Inexcusable Overclaiming Following the Labor Reform

Historically, both judicial and administrative labor proceedings have been characterized by their gratuity for workers. Now, following the enactment of Labor Modernization Law 27802, has this criterion been modified? The answer is “no.”

The labor reform does not eliminate gratuity in administrative and judicial labor proceedings; therefore, workers or their beneficiaries will continue to enjoy this benefit. It should be clarified that the gratuity we are referring to here is not the benefit of litigating without costs (which exempts a party from paying any expenses related to the proceeding), but rather an exemption from paying court filing fees at the time of submitting a claim.

As a general procedural principle, filing fees are calculated based on the amount in dispute, which discourages claims lacking reasonable prospects of success. However, and regardless of the litigation outcome, courts are generally highly reluctant to order claimant workers to pay legal costs. This created a highly favorable environment for excessive claims or those lacking reasonable chances of success, where exaggerated claims even became a pressure tool to obtain settlement agreements for amounts exceeding what the law provides, as there were no adverse consequences for claimants. This distorts the system.

Article 10 of the Labor Modernization Law amends article 20 of the Argentine Labor Law (LCT) to provide that “if the record of the proceedings reveals inexcusable overclaiming—objectively configured in cases of overestimation of the claimed credits—costs must be borne jointly and severally by the party and the acting professional.” In other words, if there is an overestimation of claimed amounts, a court may objectively establish inexcusable overclaiming and, consequently, there will be joint liability of the acting attorney for the judicial fees imposed on the party. The new provision is an attempt to correct the distortion within the system.

However, the issue is not without controversy. Indeed, although this legal concept existed before the reform, the City of Buenos Aires Public Bar Association issued a critical statement opposing the incorporation of the concept of inexcusable overclaiming, asserting that it may negatively affect the practice of law.

It is important to note that  the concept of inexcusable overclaiming already existed before the amendment, but labor courts virtually never used it. Labor case law has adopted a highly restrictive approach to its application. This is because, although there is consensus that, to establish joint liability, the lack of justification must be attributable to the attorney—who must also be attributed a conscious, deliberate, and intentional act of claiming more than what is owed, or claiming a certain amount knowing or having reason to know that it is not owed[1]—this ultimately depends on courts’ subjective assessment after evidence has been produced in the case.

Consequently, adding this concept to article 20 of the LCT has a clear legislative intent to reinforce an already existing though previously unused concept and to establish an objective criterion to apply it in the future.

Nevertheless, it will be essential to analyze future cases to determine whether labor judges apply this objective standard or whether, from a broader perspective, implementing it effectively contributes to reducing litigation in the labor jurisdiction