Payment of Judicial Awards: In Full or in Installments?

 

Law 27802—known as the Labor Modernization Law—was published in the Official Gazette on March 6, 2026. Among the many amendments it introduces to the employment contract regime, one stands out for its impact on a traditionally rigid stage of labor proceedings: the enforcement of final judgments. For decades, compliance was governed by a well-known rule of immediate, uniform execution, largely insensitive to the specific circumstances of the sentenced employer. Under the new framework, however, judicial awards may be paid in installments, subject to a differentiated regime based on the employer’s size.

This development raises a simple yet decisive question: is immediate payment the only possible means of protecting labor credits, or can the law devise alternative mechanisms to ensure their effective satisfaction?

The previous regime: full and immediate payment as a general rule

Before the reform, article 277 of the Argentine Labor Law (LCT) was interpreted under an almost unalterable principle: final judgments had to be complied with in full and without delay. Payment in a single act was regarded as the natural consequence of a judgment, even where it imposed a financial burden so significant—particularly for small and medium-sized enterprises—that it jeopardized business continuity. The possibility of paying in installments was not a legally recognized right, but rather an exception dependent on the parties’ agreement, isolated case law or, more commonly, on enforcement proceedings involving attachments and coercive measures.

This framework was further complicated by the lack of a uniform standard for updating credits and applying interest. Disputes over the applicable rate and the preservation of the claim’s real value frequently shifted to the enforcement stage, effectively turning it into a new arena for litigation. In practice, this system not only delayed employees’ effective recovery but also, in most cases, pushed SMEs and individual employers toward insolvency or bankruptcy, without necessarily improving the satisfaction of the adjudicated credit.

The amendment in article 56

Article 56 of the Labor Modernization Law introduces a substantial change to this landscape. By replacing the text of article 277 LCT, it expressly provides that final judicial awards may be discharged in consecutive monthly installments, establishing differentiated treatment according to the type of employer.

For large companies, it establishes a maximum of six installments. For micro, small, and medium-sized enterprises, as well as individual employers, the term may extend to up to twelve consecutive monthly installments.

In both scenarios, installments must be adjusted in accordance with the mechanism in article 276 of the same law, the update of the historical principal based on the Consumer Price Index (CPI), plus a fixed annual interest rate of 3%. This ensures the preservation of the real value of the judicially recognized credit, even when payment is spread over time.

Reordering compliance and preserving the credit

Strictly speaking, the amendment article 56 introduces does not entail a waiver, remission, or reduction of the judicially recognized credit. Employees’ claims remain intact, fully enforceable, and subject to objective statutory adjustment parameters. What the amendment alters is the way such right is enforced, moving away from the notion that protection of labor credits can only be achieved through immediate, lump-sum payment.

The new framework adopts a different rationale: rather than undermining the claim, installment payments function as a tool designed to ensure its effective satisfaction, even if this requires a temporal distribution. The underlying legal rationale appears oriented toward addressing the impact that final labor judgments may have on smaller employers, particularly SMEs and individual employers. In these cases, the requirement of full and immediate payment could, in practice, lead to business interruption or even make compliance materially impossible, with consequences that do not necessarily benefit the employee creditor.

The reform thus seeks to preserve business continuity—and, by extension, the very source of employment—without impairing employees’ right to collect what has been judicially awarded. The protection of labor credits is not weakened; it is channeled through a mechanism intended to secure effective recovery, even if it entails abandoning the notion that immediate payment is, in all circumstances, the only legally valid response.

Judicial oversight and predictability of the new framework

From a technical standpoint, the regime introduced through article 56 is a statutory mechanism, regulated and predefined, whose operation is not contingent upon judicial authorization or upon any assessment of convenience, merit, or opportunity by the presiding judge. While installment payments must be structured within the framework of enforcement proceedings, they do not require court approval or creditor consent. Nor do they give rise to a right of opposition, as the recognized credit remains intact, enforceable, and duly adjusted.

In this context, the role of the court is not to grant or deny access to the payment regime, but rather to verify that the installment plan strictly complies with the statutory parameters, particularly with respect to the maximum number of installments and the applicable adjustment rate.

By establishing clear, objective, and predictable rules, the new scheme introduces a significant degree of legal certainty. Within this framework, the reform appears to pursue a pragmatic solution aimed at reconciling the protection of labor credits with the economic realities faced by those required to satisfy them. It does not forgive the debtor or dilute the binding force of final judgments; it structures compliance in a way that avoids the paradox whereby the judgment itself becomes an obstacle to its own enforcement.
 

Conclusions

Final judgments continue to convey the same essential message: a debt exists and must be paid. The difference the Labor Modernization Law introduces lies in how such payment is to be made.

Article 56 opens the door to a less abrupt outcome for smaller employers, while simultaneously providing greater predictability and certainty for employees. In this context, a central question arises: does a single payment—often unattained—offer greater protection to employees, or does a structured payment plan—albeit extended over time—ultimately provide more effective satisfaction?

The key to this reform may lie precisely there: not in collecting everything at once, but in collecting more effectively, even if not all at the same time.