The Argentine Government (“PEN”) issued two Decrees of Need and Urgency (“DNU”) prohibiting dismissals and suspensions by employers
PEN published, on March 31, 2020, in the Official Gazette (“BO”) two DNUs of high legal and economic importance, prohibiting dismissals without just cause and unilateral suspensions, with some exceptions
PEN issued DNU No. 325/20, in very similar terms to DNU No. 297/20, which had established “social, preventive and compulsory isolation”, which terminated on March 30, 2020. Through the first DNU mentioned in this paragraph, PEN extended the “isolation” until Sunday, April 12, 2020, with very similar conditions to the one that established the “quarantine”.
It may be said that the only important difference is that public workers who are not considered “essential”, must render services from their homes.
The DNU No. 329/20, – on which we will focus in a little more in depth-, issued by the Argentine government prohibits dismissals without just cause (article 245 of the Employment Law (“LCT”)) and when grounded in reasons of lack or reduction of work or force majeure (article 247 of the LCT), for a term of sixty (60) days commencing from the publication of the DNU mentioned here.
Likewise, suspensions for lack or reduction of work or force majeure are prohibited for the same term, in accordance with the provisions of articles 220 and 221 of the LCT.
The legal reasoning of the DNU is based on the provisions of article 14 bis of the Argentine Constitution (“CN”), and article 1733 of the Argentine Civil and Commercial Code (“CCyCN”), which provides that force majeure does not exempt from consequences or may be neutralized when a legal provision – such as the one here enacted – so provides.
Notwithstanding what it is mentioned in the preceding paragraph, it could also be interpreted that this emergency legislation may be deemed unconstitutional, in accordance with the case “De Luca” ruled by the Argentine Federal Supreme Court of Justice (“CSJN”), which challenged the constitutionality of legislation that restricts or limits the authority to dismiss, since the impossibility of dismissing violates the constitutional right of property.
Even in that event, it is not known if the “De Luca” case is applicable to the current emergency situation, bearing in mind that it is a complex and widespread social and economic context worldwide, and this ban is for a limited and short period of time.
The DNU also stresses that the dismissals and suspensions that are set in violation of the provisions therein, will not produce any legal effect, maintaining the existing labour relationships in the same conditions.
But the second paragraph of the third article of the DNU that regulates these prohibitions, establishes an exception, stipulating that the prohibition is not applicable to the suspensions stipulated in article 223 bis of the LCT, based on the economic reasons abovementioned, agreed individually or collectively and approved by the enforcement authority in accordance with the applicable legal proceeding, when non- remunerative amounts are recognised, and if complying with the contributions destined to the social security system.
This legal exception can be applied for long-term periods of time, as it is commonly used on a regular basis in the automotive industry. Likewise, we believe that it has some advantages, such as: (i) avoiding layoffs; (ii) retain staff; and (iii) not facing the payment of double compensation, in accordance to Argentine current labour legislation.
For this reason, we believe that this DNU, in the case of suspensions, only establishes limitations, leaving open the possibility, both for employers and workers, to use the alternative mechanism of commonly agreed suspensions.
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This article has been drafted by Facundo Correa Cremaschi and Yanira S. Isuani. For more information, contact the above telephone numbers or by e-mail to fcc@correacremaschi.com or ysi@correacremaschi.com.
This is a courtesy of CORREA CREMASCHI ABOGADOS for its clients and friends.
It is not intended to provide legal advice on any topic.