Criteria for Updating Labor Credits

Introduction

The labor reform bill introduces a substantial change in the regime for updating labor credits and default interest, applicable both to future claims and to cases already in progress. This is a modification with relevant practical effects in an aspect that, in recent years, has been central in labor litigation, due to the extensive duration of proceedings and the impact of inflation and devaluation on the credits claimed.


Labor cases filed after the entry into force of the law

For credits arising from employment relationships initiated after the entry into force of the law, the bill replaces article 276 of the Argentine Labor Law (LCT) and establishes an updating scheme based on the Consumer Price Index (IPC) plus an annual interest rate of 3% from the date each amount becomes due until its effective payment.

This criterion coincides with the one currently applied by the majority of the chambers of the National Court of Appeals on Labor Matters (CNAT). This implies continuity in the judicial practice of that jurisdiction (which is the one with the greatest volume of pending cases) and, at the same time, would bring to an end a long controversy that gave rise to innumerable contradictory decisions between the CNAT and the Argentine Supreme Court (CSJN).


Cases in progress

Regarding the proceedings “in progress and still pending final judgment” at the time the law enters into force, article 55 of the bill provides that that updating must be carried out in accordance with article 768 of the Civil and Commercial Code. That is, default interest will be applied according to the rate set by the Argentine Central Bank of the (BCRA) for the corresponding period.

The provision also introduces clear limits:

•    Ceiling: the result may not exceed the amount obtained by updating the judgment sum with IPC plus 3% annually.
•    Lower limit: The amount may not be lower than 67% of that same calculation (IPC + 3% annually).

Finally, the article states the public‑order nature of these rules and mandates they must be applied ex officio, including in insolvency and bankruptcy proceedings.

In practice, recognition of the 67% lower limit means that cases in progress could receive an update lower than 100% of IPC plus 3%, unlike cases initiated after the entry into force of the law, which would indeed receive the full IPC plus 3%. This unequal treatment has generated criticism from the workers’ sector, which considers it an arbitrary distinction.


Practical impact on labor litigation and final considerations

The updating of credits and default interest has been a decisive axis in contemporary labor litigation, given its quantitative weight in periods of high inflation and the prolonged duration of proceedings. In many cases, the updating criterion applied ends up having greater influence on the final amount of the judgment than the substantive issue itself.

In this context, although for cases filed after the law enters into force the impact seems limited within the National Courts on Labor Matters—where, in practice, the IPC plus 3% criterion was already being applied—the reform is relevant because it unifies criteria across all jurisdictions. Thus, it eliminates the divergences that existed among them and limits the broad discretion judges previously had to resolve this issue.

Regarding cases in progress, in the National Courts on Labor Matters the practical impact could be even greater, since some proceedings which, under the CNAT’s criterion would be updated with IPC plus 3%, could end up applying the BCRA rate, provided that the result is not below the 67% lower limit.