In my last post on the tricky language of Argentine labor law, we took a look at the concept of “remuneración” (remuneration) and some of its legal and linguistic tricks and traps. If you made it all the way to the end of that post, you learned about 20 words that labor lawyers use almost on a daily basis in Argentina and what the legal implications of those words really are. In this post, I will argue that the second most important concept to employers and workers alike is that of “despido” (dismissal or termination of employment at the initiative of the employer).
Once again, when it comes to termination, Argentine labor law is worker-oriented and its aim is to protect workers from any kind of unjustified or wrongful termination. In fact, some leading experts argue that the law is designed to protect workers from being fired altogether, creating strong economic incentives for employers to keep even their most inept workers on their payroll. While the cost of dismissing a worker may be high, the only way to know if that’s true is by conducting a cost-benefit analysis on a case by case basis comparing the cost of keeping the worker in question to the cost of dismissing him or her.
Either way, firing people is expensive in Argentina. Employers often prefer to put up with unfit employees than bear the cost of firing them and, in turn, unfit employees have incentives to stay on board, do a bad job, and hope to get fired and receive a nice “indemnización por despido” (severance package consisting of severance allowance plus other separation benefits). This, however, is just one of the many problems with protectionist pieces of legislation like Argentina’s Ley de Contrato de Trabajo (Labor Contract Act), but our focus is on language, so we can leave the rest up to Congress and the Courts.
When and how can employers dismiss their employees without compensation?
When there’s “justa causa” (just cause). Consistent with article 4 of the ILO Termination of Employment Convention of 1982, employment can be terminated when “there is a valid reason for such termination connected with the capacity or conduct of the worker or based on the operational requirements of the undertaking, establishment or service.” Article 4 basically defines “justa causa” in a nutshell. Of course, this is not easy to prove and Argentina’s Labor Contract Act also establishes a series of requirements for dismissing employees with just cause.
First, employees must be notified in writing that they are being dismissed. You can’t just blurt out “You’re fired!” à la Donald Trump and then weasel out of compensating your former employee. Second, your employee must have committed, and been previously sanctioned for, an “injuria” (terminable offense).
Are there exceptions?
Of course. Immediately terminable offenses, i.e. the kind where you can just blurt out “You’re fired” and not be expected to compensate your former employees do exist, but there’s a catch: only a judge can determine that an offense was immediately terminable; and a not-so-quick look at Argentine case law shows that is rarely ever the case. Courts are reluctant to declare employee offenses as immediately terminable; instead, they usually save the exception for really serious offenses, like getting caught stealing from your employer, physically attacking people at work, or getting arrested for a crime that affected your employer.*
Are there more catches?
Yes. Imagine an employee says, “I quit!” and then walks out the door. Logic dictates all they’re entitled to in terms of compensation is whatever was owed to them until the moment they quit, right? Wrong! Under Argentine labor law, the employer has to send the employee an “intimación” (similar to a Notice of Delinquency) asking them to come to work within 2 business days. If the employee does not show up, then and only then is the employment terminated and the employer safe, provided the Notice made it abundantly clear that if they didn’t show up, their employment would indeed be terminated. And I can’t stress just how clear that has to be!
So, what if they do show up and you don’t want them back? Well, then you’re better off negotiating a severance package, because the courts are very reluctant to let employers off the hook, even when an employee has been systematically absent or actually said they quit before leaving.
Terminating employment in Argentina is neither cheap nor simple. The logic of Argentina’s Labor Contract Act is not always easy to follow, but it makes a lot more sense when looked at in the historical, economic, and sociological context in which it was drafted, as explained in my first post. Your lawyer will be able to explain that to you and your lawyer-linguist can help you understand all those complicated terms in your own language. So, if you’re doing business in Argentina and struggle a bit with the language, make sure you have a qualified legal team, including a lawyer-linguist, on your side.
* Oddly enough, there’s an interesting precedent where an employee was arrested at their workplace for a criminal offense, was fired on the spot, and was still entitled to compensation because the employer had not been directly affected by the crime that employee had been arrested for.