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Argentina

Termination and Severance Policies

Learn about the legal processes for employee termination and severance in Argentina

Notice period

In Argentina, the notice period requirements during employment termination are determined by the Labor Contract Law (Ley de Contrato de Trabajo - LCT) and depend on who initiates the termination and the employee's length of service.

Employer-Initiated Termination

When an employer terminates an employee's contract, the required notice period varies based on the employee's seniority:

  • Probationary Period: During the three-month probationary period, either party can terminate the contract with only 15 days' notice or payment in lieu of notice.
  • Less than Three Months' Service: If the employee has been employed for less than three months (excluding the probationary period), the employer must provide 15 days' written notice.
  • Three Months to Five Years' Service: For employees with service between three months and five years, the employer needs to give one month's written notice.
  • More Than Five Years' Service: Employees with over five years of service are entitled to two months' written notice before termination.

There's an exception for small businesses (pequeñas empresas) defined under specific regulations. In these cases, the maximum notice period for employer-initiated termination is one month, regardless of the employee's seniority.

Employee-Initiated Termination

Employees in Argentina can resign at any time with just 15 days' written notice to their employer. This applies irrespective of their seniority level.

Payment in Lieu of Notice

Employers can choose to pay the employee their salary for the notice period instead of providing written notice. This option applies to all termination scenarios, including probationary periods.

Severance pay

In Argentina, employees are entitled to severance pay under specific termination scenarios.

Termination Without Just Cause

When an employer terminates an employee's contract without a valid reason, the employee is entitled to severance pay, known as "despido". The calculation for this is one month's salary for every year of service, or fraction exceeding three months. The severance payment cannot be lower than two months' salary. For example, an employee with eight years of service would receive eight months of salary as severance pay upon being terminated without just cause.

Termination with Just Cause

If an employee is terminated for a valid and serious reason, they are not entitled to severance pay.

Voluntary Resignation

Employees who voluntarily resign do not receive severance pay.

Retirement

Employees who retire are entitled to severance pay equivalent to termination without just cause.

Death of the Employee

In the unfortunate event of an employee's death, severance pay is reduced by half and becomes payable to their legal heirs.

If an employer terminates an employee due to reasons beyond their control (force majeure) or a demonstrable lack/reduction of work, the employee is entitled to half the regular severance pay amount.

Other Special Cases

Pregnant employees and those in post-maternity stability enjoy a protected period during pregnancy and 7.5 months after giving birth. Termination without just cause during this period results in increased severance. Employees also have a protected period of three months before and six months after their marriage. Termination without just cause within these periods entails additional severance.

Termination process

In Argentina, the termination process for employees is governed by legal guidelines that both employers and employees must adhere to.

Notice of Termination

The employer must provide a written notice of termination to the employee. If the termination is initiated by the employee, they must give the employer a written notice of resignation at least 15 days in advance. In both scenarios, either party can opt to pay compensation corresponding to the notice period instead of providing written notice.

Documentation and Finalization

The employer must provide a detailed termination letter stating the reasons for dismissal (if applicable) and outlining any severance entitlements. They must also issue a certificate of employment detailing the employee's start and end dates, position held, and wages. The final paycheck must include all outstanding wages and unused vacation time.

Additional Considerations

Employers may terminate employees with just cause, such as serious misconduct or repeated poor performance. In these cases, severance pay is not required. Certain categories of employees, such as pregnant employees or trade union representatives, have additional protections against unfair dismissal. In the event of a dispute over termination, employees can file a claim with labor courts.

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