Annulment of dismissals due to discrimination. Is the employment security system affected?

As I have already said in many other articles or seminars, I am concerned about the consolidation of the current trend in labor precedent whereby dismissals are being annulled within the framework of private employment on the grounds of discrimination.

In this regard, the aim of this article is to attract the attention of those who, based on doctrines that I consider mistaken, are misinterpreting the laws in force.

This trend in legal precedent, which is already established, fosters the annulment of dismissals based on the provisions of Law No 23,592 and, in my opinion, this is a mistake that I shall try to explain since, except in certain particular circumstances, the Argentine labor law does not provide for absolute employment security and the passing of such judgments leads, in practice, to ensuring such security within the private sector.

To avoid any misinterpretation or misunderstanding of my position in this regard, I would like to make it clear that any act of discrimination should be duly punished. In this regard, I completely agree with the passing of Law No 23,592 (the non-discrimination law) but I strongly disagree with the current interpretation and application of this law in the labor scenario.

1.    Definition of discrimination and the applicable law

According to the Dictionary of the Spanish Royal Academy, the term “discriminate” has the following meanings: i) to exclude; and ii) to belittle a person or group based on racial, religious, political or other similar reasons.

As regards international conventions, Convention No 111 of the International Labor Organization (“ILO”) on employment and occupation, adhered to by Argentina on June 18, 1968, establishes that discrimination includes any distinction, exclusion or preference made on the basis of race, color, sex, religion, political opinion, national extraction or social origin, which has the effect of nullifying or impairing equality of opportunity or treatment in employment or occupation.

Within the framework of Mercosur, the Social and Labor Declaration incorporates the principle of “non discrimination” by prohibiting any distinction or exclusion made on the basis of race, nationality, color, sex or sexual orientation, age, religion, political opinion, union membership, ideology, financial status or any other social or family condition.

At a national level, section 17 of the Employment Contract Law (“ECL”) prohibits all kinds of discrimination of workers on the basis of sex, race, nationality, religion, political opinion, union membership or age.

Likewise, Law No 23,592, the Non Discrimination Law, imposes sanctions on any discriminatory conduct based on race, religion, nationality, ideology, political opinion, union membership, sex, financial or social condition or physical features and makes it possible to order any person that commits a discriminatory act to annul it or cease such behavior and pay any applicable damages.

2. Employment security

In respect of the employment security principle, in general, two systems are used in the western world:

• Absolute employment security and
• Relative employment security.

Under the absolute security approach, dismissals are null and void, thus accepting the mandatory reinstatement of the employee. This system has been recognized by Argentine law under certain circumstances. It includes public officers and unionized workers.

Under the relative security approach, the dismissed employee is entitled to compensation. Section 245 of our Employment Contract Law provides for the application of this approach.

In fact, absolute employment security is not recognized by Argentine law as a general principle governing employer-employee relationships; it is only applicable to specific cases such as those mentioned above.

3.    Precedent

In the last few years, labor courts have started to apply the provisions of Law No 23,592 to employer-employee relations and especially to cases of dismissal. Several judgments were passed under this law by the National Court of Appeals in Labor Matters.

In June 2001, Division X of the National Court of Appeals in Labor Matters, in the case “Stafforini Marcelo Raúl vs. the Ministry of Labor and Social Security, National Social Security Administration ANSES for amparo (motion for protection of constitutional rights)” resolved that, by application of section 1 of Law No 23,592 and section 1083 of the Civil Code, the situation should be reversed, therefore ordering the reinstatement of the employee.

In March 2004, Division VI of the National Court of Appeals in Labor Matters, in the case “Balaguer Catalina Teresa vs. Pepsico de Argentina SRL for summary proceeding” ordered the reinstatement of an employee who had been discriminatorily dismissed – in this case due to being married to a union delegate – also ordering the employer to pay the salaries in respect of the period from the date of dismissal to the date of effective reinstatement.

In May 2005, Division IX of the National Court of Appeals in Labor Matters considered, in the case “Greppi Laura Karina vs Telefónica de Argentina S.A. on dismissal”, that the discriminatory grounds for the dismissal had been duly proved, through testimony and documentary evidence, and determined that the relative employment security system was not applicable to that case. It held that there were grounds for the application of the provisions of Law No 23,592 that provides for the punishment of any breach of the individual guaranties and human rights, because the dismissal amounted to a restriction imposed by the employer on the constitutional right to freedom of speech and expression (section 14 of the Argentine Constitution). Therefore, it ordered the reinstatement of the employee.

