The Government reduces the double severance pay gradually

The Government extended until June 2022 the occupational emergency and announced a schedule for reducing the compensation surcharge that will gradually decrease during the first semester. Within the framework of a recovery in unemployment levels, which stood at 8.2% at the end of the third quarter of the year, with a decrease of 3.5 points compared to 11.7% in the same period of 2020, the Executive Branch decreed the extension until June 30, 2022 of the public emergency in occupational matters declared by Decree of Necessity and Urgency No. 34/19.
Decree 886/21, which bears the signature of President Alberto Fernández and his cabinet, states that although between January and September of this year 129,000 workers were incorporated into formal employment, it states that employment protection measures must continue since “the number of workers with registered employment in all private companies is five percent (5%) below the level observed in December 2015”.

In this sense, they point out that “it is necessary to maintain the objective of increasing the level of protection of formal workers through an increase in the compensations originated in the unjustified dismissals.” Regarding the replacement of the double indemnity regime that began in 2019, during this year it suffered modifications that resulted in the imposition of a cap of $500 thousand to the surcharge. However, from January a new scheme will begin to take effect. The schedule provided in the decree will be for the case of dismissal without cause and will allow the affected worker to receive, in addition to the compensation that corresponds by law “an increase equivalent to seventy-five percent (75%) of the amount of the same, from January 1, 2022 and until February 28, 2022; fifty per cent (50 per cent) from 1 March 2022 to 30 April 2022 and twenty-five per cent (25 per cent) from 1 May 2022 to 30 June 2022.”

In any case, the decree states that “for the purposes of establishing the calculation of the definitive compensation, in the terms of article 2 of this decree, the amount corresponding to the increase may not exceed, in any case, the sum of five hundred thousand pesos”, with which the aforementioned limit will continue in force, mainly for those indemnities that exceed that amount even adjusting to the new scheme.

Original source in Spanish