Employee Rights When an Undertaking is Transferred in Argentina

1. Employees’ Rights

There are two (2) possible situations in Argentina stipulated by the LCL: a transfer of undertaking or an assignment of employees.

In case of a transfer of undertaking, all obligations arising from employment contracts are transferred to the takeover party, transferring even those obligations originated by reason of the transfer. The employment contract continues with the new employer and the employee maintains the acquired seniority and all the rights arising from it.

However, the employee may consider the extinction of the labour contract if, by reason of the transfer, he suffers a damage that justifies the termination. These are cases where, by reason of the transfer, the essential labour conditions are modified.

In case of employees’ assignment without transfer of undertaking, express written agreement of the employee is required and the same rules that govern the transfer of undertaking apply.

2. Requirements for Predecessor and Successor Parties

  1. Transfer of undertaking:
    1. There must be a change of employer (change of ownership of one or more production units);
    2. Change of corporate type is not considered as transfer of undertaking;
    3. It is not necessary that the transfer involves the entire enterprise, it may be transferred only some of its branches or sections. What is essential is that the part that is intended to be transferred can operate as a separate productive technical unit.
    4. The new employer (purchaser) is joint and severally liable for the labor and social security debts originated prior the transfer. However, it is exclusively liable for those obligations originated after the transfer.
    5. Joint and several liability applies not only to debts related to those employees who continued working for the purchaser, but also to the debts related to those employees whose labor relationship was terminated before the transfer takes place.
    6. The purchaser must recognize the employee’ seniority, job category, working hours, compensation and any other working conditions. If parties agree otherwise, such agreement will be of no value.
    7. Obligations of conduct are also transferred: Those moral imperatives must always be respected by the parties (good faith, collaboration, loyalty, etc.). Thus, the employee’s disciplinary record, both favorable and unfavorable, must be taken into account by the new employer.
  2. Assignment of personnel:
    1. For the assignment of personnel to be valid, it requires the employee’s express consent.
    2. Personnel labour conditions and seniority must be respected by the assignee.
    3. Once the assignment takes place, the assignor and the assignee are joint and several liable for all obligations arising from the assigned relationship.
For more information, please contact L&E Global.
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