What is the New Employment Termination Insurance Scheme?

Resolution 347 of the Argentine Superintendence of Insurance (SSN) entered into force on July 10, 2025, establishing the technical and contractual guidelines applicable to Employment Termination Insurance, within the framework of the Severance System introduced by the Bases Law 27742 and its implementing Decree 847/2024. While several aspects remain to be defined, the new Employment Termination Insurance allows replacing the traditional severance regime in article 245 of the Labor Contract Law through early capitalization mechanisms, subject to collective bargaining rules.

This insurance may be structured either as a as group life insurance with savings or a group retirement insurance plan, aiming to replace the severance compensation and any other indemnity components that reference it as a calculation base. Its implementation is optional, meaning it only applies if expressly provided under a collective bargaining agreement. It also requires the employee’s individual consent, and it may be extended to pre-existing employment relationships, subject to mutual agreement.

From an insurance technical standpoint, Resolution 347 provides for the creation of multiple accounts associated with each insurance policy, organized as follows:

• Employee-specific account, funded by the employer’s contributions paid as premiums for that specific employee. This account does not grant the employee a direct entitlement until funds are transferred to their individual account. Upon termination of the employment—or when other specific events established in the collective bargaining agreement occur—a portion of the balance is automatically transferred to the employee’s individual account.
• Individual account of the insured employee, used to credit the employee’s voluntary contributions (if permitted by the policy) and the amounts previously in the employee-specific account, once a triggering event occurs (termination or other specific events). The balance of this account may be freely withdrawn by the employee, although minimum surrender periods may be established.
• Collective account: It accumulates unallocated funds (e.g., when an employee is no longer covered) and additional employer contributions. Employers may apply these funds toward future premium payment obligations.

The policy must clearly specify how and when funds are credited or debited from each account, how the fluctuation fund is built, and the mechanism for transferring funds to individual accounts of the insured employees. Employers may transfer the policies and their funds to another insurer without necessarily triggering the transfer from the employee-specific account to the individual account of the insured employee.

If the policy does not specify how to recover an employer’s contributions—e.g., if an employee leaves without a triggering event, or in the case of contributions made by the employer in excess—such limitations must be expressly disclosed when entering into the policy and the employer must accept them in writing.

The resolution requires that the employment termination causes triggering the insurance benefit are clearly defined. The sum insured may be set as a multiple of the employee’s salary or through other variable formulae. If an employee dies, the beneficiaries must be determined in accordance with article 248 of the Labor Contract Law. The regulation also addresses key aspects such as:

• Early termination of the policy (restricted during its first 12 months).
• Mandatory disclosure obligations for transparent and regular reporting to the insureds.
• Participation of the insureds in the fund’s excess yield, with a minimum 70% of its gross yield.

Insurers are only obligated to pay up to the maximum value established in the policy.

Insurers interested in offering Employment Termination Insurance must submit their plans before the SSN through the “Plan Deposit System” provided in article 23.2 of the General Rules of the Insurance Activity, following the rules already in place for life and retirement insurance policies.

Resolution 347 aligns with the regime recently approved by the Argentine Securities Commission (CNV) for employment termination investment funds and trusts under Resolution 1071/2025. Together, these regulations form a comprehensive legal framework offering various protection alternatives for employers and employees upon employment termination.

Finally, the practical application of this new alternative still depends on the collective bargaining negotiations between employers and employee representatives. The upcoming months will reveal how this new system is adopted and implemented.