On November 14, 2018, Executive Order 1043/2018 (the “Order”) issued by the National Executive entered into force. Below are its main provisions.
A. “Non-Wage” Extraordinary Bonus
As from November 1, 2018, private sector employers are required to pay to their full-time employees an extraordinary bonus of five thousand Argentine pesos (ARS 5,000) in two equal installments of two thousand and five hundred Argentine pesos (ARS 2,500). The first installment must be paid together with the November 2018 salary, and the second, together with the December 2018 salary. The bonus is considered a “non-wage” item; thus, it is not subject to social security payments and contributions -but it is subject to income tax. Part-time employees or those working under a reduced shift will earn this bonus on a proportional basis.
The bonus amount and payment term for employees comprised within activities or sectors particularly affected by the crisis or reduction of production may be adjusted in a collective bargaining process.
During the last months, different employers’ associations and the corresponding unions have been re-negotiating the amount of the salary originally agreed for 2018. The Order establishes that, in such cases, through collective bargaining, it may be possible to establish that the bonus has been compensated or absorbed by the recently re-negotiated 2018 salary increase (unless expressly agreed otherwise), or it may be considered as a payment on account to the 2018 salary increase currently under re-negotiation. The Order further sets forth that the bonus may be considered compensated if the employer has unilaterally granted other salary increases as from January 1, 2018. In all these cases, the bonus will be considered a “wage” item and, therefore, it will be subject to social security payments and contributions.
B. Administrative Procedure in Advance to Notice of Dismissal without Cause
The Order establishes that as from November 14, 2018 until March 31, 2019, before giving notice of dismissal without cause to an employee under an indefinite term employment agreement, the employer must communicate the decision to the Ministry of Production and Employment with at least 10 business days in advance.
The Ministry of Production and Employment may call the employer, the employee and the union to hearings where the conditions of the employment termination will be considered.
Failure to comply with this procedure will result in the employer’s being subject to the fines set forth in the Federal Labor Pact (Pacto Federal de Trabajo) (Law No. 25.212) per employee affected:
- Moderate breach: Between 25% and 150% of the monthly value of the minimum wage in effect upon verification of the breach.
- Serious breach: Between 30% and 200% of the monthly value of the minimum wage in effect upon verification of the breach.
- Very serious breach: Between 50% and 2,000% of the monthly value of the minimum wage in effect upon verification of the breach.
The Ministry of Production and Employment may issue the supplementary and clarifying regulations it deems convenient.
