The background
A staff member may have no right to have a fixed-term contract renewed. But can an organisation rely on performance concerns to justify non-renewal if those concerns were never raised with the employee beforehand? In ILOAT Judgment No. 5251, the Tribunal’s answer was clear: discretion not to renew does not remove the duty to act fairly.
The complainant was the International Olive Council’s Internal Comptroller. She had been recruited through a competitive process on a four-year fixed-term contract, due to expire on 15 October 2021. Her performance evaluations for 2018, 2019 and 2020 gave her an overall rating of “Optimum”.
In April 2021, she told the Executive Director that she would welcome an extension and asked to be informed of his intentions. The Staff Regulations allowed for one or more extensions, up to a maximum of four additional years. The Tribunal confirmed, however, that this wording created only a possibility of renewal, not an entitlement or a legitimate expectation that the contract would be extended.
The issue was therefore not whether the complainant had a right to renewal. It was whether the organisation had exercised its discretion lawfully and fairly.
The decision and the concerns raised
On 15 July 2021, the Executive Director published a vacancy notice for the Internal Comptroller post. Twelve days later, he informed the complainant that her contract would not be extended.
The letter also set out criticisms of her performance and conduct. These included alleged errors in a report, a diplomatic incident, concerns about a conflict of interest, and claims that she had not fulfilled certain professional duties.
The complainant had not received a specific and timely warning that these alleged deficiencies could put her continued employment at risk. Nor had she been given a meaningful opportunity to respond before the non-renewal decision was made. Instead, the concerns were communicated at the same time as the decision itself.
The Tribunal’s reasoning
The Tribunal reaffirmed that organisations have wide discretion when deciding whether to renew a fixed-term appointment. That discretion is not unlimited. A non-renewal decision must not be arbitrary or irrational, must be based on a valid reason, and must be communicated within a reasonable time.
Where an organisation relies on alleged performance or conduct deficiencies, the staff member must have a fair opportunity to address them. Raising those criticisms only when communicating the non-renewal leaves no genuine opportunity to respond before the outcome has been decided.
The Tribunal found that the failure to provide a specific and timely warning, and to give the complainant a meaningful chance to answer the criticisms, breached the organisation’s duty of care and tainted the decision with procedural flaws. It set aside both the non-renewal decision and the decision rejecting her internal appeal.
The remedy
The Tribunal did not find that the complainant was entitled to renewal. Given the fixed-term nature of her contract, the Executive Director’s discretion, and the circumstances affecting the working relationship, it could not conclude that renewal was certain or even probable.
The procedural failure did, however, deprive her of a valuable opportunity to have her request for renewal properly considered. The Tribunal awarded compensation equivalent to six months of her net salary and allowances, together with €3,000 in costs. It rejected her separate claim for moral damages because she had not established the required link between the unlawful decision and the alleged moral injury.
The Tribunal did not need to decide the complainant’s other arguments, including her allegation that the non-renewal was retaliatory.
The practical lesson
Judgment No. 5251 draws an important distinction between a right to renewal and a right to fair treatment. The former may not exist under a fixed-term contract. The latter remains essential.
When an organisation relies on performance or conduct concerns in deciding not to renew an appointment, it should raise those concerns in time, explain their possible consequences, and allow the staff member a meaningful opportunity to respond before making its decision.