A relatively overlooked aspect of Argentina’s recent labour reform may affect how employment-related claims are calculated in court.
One of the amendments concerns Article 276 of Argentina’s Employment Contract Law (Ley de Contrato de Trabajo), which regulates the adjustment of employment credits.
The provision now states that employment-related claims must be adjusted according to the variation of the Consumer Price Index (CPI), plus an annual interest rate of 3%, calculated from the date each amount became due until payment is made.
A potential interpretative issue arises from the fact that this rule appears under the heading “Adjustment and revaluation of employment credits due to monetary depreciation.”
Both “adjustment” and “revaluation” refer, in principle, to mechanisms intended to preserve the real value of a claim in the context of monetary depreciation. However, these concepts do not necessarily overlap with the idea of interest accruing for the use of money, traditionally understood as compensatory interest.
From this perspective, it may be argued that the amount resulting from the formula established in Article 276 — CPI adjustment plus a 3% annual rate — does not necessarily exclude the possibility of adding compensatory interest.
Such an interpretation would assume that indexation based solely on CPI may not fully preserve the economic value of the claim, which may explain the inclusion of the additional 3% annual rate.
Conversely, if the 3% rate were interpreted as replacing compensatory interest, then no additional interest should be added.
However, given that the provision establishes an additional annual rate of 3%, and considering the well-established principle in Argentine labour law that interpretative doubts should be resolved in favour of the employee, it cannot be ruled out that some courts may conclude that the rule does not necessarily preclude the application of compensatory interest.
In that scenario, the issue will likely depend on the evolution of case law unless the legislature introduces further clarification regarding the scope of the amended Article 276.
This question is not merely theoretical, as the interpretation ultimately adopted by the courts could have a significant impact on employers’ financial exposure in labour litigation. For companies operating in Argentina, the development of judicial criteria on this point will therefore be worth monitoring.
Written by Sergio Augusto Militello, 360 Business Law Lawyer – Buenos Aires, Argentina
Advising companies on employment, commercial and litigation matters under Argentine law.