In June 2005, the Supreme Court of the Province of Río Negro, in the case “María Mabel Pellejero for Amparo - Appeal" ordered the annulment of the dismissal of a bank employee – who was married to a union delegate- on the basis that it was discriminatory pursuant to the provisions of section 1 of Law No 23,592, and required her immediate reinstatement.

In June 2006, Division I of theNational Court of Appeals in Labor Matters, in the case “Rodríguez Carlos Erwin vs Artes Gráficos Rioplatenses S.A. on dismissal”,resolved against a company that had dismissed an employee who had filed union-related claims (but who was not a union delegate) based on the provisions of section 1 of Law No 23,592. This judgment should be referred to separately since, although Law No 23,592 was applied, in my opinion, the judges, acting prudently, did not order the reinstatement of the employee but decided that the company was liable for damages.

Also in June 2006, Division VI National Court of Appeals in Labor Matters, in the case “Parra Vera Máxima vs San Timoteo S.A. for amparo”, ordered the payment of moral damages and the reinstatement of the employee on the basis that she had been dismissed due to legitimate union-related actions and was therefore discriminatory.

All these precedents evidence the existence of the above-mentioned trend, namely that dismissals due to discrimination are being declared null and void and orders are being made for the reinstatement of the dismissed employee. 

This trend could lead to dismissals due to pregnancy, maternity or marriage being resolved in the same way since there is no denying that dismissing someone due to his or her getting married is as discriminatory as doing so for being married to a union delegate. The same could apply to discrimination in the selection of staff by companies as well as to many other cases not worth mentioning here.

To sum up, if the current trend is not modified, we should not be surprised in the future if, in practice, (i.e. through the courts) the relative employment security system recognized by Argentine labor law becomes an absolute security system, but this time recognized by Argentine courts.

4.    Legal system applicable to discrimination in the workplace

As mentioned above, over time, Argentine legislators adopted the relative employment security principle and only acknowledged the absolute security approach in exceptional cases, such as in respect of public officers or unionized workers.

As held by Dr Jorge Rodríguez Mancini in his article published in the law journal La Ley dated 8/28/2006, a discriminatory dismissal is regarded as an arbitrary, unjustified or “without cause” dismissal.

In fact, there is a remedy in the case of arbitrary dismissal or dismissal without cause, namely the indemnification set forth in section 245 of the ECL. This is calculated by taking into account the salary received by the employee during a certain term before the dismissal as well as the seniority of the employee as of the date of dismissal. However, the Argentine legal system does not provide any right to reinstatement.

Therefore, the ECL does not contain any provision expressly establishing an obligation on the employer to maintain and keep employees against his or her will or requiring reinstatement after dismissal, other than the protection cases specifically indicated.

It should be pointed out that when legislators determined the application of the absolute employment security approach or the payment of special indemnifications in cases of discrimination, they clearly expressed such intention, as apparent from cases including the following:

(i)                in cases of union delegates or representatives (Law No 23,551);

(ii)                in cases of dismissal due to pregnancy, maternity or marriage;

(iii)                in cases provided for by Law No 25,013;

(iv)               in cases of discrimination set forth in the National Agricultural Labor System.

In all the mentioned cases, legislators benefited only union representatives with absolute employment security. In all the other cases of discrimination, the employers involved are liable for damages.

Another problem arising from the trend for discriminatory dismissals to be annulled and employees reinstated relates to the manner of such reinstatements. In my opinion, judges are not entitled to force employers, “manu militari”, to reinstate workers, but may only impose higher financial sanctions upon employers to ensure that they comply with the pertinent judgments.

To conclude, I would like to say that, so far, the Argentine Supreme Court of Justice has clearly stated that the absolute employment security approach is unreasonable because it eliminates the discretionary power of employers over their members of staff. Furthermore, the Supreme Court has stated that absolute employment security systems breach the guarantee granted by section 14 of the National Constitution, i.e. freedom of trade and industry. This argument is based on two judgments that made precedent, namely that related to the Banking Employee Regulations (Law No 12,637) “De Luca, José E vs Banco Francés del Río de la Plata” (“Fallos” 273-87) and that related to the Mining Workers Collective Bargaining Agreement, “Figueroa, Oscar vs. Loma Negra CIASA” (“La Ley” 1985-B, 32; “Derecho del Trabajo” 1984-B, 1809).

5.    Conclusion

In my opinion, those judgments ordering the annulment of discriminatory dismissals and, consequently, the reinstatement of employees pursuant to the provisions of Law No 23,592 are inconsistent with the Argentine legal system that is based on relative employment security, Such judgments even jeopardize it by restricting the power granted to employers by the ECL to select and remove their employees and breach the guarantee under section 14 of the Argentine Constitution as to freedom of trade and industry.