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Termination of Employment Contracts in Argentina

1. Grounds for Termination (List)

The employment stability is the right of workers to maintain the employment relationship for a specified or unspecified time. In Argentina, the employment stability is relative, which means that the employee may be dismissed, but he has the right to be paid the severance compensation.

The labour contract may be terminated by the employee, by the employer or by both parties.

If both parties decide to terminate the labour relationship, the act must be executed by deed or before the administrative or judicial labour authority.

2. Collective Dismissals

The LCL authorizes the employer to carry out collective dismissals in cases of force majeure or lack or reduction of work not attributable to the employer, but it has to be duly justified.

In such cases, dismissal must begin with the least senior staff within each specialty.

The dismissed employee is entitled to receive a compensation of one half (1/2) of the seniority compensation.

However, under local labour law there is a special procedure that addresses the cases where the employer needs to suspend or terminate all or the majority of his employees due to force majeure or lack of work. Such procedure pursues the payment of a reduced severance – fifty per cent (50%) of the severance for seniority – and takes place before the Ministry of Labour and with the participation of the unions involved.

In order to file for the PCP the company has to evidence that the lack of work is not based on its negligence and that it has done everything to avoid terminations.

3. Individual Dismissals

One of the main principles of the Argentine Labour Law is the principle of continuity of the labor relationship. According to this principle, the labour relationship ends with the employee retirement.

a. Is severance pay required?

An unfair or wrongful dismissal entails specific liabilities within the scope of Argentine labour regulations.

The severance compensation is reduced by one half (1/2) if reduction of business activity or lack of work objectively justifies the dismissal. The compensation is also limited to one half (1/2) if the severance payment is made as a result of the employee’s death.

4. Separation Agreements

a. Is a Separation Agreement required or considered best practice?

A separation agreement is not mandatory. However, an employer and an employee may ratify termination by executing a termination agreement before the MTEySS in which the employee declares that he has no further claims against his ex-employer and requests MTEySS’s approval.

b. What are the standard provisions of a Separation Agreement?

Separation agreements will often cover the following:

  1. Employee’s personal information (name, ID number, date of birth, date of beginning of the labor relationship);
  2. Means of termination and termination date;
  3. Applicable collective bargaining agreement, if applicable;
  4. Monthly compensation;
  5. Legal fees;
  6. Specific wording established by the MTEySS for validity of severance agreement;
  7. Total amount granted on account of severance compensation and final liquidation;
  8. Means of payment and payment date;
  9. Delivery of work certificates.
  10. Any agreed additional compensation on the grounds of termination of employment;
  11. Employee waiver (i.e. where he agrees to not bring any further claims against the employer);
  12. Statement to the effect that the amount paid as compensation will be offset against any compensation granted under a potential future legal claim;
  13. Request to the Ministry of Labor to approve the termination agreement.

c. Does the age of the employee make a difference?

No, the age of the employee does not make any difference.

d. Are there additional provisions to consider?

Yes, additional provisions may be included in separation agreement.

5. Remedies for employee seeking to challenge wrongful termination

If an employee is dismissed but he does not agree with the amount paid as severance, he can file a claim under the conciliatory procedure provided by the Ministry of Labour. This step of the procedure is mandatory if the employee later intends to file a claim in court. Under this procedure both parties have to attend a conciliation hearing in an attempt to settle the disputed severance payment. There are two possible outcomes:

  • The parties reach an agreement, following which the Ministry of Labour must approve the settlement for it to be valid.
  • The parties fail to reach an agreement. The claimant can now file a claim before the court.
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