[co-authors: Mercedes Balado Bevilacqua, Cecilia Acosta]*

In response to the socioeconomic environment in Argentina, on December 13, 2019, President Alberto Fernandez issued a 180-day urgent decree declaring a public emergency in relation to employment, which is due to last 180 days.

The main thrust of the Decreto de Necesidad y Urgencia (DNU) No. 34/2019 is to double severance compensation to employees who are dismissed without cause between December 13, 2019, and June 9, 2020. The decree applies to all types of employment contracts.

In the past, these types of decrees have been extended and many commentators expect the government to renew DNU No. 34/2019 for another term.

As the DNU is not retroactive, it does not apply to dismissals effective prior to December 13, 2019.

The double severance compensation applies to all payments due as a result of the dismissal including (i) seniority compensation; (ii) compensation in lieu of notice; and (iii) pending days of the termination month. There is uncertainty however as to whether it relates to vacation pay due on termination.

There is also uncertainty over whether the double compensation principle will apply to terminations due to an employee’s maternity or marriage; or constructive dismissals (where an employee resigns because of an employer’s breach of contract). It is thought likely based on past case law that it will cover both these scenarios.

During previous periods of double severance compensation judicial labor decisions have also applied the duplication to fines for failures to register an employment relationship and it would appear likely that will be the case again now.

On the other hand, the double compensation principle does not apply to terminations during a trial period.

Time will tell whether labor judges follow expectations in relation to some of these areas of uncertainty.

* MBB Abogados