Complementary Salary Update

On April 1, 2020, Decree 332/2020 was published in the Official Gazette, creating the Emergency Assistance to Work and Production Program (the "ATP Program") for employers and workers affected by the health emergency within the framework of the COVID-19 pandemic. The ATP Program seeks to mitigate the impact of health measures dictated in order to protect public health, on production processes and employment.

Different executive decrees, resolutions from the Argentine Tax Authority (the “AFIP” after its acronym in Spanish) and Chief of Cabinet of Ministries’ administrative decisions approving the recommendations made by the Evaluation and Monitoring Committee of the ATP Program (the "Committee"), regulated the beneficiaries, requirements and benefits under the ATP Program.

In addition, since Decree 520/2020 was published, some geographical areas of the country have entered a new phase called Preventive and Compulsory Social Distance ("DISPO"), while other areas continued under the regime of Preventive and Compulsory Social Distance ("ASPO") (https://www.marval.com/publicacion/actualizaciones-en-materia-laboral-distanciamiento-social-prorroga-del-aislamiento-y-del-acuerdo-uia-cgt-13692&lang=en). This has had an impact on the benefits discussed in this article since different rules apply depending on the type of activity and/or place where the companies carry out their activities. We will explain below: 1. Current benefits of the ATP Program; 2. Common requirements to access the postponement or reduction of contributions to the Argentine Integrated Social Security System (“SIPA”) and the Complementary Salary; and 3. Current regulations on the Complementary Salary.

 

1.  ATP Program Benefits

In accordance with the modifications introduced to the ATP Program by the Argentine Executive through Decree 376/2020, employees and employers can access some of the following benefits:

 

a) Postponement or reduction of up to 95% of the payment of employer contributions to the SIPA.

 

b) Complementary Salary: This benefit consists of an allowance payable by the Argentine Administration of Social Security (the “ANSES” after its acronym in Spanish) to all employees of the private sector (unionized and non-unionized), though with certain salary limits discussed below. This Complementary Salary is equivalent to 50% of the employee’s net salary, with certain minimum and maximum limits, as explained below. The Complementary Salary may be considered on account of the payment of the remuneration or the allowance in case of suspension of the employment according to Section 223 bis of the Labor Contract Law No. 20,744.

 

c) Zero Interest Rate Credit: It consists in the granting of a loan to be credited in the credit card of the people adhering to the Simplified Scheme for Small Taxpayers, and self-employed personnel. Beneficiaries will be able to access credits with a 100% subsidy over the total financial cost.

 

d) Comprehensive unemployment benefit system: Unemployment benefit was increased to an amount ranging from six thousand pesos (ARS 6,000) to ten thousand pesos (ARS 10,000).

 

2. Common requirements to access the postponement or reduction of employer contributions to the SIPA and the Complementary Salary

Currently, the requirements for companies to be able to access both the postponement or reduction of employer contributions to the SIPA and the Complementary Salary are:

 

a) Economic activities that are critically affected because of the geographical areas where they are carried out;

b) To have a significant number of employees infected by COVID-19 or in mandatory isolation or with a work exemption (e.g. risk group), or in the care of minor children, and/or

c) A substantial reduction in its billing after March 12, 2020.

 

3. Complementary Salary regulation

The Complementary Salary is regulated through different Chief of Cabinet Administrative Decisions, by which the different recommendations of the Committee have been approved.

The Committee is formed by the heads of the Ministries of Productive Development, Economy and Labor, Employment and Social Security and the AFIP and it was created through Decree 347/2020. Among its primary functions are to rule about the different economic activities in order to recommend or discourage its incorporation as beneficiaries of the ATP Program and to propose to the Chief of Cabinet the measures to be taken for the effectiveness of the Program.

Based on the recommendations of the Committee, the Chief of Cabinet has approved the following requirements that employers must meet to access the Complementary Salary:

 

a) Activity: to access the Complementary Salary, the employers’ main activity must be included in a list of activities published by the AFIP and the different Minutes of the Committee. The full list of activities mentioned can be accessed at the following link: https://www.marval.com/publicacion/actividades-alcanzadas-por-el-programa-atp-13668&lang=en

 

b) Billing Variation: those companies that have suffered a nominal variation in their billing that implies a reduction or an increase not in excess of 5% (Administrative Decision No. 721 of the Chief of Cabinet) in the following periods may access the Complementary Salary:

 

•  General principle: the change in turnover is measured by comparing a certain period or month in 2019 with the same period or month in 2020 (e.g. May 2019 turnover is compared with May 2020).

 

The criteria for those cases that are not included in the general principle vary according to the month in which the benefit was requested and may be modified again in the future.

 

• Exception: companies that started their activities in 2020 are considered "critically affected activity", and therefore automatically qualify for the Complementary Salary. For the June Complementary Salary, the same criterion also applies to companies that started their activities from December 2019.

 

c) Calculation of the Complementary Salary: as the benefit was extended over the months, the remuneration based used to calculate the Complementary Salary has been updated. Thus, for wages earned in April, the wage paid in February 2020 was considered, for wages earned in May, the wage paid in March 2020 was considered whereas for wages earned in June, the wage paid in April was considered.

