Employment Tax

Argentina | Argentine Senate advances Labor Modernization Bill on severance pay

Summary

On February 11, 2026, the Argentine Senate gave preliminary approval to the Labor Modernization Bill. The legislation clarifies statutory parameters for calculating severance under article 245 of the Labor Law (LCT) for dismissals without just cause, consolidates existing jurisprudence, defines “habitual” and “normal” remuneration, and allows collective bargaining–based labor termination systems.

The detail

The bill is still under consideration and may be subject to change as it moves through the legislative process.

Key Details:

• Redefined current severance calculation base by introducing definitions for “remuneration,” “habitual,” and “normal.”
• It is clarified that “non-monthly payment items such as the annual bonus (13th salary), vacation pay, and bonuses that are not paid on a monthly basis will not be taken into account.
• Severance Cap: The cap of three times the average remuneration under the applicable collective bargaining agreement is maintained; however, its calculation is entrusted to the “signatory parties to the collective agreement.
• Incorporates Supreme Court “Vizzoti” standard: severance cannot fall below 67% of normal and habitual remuneration.
• Enables replacement of statutory severance via employer-funded, collective bargaining–approved labor termination systems.
• Receiving severance under article 245 is the exclusive remedy, except for criminal claims.

What this means for employers

Employers should monitor the bill’s progress, as it could affect severance calculations, documentation practices, and labor termination arrangements. While the core structure of severance remains unchanged, clarifications reduce discretionary interpretation and may help prevent disputes once finalized.

Contact us

For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:

Javier Fernandez Biondi
Senior Manager

Lilian Falcon
Director

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