In Argentina, individual relationships between employers and employees are regulated by the National Employment Law (“NEL”), which has been amended in the last year to change the income tax regime.

By Mercedes Balado Bevilacqua, MBB Balado Bevilacqua Abogados

Partial seizure of employees’ salary accounts

On 8 January 2018 the NEL was modified to allow the partial seizure of employees’ salary bank accounts.

The account where the employee’s salary is deposited (“salary account”), may not be seized when the account balance does not exceed the equivalent of three months’ salary and/or social security allowances. To calculate this amount, an average can be taken of the amounts the employee received over the previous six months. In the event that the employee’s account balance exceeds such amount, seizure may apply only upon such excess.

By way of example, if the employee has an average monthly salary of ARS 20,000 (around £700) and the balance of their salary account is ARS 100,000 (around £3,500), the seizure would only be permitted on ARS 40,000 (around £1,400).

Upon seizure, the employer must notify the involved employee about the seizure and provide them with a copy of the judicial resolution that ordered the seizure.

Retirement reform

On 29 December 2017, Law No. 27,426 entered into force, which amends the method of calculating the amount of pension to be collected by retired persons.

This new law also amended Section 252 of the NEL to change the time at which an employer may request that an employee files for retirement. Previously, an employer was able to formally make this request provided that: i) the employee was at least 60 years old (for female employees) or 65 years old (for male employees); and ii) they had made at least 30 years of contributions to the Social Security System.

With this recent amendment, although men and women are still entitled to retire at 65 or 60 years old respectively (and at which point their social security contributions are modified), the employer may only request that the employee files for retirement benefit when the employee: i) is 70 years old; and ii) has made 30 years of contributions to the Social Security System.

Thus, the employee may continue working until they are 70 years old if they wish, and only then is the employer entitled to request that they file for retirement.

Once the employer makes such a request to the employee, the employer must maintain the employment relationship for one year or until the employee successfully obtains the retirement benefit, whichever is sooner. Once the pension benefit has been granted or the one year term has expired, the employment relationship may be terminated without any obligation for the employer to pay statutory severance compensation.

Income tax payable on severance compensation

For many years there was uncertainty regarding the treatment of income tax payable on compensation received due to termination of an employment relationship. The Supreme Court determined in 2014 that such compensation is exempted from income tax. However, it was only in 2016 that the Tax Bureau formally adopted this position.

However, Law No. 27,430 (which entered into force on December 29, 2017) established that income tax is applicable on severance compensation paid to directors and executive employees. This will apply to those who hold executive positions in both private and public companies, provided that the compensation paid exceeds the minimum amount set out in the applicable labour regulation.

It is still undetermined exactly which working positions are covered by the categories of directors or executives.


These amendments are, apparently, the beginning in a series of changes the Government is seeking in order to adjust old regulations to bring them in line with current market needs. However, due to the strong power of unions and the protective nature of Argentina’s legal system towards the labour market, it is a very difficult challenge and implementation may take time and negotiation.