 

d) Complementary Salary limits: in no case may the amount of the Complementary Salary exceed the net wage otherwise payable to the worker. Although, in general, the amount of the salary of the month in which the benefit was received was taken as a parameter, for June Complementary Salary the remuneration of the month of April was considered.

In addition, there are certain restrictions regarding the amount of the minimum wage (SMVM). In this sense, as a general principle, the Complementary Salary cannot be less than one SMVM or exceed two. However, as of the June Complementary Salary, this limit depends on the place where the worker provides services and how much the employer’s activity was affected:

 

• In the areas where the ASPO applies, the Complementary Salary may not exceed two (2) SMVM.
• In the areas where the DISPO is in force, both the minimum and maximum limits are one SMVM, except for companies that carry out "critical" activities in those areas, for which the limit is two (2) SMVM.

 

In addition, the salary cap explained below applies.

 

e) Salary limit: employees whose gross remuneration earned in the month of March 2020 exceeded the sum of ARS 250,000 were excluded from the benefit of the Complementary Salary through Administrative Decision No. 887 of the Chief of Cabinet (that approved Minute 12 of the Committee). As of the Complementary Salary of the month of June, gross remunerations (accrued in April) higher than the amount of $140,000 are excluded from the benefit. This salary limit applies to both DISPO and ASPO areas.

 

f) Restrictions applicable to beneficiary companies: access to the Complementary Salary implies, for beneficiary companies, the duty to comply with the following requirements:

 

• They may not distribute profits for fiscal periods closed as of November 2019.
• They may not repurchase their shares directly or indirectly.
• They may not acquire securities in pesos for their subsequent and immediate sale in foreign currency or their transfer in custody abroad.
• They may not make expenditures of any kind to subjects directly or indirectly related to the beneficiary whose residence, establishment or domicile is in a non-cooperative jurisdiction or one with low or no taxation.

 

Under no circumstances may the net worth of the company be reduced by the causes previously described until the end of the corresponding period depending on the number of employees (12 or 24 months).

Companies with more than 800 employees: for these companies, the above-mentioned restrictions apply to the Complementary Salary for the month of April, during the financial year in which the benefit would have been granted and for a period of 12 months following the end of that financial year. For the May Complementary Salary, this period was extended to 24 months.

As of June, a new restriction was added to these companies, which establishes that the fees, salaries or advance payments for the members of the board of directors must not be increased in more than five percent in pesos. Additional payments, bonuses or extraordinary fees related to the fulfillment of results are included within the same limitation.

Companies with less than 800 workers: in these cases, restrictions do not apply to the Complementary Salary of April, but they do apply to the Complementary Salary of May (and subsequent periods). The period for which these restrictions must be complied includes the fiscal year in which the benefit would have been granted, and the 12 months following its termination.

These clarifications were given through Administrative Decision No. 817 of the Chief of Cabinet, which approved Minute 11 of the Committee.

 

g) Cancel the registration for the ATP Program: through Administrative Decision No. 817 the Chief of Cabinet approved the possibility of requesting the benefit of the Complementary Salary to be cancelled. Furthermore, AFIP established the mechanism to implement the cancellation through Resolution No. 4719.

The cancellation request implies that the amounts paid by ANSES to the employees as Complementary Salary plus their respective interests (in accordance with the evolution of the Reference Stabilization Coefficient - CER) must be refunded. The deadline to refund the Complementary Salary varies according to the month to which the benefit corresponds. In the case of the one paid in April 2020, the refund should have been made up to 31 May 2020, and in the case of the one granted in May 2020 and subsequent months, up to and including the 20th day of the month in which the payment of the Complementary Salary was made.

In those cases in which the period between the date of payment of the benefit by ANSES and the expiration of the refund term is less than 5 working days, the employer may transfer the corresponding amounts within this term (5 working days).

 

h) Exclusion of employees receiving contributions and/or subsidies: in the case of employers of the ATP Program that have contributions and/or subsidies that directly or indirectly reach a part of their staff, AFIP will identify the employees not reached directly or indirectly by the contribution and/or subsidy for the pre-settlement of the Complementary Salary.

 

i) Multi-employment: in the case of workers with up to 5 different jobs specific rules have been established for the calculation of the Complementary Salary. In these cases, the Complementary Salary must be equivalent to 50% of the sum of the net wages corresponding to February 2020 or April 2020 (the April reference started from the benefit for wages earned in June). The result, regardless of the type of activity or area where it is carried out, in addition to complying with the general rules, cannot result in the worker obtaining a benefit greater than the sum of the net remunerations corresponding to the month of February 2020 or April 2020, respectively.

The Complementary Salary determined in accordance with the above guidelines must be distributed proportionally, considering the gross remunerations paid by each employer that has been selected to access the benefit in question.

 

j) Imputation of the surplus to the following month: employers who have made total or partial payment of salaries prior to their employees receiving the benefit of the Complementary Salary may impute the surplus, if any, to the payment of the salary corresponding to the following month. The same applies to employers who have paid the allowance provided for in Section 223 bis of the Labor Contract Law No. 20,744.

The rules explained above, in accordance with their wording in force as of the date of this article, are applicable in the same terms to the extensions of the Complementary Salary that may be approved in the future. However, we will continue to monitor closely given the great regulatory dynamism that we observe in the current situation.