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In brief

Emergency Decree 886/2021 (“Decree“), published on 24 December 2021, does not extend the prohibition to terminate employment without cause and for lack or reduction of work or force majeure (jointly, “Terminations“), or to suspend employees for lack or reduction of work or force majeure (“Suspensions“). The Decree also sets forth a progressive schedule that reduces the additional severance until its finalization in June 2022.

  1. Effects of the prohibition on Terminations and Suspensions

The Terminations and Suspensions prohibition has been in effect since 31 March 2020, established at the time by Emergency Decree 329/20 as a consequence of the public emergency declared by Federal Law. 

The Terminations and Suspensions made effective in breach of the prohibition had no effect, and employment had to continue its normal course under its original conditions.

The government extended the prohibition successively until 31 December 2021 by means of different emergency decrees. Even when the Decree extends the occupational emergency until 30 June 2022, in this opportunity it does not extend the Terminations and Suspensions prohibition beyond 31 December 2021. It also allows the possibility of terminating without cause, subject to the severance increments detailed below.

  1. Schedule of severance increments

As part of the occupational emergency’s extension until June 2022, the Decree includes the possibility of terminating employment without cause, according to these conditions and incremental phases:

For Terminations occurring between:This severance increment applies:
1 January 2022 and 28 February 202275% of severance for termination 
1 March 2022 and 30 April 202250% of severance for termination
1 May 2022 and 30 June 202225% of severance for termination

The severance increments apply on the mandatory severance items (seniority pay, prior notice and balance salary of termination month), but in every case it will continue subject to the ARS 500,000 (approximately USD 4,650) cap currently in effect. 

The severance increment does not apply to employees hired after 13 December 2019.

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Matias Herrero is a partner in Baker McKenzie's Buenos Aires office. He routinely advises on a broad scope of employment matters, including executive and massive terminations, companies’ closing, local and international executive hirings, and employee compensation and benefits.

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