Members of the Extraordinary Chambers in the Courts of Cambodia. Photograph: ECCC

Hundreds of international employees at the Khmer Rouge Tribunal could be laid off at the end of the year due to a severe funding shortfall, staffers were told Friday morning in a confidential meeting with UN Special Expert David Scheffer.

According to a source who attended the closed-door meeting, the court needs $3 million to make up a 2012 budget shortfall and another $5 million for the first quarter of 2013.

If the shortfall is not met, contracts will likely not be renewed at the end of the year, the source said.

Since late last year, contracts have been awarded only on a month-to-month basis because of the UN's inability to guarantee long-term payment, while a hiring freeze – in place since July – has prevented the court from replacing outgoing personnel.

Compounding difficulties, Scheffer told the staffers, is the recent pullout by a donor country that had previously pledged to make up the 2012 shortfall.

He did not disclose which country.

The announcement comes just days after the court's Trial Chamber stunned lawyers, donors and trial observers by announcing that the inability to replace half its staff had led to a backlog of work, which could be rectified only by cutting back on the number of days judges sat and heard testimony.

While the court has routinely struggled with financial woes, the past year has proven an especially difficult one for both the Cambodian and international sides.

Cambodian staffers went months without pay, while an unusually late submission of the proposed budget earlier this year left the international side scrambling to piece together funds from donors who had pledged their aid elsewhere months earlier.

It is unclear what will happen if the shortfall is not met. In a report released last month to the UN General Assembly, Secretary-General Ban Ki-moon warned that the court's financial crisis "could jeopardize the judicial proceedings before the Chambers."

To contact the reporter on this story: Abby Seiff at [email protected]