Comparative analysis of the three bills that seek to reform the updating of labor compensation trials

Three bills, presented in the Labor Legislation Commission of the Argentine Congress, seek to reform the updating of labor compensation and the repowering of labor credits due to monetary depreciation.

While all seek to update calculation methods, they differ significantly in their approaches and potential consequences for workers and employers. Information about the projects comes from documents presented to the commission, including a summary of the call for its meeting. The interest rate issue is a long-standing issue.; In fact, I have particularly been studying it since 2017, with presentations and dissertations at conferences of the Argentine Society of Labor Law, FOFETRA, CPACF, UBA and I have written it in various doctrinal articles in specialized magazines.

Let’s analyze them and make some observations:

Project 1 (Deputy Ávila):

This project modifies articles 255 and 276 of the Labor Contract Law (Law 20,744) to update the calculation of compensation for dismissal and the repowering of labor credits due to monetary depreciation, seeking a balance between workers and employers. It updates the worker’s seniority and considers an update by the Consumer Price Index (CPI), plus a pure default interest rate (without specifying the numerical value). Considering DNU 70/2023, this rate should be, at least, 3% monthly. This project is presented as a response to the problems that have arisen after Minute 2764/22.

Project 2 (Deputies Razzini and others):

This project proposes a new methodology to update labor credits using the Active Rate of Banco Nación (TABN) with a single capitalization, according to article 770, section B of the Civil and Commercial Code (CCyCN). This proposal is dangerous and harmful to workers because the TABN, influenced by political factors, has often shown results well below inflation, making it an unreliable adjustment variable. The concern of the employer sector about the interest rate is recent (as of September 2022, date of issuance of Minute 2764/22 CNAT), since previously the lawsuits were liquidated by inflation and devaluation, leading to workers receiving only the 20% of the judgment capital in hard currency.

Project 3 (Deputy Tetaz):

This project proposes an update mechanism that consists of translating the amount of the credit to the equivalent in minimum vital and mobile wages on the accrual date, then multiplying it by the updated minimum vital and mobile wage, plus a pure interest rate of 3%, with a maximum limit regulated by the Central Bank. However, this project also presents risks, since the living and mobile minimum wage has been severely delayed in recent times due to political factors. Its use in labor trials could give rise to lower updates to the prices of the national economy. The discussion on the interest rate, therefore, is inserted in a context of concern about maintaining the purchasing power of workers in the face of inflation, a concern that we reiterate, curiously, was relatively minority in the employer sector until the ruling of the Act 2764/22.

A comparative analysis

The three projects aim to solve the problem of updating compensation in the face of inflation, but their approaches vary. Ávila proposes a solution based on reliable economic indicators (CPI), while Razzini and Tetaz offer options with less reliable variables, with possible negative consequences for workers. The debate on the interest rate, as we have seen, is not new, but it has gained greater relevance as a result of recent court rulings.

From the working sector, the main demand is clear: The aim is for workers to receive their updated capital, neither more nor less, with a fair interest rate that reflects the inflationary reality.. To do this, objective comparative parameters such as the CPI or the CBA are essential. Any rate that does not respond to real economic parameters will be unfair and illegal. For the above reasons, we believe that the business sector should adhere to fair solutions, so that the regulations issued by Congress are not considered unconstitutional in the courts, achieving as a society the legal security necessary to work, undertake and provide work. As the Romans said, justice is achieved only when each person receives his right (ius). The legislative decision on which project is approved will have a profound impact on Argentine labor relations, determining equity, protection of workers’ purchasing power, and legal certainty for all parties involved.