Amendment to the Labor Relationships Termination Regime

Section 16 of the Law provides, with a debatable text, a temporary amendment -lasting 180 days- of the whole individual labor agreement termination regime, through the declaration of the "suspension of all terminations without justified cause", and the twofold increase of the legal severance payments in case a termination does take place.

It is important to point out that even if section 16 of Law 25.561 suspends termination without justified cause, other situations must be included in this classification, such as those terminations based on justified cause but which were not ultimately validated by a Court, or those situations in which the employee considers himself dismissed by attributing some kind of failure to comply with his individual labor agreement to the company.

Even if Section 16 of Law 25.561 conflicts in the essence with Laws 25.013 y 25.250 it does follow the policy of Laws 24.013, 25.323 and 25.345 which established penalties and the increase of indemnification payable by the companies, seeking the legalisation of labor relationships and the effective collection of personal and employer's contributions to the Social Security System.

Related to this rule are Law 20.744 (Labor Agreement Regime for all relationships initiated before October 3, 1998) through its sections 231, 232, 233 and 245, Law 25.013 (Labor Regime Amendment which regulates all relationships initiated after October 3, 1998), Law 24.013 (National Employment Law), and Laws 25.323 and 25.345, whose main consequences are analysed below.

Due to the lack up till now of specific regulation to the Law, doubts arise regarding the indemnification items contemplated by it. Even if the Law uses a singular word, "the indemnification", when referring to the twofold increase, we believe that an appropriate interpretation of the labor regulation as a whole unavoidably leads us to interpret that the indemnifications or severance payments referred to by Law 25.561 are those sketched below:

Seniority

Law 20.744 (section 245): One (1) monthly salary for every year of work or for every fraction of a year greater than three months.

Law 25.013 (section 7°): One twelveth (1/12) of the monthly salary for every month of work or for every fraction of a month greaterr than 10 days.

Failure to Give Prior Notice

Law 20.744 (sections 231 and 232): it is due as from the first day of the relationship and it is calculated as one (1) monthly salary for those having a seniority of up to five (5) years and two (2) monthly salaries for those having a seniority of over five (5) years.

Law 25.013 (section 6°): between one (1) and three (3) months of seniority, half (1/2) a monthly salary; between three (3) months and five (5) years of seniority one (1) monthly salary and for those with a seniority of over five (5) years, two (2) monthly salaries.

Termination Month Salary

Law 20.744 (section 233): the salary for the whole month in which the relationship is terminated is due.

Law 25.013: only the salary corresponding to the days actually worked on the month on which the relationship is terminated is due.

Other Indemnification Items

Besides the generic severance indemnification due for termination and seniority those arising from special situations should be mentioned (i.e., maternity, marriage, etc.)

Laws 24.013, 25.323 and 25.345 set out the following indemnifications which must be considered as included in the twofold increase provided by section 16 of Law 25.561.

Law 24.013

These indemnifications are only due when the employee requires from the employer, by some authentic or attesting means, the correct registration of his labor relationship while the relationship is in force, and the employer fails to comply.

Section 8 (Unregistered Relationships): ¼ of all the remunerations the worker has earned throughout the whole duration of the labor relationship.

Section 9 (Incorrect commencement date): ¼ of all the remunerations the worker has earned throughout the period between the real commencement date and the one incorrectly registered.

Section 10 (Incorrectly registered remuneration): ¼ of the unregistered portion of all the remuneration the worker has earned throughout the period counted as from the incorrect registration.

Section 15 (Twofold increase of indemnities): The employer will have to pay twice as much as severance payment if the employee who required the correct registration of his labor relationship is dismissed within two years from the date of the requirement.

Law 25.323

Section 1: Provides a twofold increase of indemnification for seniority on those cases of unregistered or defectively registered relationships. This indemnification is not cumulative with those provided by Law 24.013.

Section 2: Increases by 50% those indemnifications for termination without justified cause which are not paid within four (4) days after being required by the employee.

Law 25.345

Section 43: In case the employer had withheld the sums for personal contributions or union payments, without handing them over to the collecting authorities, a fine equal to one (1) monthly salary will be applicable until the sums are deposited. This fine is not computable as regards Section 16 of Law 25.561.

Section 45: Imposes a fine of three monthl salary on the employer who refrains from handing over to the employee the work certificate and the contribution to the social security system certificate.

Date of coming into force for Section 16 of Law 25.561

Originally, section 16 of Law 25.561 was supposed to come into force on January 16, 2002 pursuant to the application of the generic rule by section 2 of the Argentine Civil Code, which provides that those laws that do not specifically state their date for coming into force will become compulsory as from the eighth (8th) day after their publication by the Official Gazette (the law was published on January 7, 2002).

However on January 9, 2002 the Government, by means of Decree Nº 50/2002 provided that Law 25.561 would be effective as of January 6, 2002. This decree is highly debatable since, firstly, a lower hierarchy rule would be modifying a higher hierarchy rule, and secondly it would be establishing the date of coming into force for a Law earlier than the date of its publication.

These deficiencies will surely by brought up in the near future in the Argentinean Courts.