator markets to determine overall percentage increase required on a staff weighted average basis, producing a provisional payline.
    - Step 2: grade‑by‑grade adjustments considering recruitment difficulties; where market reference is lower than Fund midpoint, midpoint remains unchanged; internal considerations of career progression and payline stability applied.
    - Step 3: assess competitiveness versus international comparators (France, Germany, Japan) using arithmetic average of percentage differences at each grade weighted by staff numbers as of January 1 of the review year; international competitiveness test: Fund payline should be a range of 10-20 percent above the international market payline.
  - CCBR allows a “further adjustment” to midpoints after grade‑by‑grade adjustments based on international competitiveness evaluation; discretionary downward adjustments may be subject to the safeguard mechanism.

### Central factual findings and contested elements
- Management’s 2023 Review proposed grade‑by‑grade adjustments to midpoints; the Board approved Management’s proposed salary structure resulting in:
  - staff weighted average of 5.0 percent (salary structure adjustment),
  - proposed average salary increase of 6.9 percent.
- Applicants’ principal contentions:
  - Management failed to follow the CCBR multi‑step payline adjustment process (allegedly skipped a provisional payline step and “commingled” steps).
  - Resulting payline was “inexplicably below market” at certain grades, notably A5–A6 (within A1–A8 payline) and A9–A10 and A15–B2 (within A9–B2 payline).
  - Management arbitrarily adjusted downward the Grades A9–B2 payline based on its international competitiveness assessment, despite earlier drafts indicating no evidence of “over‑competitiveness.”
  - Management failed adequately to explain the recommended option to the Board and misdirected the Board regarding the “75th percentile” market pitch.

### Tribunal’s legal standard and approach
- Tribunal emphasizes heightened deference for regulatory decisions, especially policy decisions by the Executive Board, while holding that changes to non‑fundamental employment terms must:
  - be based on proper consideration of relevant facts,
  - be reasonably related to the intended objective,
  - be made in good faith without improper motives,
  - not discriminate unjustifiably among staff,
  - avoid excessive and unnecessary harm.
- Because the compensation system is meant to be “rules‑based” and “comparator‑based,” the Fund’s obligation to adhere to written rules is heightened.
- Tribunal recognizes that the CCBR’s triennial payline adjustment rules afford Management some discretion; review focused on what the rules required and how Management implemented them.

### Tribunal analysis and conclusions (by contested question)
- Did Management consider a “provisional payline” (Question 1)?
  - Tribunal found the prescribed Steps ensure the review is comparator‑based but need not be followed rigidly; Management compared Fund midpoints with relevant market paylines and adhered to the CCBR requirement to consider a provisional payline for Grades A1–A8 and A9–B2.
- Did Management improperly “commingle” steps or fail to account for career progression, payline stability, recruitment and retention (Question 2)?
  - Tribunal held that the rules did not prescribe precise balancing of competing factors; Management had discretion to prioritize factors and did not exceed its discretionary authority or improperly commingle elements.
- Did Management arbitrarily adjust downward the Grades A9–B2 payline based on international competitiveness and misstate the basis for a downward adjustment (Question 3)?
  - Tribunal rejected Applicants’ claim that Management arbitrarily reduced the A9–B2 payline; Management explained that full alignment to the U.S. market across A9–B2 would place the Fund more than 20 percentage points above the CCBR’s 10-20 percent international competitiveness target, and Management adopted a “more targeted and moderate increase” to maintain competitiveness at key recruitment levels while addressing internal equity.
- Did Management fail to explain adequately its recommendation to the Board (Question 4)?
  - Tribunal concluded Management provided explanation and documentation in the 2023 Review, its Annexes, and the 2023 Supplement issued in response to SAC input; Management did not abuse its discretion or fail to adhere to the rules.
- Did Management misdirect the Board concerning the “75th percentile” market pitch (Question 5)?
  - Tribunal found the CCBR explains the meaning of the 75th percentile reference; the 2023 Review appropriately described the Fund’s market pitch as targeting, approximating, or being set “on average” at the 75th percentile. The Applicants’ challenge to the 75th percentile reference lacked merit.

### Overall disposition
- Tribunal concluded Applicants did not demonstrate that Management:
  - failed to consider a provisional payline;
  - improperly commingled multi‑step processes or ignored career progression, payline stability, or recruitment and retention;
  - arbitrarily adjusted downward the Grades A9–B2 payline based on international competitiveness;
  - failed adequately to explain the FY2024 payline adjustment proposal to the Board;
  - misdirected the Board in developing the proposed payline adjustment.
- Having found no abuse of discretion by Management, the Tribunal also concluded the Board did not abuse its discretion in adopting the FY2024 staff compensation decision. The Application was denied.

### Key statistics and precise references preserved from the Judgment
- Dates and decisions:
  - Board adoption of FY2024 staff compensation decision: April 20, 2023.
  - Effective date of decision: May 1, 2023.
  - CCBR decision adopted in 2019.
  - IMFAT Judgment No. 2025-3 (June 6, 2025).
- Payline and increases:
  - staff weighted average resulting from approved salary structure: 5.0 percent.
  - proposed average salary increase: 6.9 percent.
- CCBR international competitiveness target range: 10-20 percent above the international market payline.
- Market pitch reference: 75th percentile.
- Staff numbers weighting reference date for international comparison: January 1 of the review year.
- Grades specifically contested or highlighted: A1–A8; A4/A5; A5–A6; A9–B2; A9–A10; A15–B2.

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_Source: https://www.imf.org/-/media/files/imfat/j2025-3-summary.pdf_