Payroll and Benefits Guide Argentina

Termination Process

The employer must justify any termination with notice unless it is through mutual agreement, the employee’s failure to fulfill their work requirements, severe misconduct, or economic factors.

In Argentina the employer is legally required to deliver the termination notice in writing and must do so via a notary or certified mail. According to employment law, for any dismissal, the employer must serve written notice of termination through a notary public or certified letter. Written notice ensures there is a formal, documented communication of termination and using a notary or certified mail adds legal validity and verifiable delivery, which is especially important in case of disputes.

In Argentina an employer/employee can use a Mutual Termination Agreement to terminate the employment. The benchmark for a “redundancy offer” is 110% to 130% of the statutory severance. This amount will usually mitigate risk. The MTA can and should release both the In Country Team and the end-client if signed before a labor authority or notary.

Mutual agreement) can be faster and sometimes cheaper if both parties agree but it must be ratified at the Ministry of Labor to be valid and prevent future claims. The typical timeline for an MTA can be 5–7 business days to allow time for (prep + signing + filing), but it can take longer, especially if negotiations are involved in the final severance payment.

Notice Period

During the probation period either party (Employee or Employer) may terminate the employment contract by giving fifteen (15) days’ notice, without any obligation to pay severance indemnity.

More than 3 months worked but less than 5 years: Either party (Employee or Employer) is required to provide 1 month notice.

Over 5 years: Either party (Employee or Employer) is required to provide 2 months’ notice.

Employer can substitute; employer may pay the equivalent salary instead of giving actual notice.

The end-client is always allowed to Pay In Lieu of the notice period.

Severance Pay

An employee who is dismissed without reasonable cause is entitled to statutory severance of 1 month’s salary for each year of service. Workers are entitled to severance if they have been employed for at least 3 months. This amount is calculated using the employee’s highest monthly, regular compensation received in the last 12 months of work. This baseline cannot be more than 3 times the monthly payment, which is the average of all compensation set out in the applicable CBA at the time of the dismissal.

If dismissed mid-month without completing the month, the employee is owed the full month’s salary, plus proportional parts of the annual bonus and unused vacation pay.

If the employee is not subject to a CBA (typically senior employees), the limits applicable to the activity in which they perform duties still apply. In no case will the amount of the compensation payable be less than 1 month of salary. In the Vizotti case, Argentina’s Supreme Court of Justice ruled that if applying the legal severance cap would reduce a worker’s severance by more than one-third, the calculation should instead use two-thirds (67%) of the worker’s real monthly pay multiplied by their years of service, to avoid violating constitutional protections. This ruling applies to high earners or employees in industries where the legal cap is far below their actual salary. Ensuring severance is not disproportionately reduced. Giving courts and employers a formula to follow when the statutory cap would otherwise unfairly reduce compensation.

This severance payment may be reduced or increased in other types of termination (e.g., force majeure and lack or reduction of work, death of the employee, employer bankruptcy, employee retirement, employee illness, or employee pregnancy).

Dismissal with cause any of the parties may terminate the contract, which results in no severance payments. This is a very difficult standard.

• It is important to note that if a termination requires legal fees (going to court for a lawsuit) the defeated party must reimburse the court tax which is equal to 3% of the amount claimed. As well as the prevailing party’s attorney fees, which courts fix at 12% to 33% of the judgment amount in the first instance (plus 30-35% of the at figure on appeal.) As per the service agreement the client is obliged to indemnify the ICT of these costs. If the employer wins, the worker is theoretically liable, but collection is uncommon.
• Upon a termination all wages and the full termination package (severance, notice in lieu, vacation, SAC, etc.) must be paid immediately and simultaneously with dismissal. Delays may trigger statutory penalties. The ICT usually recommends payment be made within 4 business days to avoid triggering any statutory penalties.

Probation Period

A maximum probation period of up to 3 months can be used. During this period, should the employer or the employee decide to terminate the contract without cause, the employer has no obligation to pay severance but must notify the employee of the termination at least 15 days in advance.