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Argentina: Mandatory one-time bonus for all private sector employees in Argentina

The Argentine government recently issued a formal decree (Decree 665/2019), wherein employers are required to pay a mandatory one-time bonus of AR$ 5.000 (equal to USD 85 at the current exchange rate), to be paid in October 2019, to all private sector employees.

The Decree also provides that:

  1. This bonus is a “non-salary” payment, which in practice means that it is not subject to payment of social security obligations and income tax, nor should it be considered for purposes of calculating the 13th-month salary and vacation payments.
  2. The parties of each applicable Collective Bargaining Agreement (union and chamber of companies) may agree to pay it on a different date, as well as pay it in installments and any other conditions agreed between parties.
  3. Part time employees should be paid the bonus in proportion to the time actually worked.
  4. Employers can offset this bonus against future salary increases granted after 26 September 2019.
  5. If an employer has granted salary increases after 12 August 2019, the employer can offset them against the amount of this bonus.

Irrespective of the language used in the decree, which provides that the mandatory one-time bonus is a “non-salary” payment, labour courts in Argentina have systemically ruled that “non-salary” payments agreed to in collective bargain agreements, should be considered as “salary” and therefore, should be taken into account for purposes of calculating the 13th-month salary and vacation payments.