What will be the severance pay considered in the government labor reform?

The national government regulated the labor reform introduced by President Milei as part of the Basic Law. Article 96 creates different reward system for new workers, similar to that used in the construction industry. In fact, the national leader secretly met with the leader of Uocra, Gerardo Martinez, to provide you with details of Termination fund which governs the given sector.

What does this article say about labor reform? “Over collective agreement, parties may replace replacement according to article 245 of the law 20,744 by severance fund or scheme in accordance with the parameters set by the national executive branch. Employers can choose rent a private system at your own expense in order to settle the compensation provided for in this article and/or the amount freely agreed between the parties in the event of separation by mutual agreement in accordance with article 241 of law 20.744. In all cases, companies can self insurance in the system that is defined.”

He Work termination system It is presented as an innovative solution for compensation management in connection with termination of employment. According to the regulations, the system must precisely define the causes, facts and conditions that activate the payment of a cash benefit to a worker upon termination of employment.

Regarding the amount and methods of payment, the Termination System can link payments to various parameters of the employment relationship, such as time worked, type of contract or specific characteristics of the activity. In addition, this system will make it possible to agree on methods of mediation or conflict resolution in the event that disputes arise between the parties.

One of the key points of this reform is the differential treatment that will be applied in favor of workers dismissed without reason. This means that in situations of dismissal without reason, the termination scheme will offer additional protection and ensure that the worker receives compensation according to his situation. To finance this system, it is possible to use severance pay or contractual group or individual insurance, which must be in accordance with the requirements of the regulations.

Article 7 of the regulation lays down the basic principles according to which the employment termination system must operate. Firstly, aThis system will replace the traditional remuneration for years of service provided for in Article 245 of the Law on Employment Contracts. Additionally, it will replace any other compensation item that has the above compensation as a parameter. This provision represents a structural change in the workers’ compensation regime, which has historically been based on a worker’s length of service.

In the event that the employment relationship is terminated by mutual agreement between the employer and the employee, the payment of any agreed remuneration or amount may be made using the methodologies established by the Termination of Employment System. However, nothing will prevent the parties from agreeing on additional payments, always within the provisions of the law.

The regulations further specify that at the start of a new employment relationship, both the employer and the employee must agree whether they wish to follow the termination system set out in the collective agreement, or if they choose to maintain the traditional remuneration system instead Employment Contract Act. This Agreement shall be binding on both parties and may be modified only by written agreement.

One of the most innovative aspects of this reform is the flexibility it provides to collective agreements. These can establish different severance pay systems, adapted to the needs of different types of companies, activities or sub-sectors. This variability will allow each sector to define the payment terms and methods that best suit its characteristics, always in accordance with the minimum requirements set by the regulations.

It is important to emphasize that these schemes must not include the collection of commissions, fees or amounts that directly or indirectly favor employer or trade union representatives, which guarantees that the funds allocated to the termination scheme will be used exclusively for the benefit of employees. Likewise, payments made through this system will have a full and final cancellation of effect on the compensation they replace, thereby eliminating any possibility of subsequent claim by the worker.

The regulations also provide for the possibility of applying the new system of termination of employment to labor relations that were already valid before the reform came into force. In these cases, the employer and the employee can, after mutual agreement, agree to switch to the new system. In addition, collective agreements can introduce a special regime for these workers to facilitate adaptation to the new regulatory framework without conflicts or loss of acquired rights.