Argentina: National Supreme Court rules in favor of the validity of an employment mutual termination agreement during COVID-19 emergency context
On September 10th, 2020, in re “Ocampo Alessio Matías Yair v. BGH S.A. – dismissal”, the National Supreme Court ruled in favor of the validity of the employment mutual termination agreement executed between the employee and the company pursuant to section 241 of Labor Contract Law (“LCL”). In this respect, the National Supreme Court revoked the prior decision issued by the Court of Appeals, which confirmed the ruling by the Court of First Instance, which had granted employee’s complaint challenging the mutual termination agreement further claiming payment of mandatory severance compensation for dismissal without cause, based on the fact that the agreement was not executed before judicial or administrative authority nor existed in the case a resolution regarding a just composition of rights and interests.
Pursuant to section 241 of LCL, the parties may terminate the employment relationship by means of a mutual termination agreement executed through notary deed in the presence of a notary public or before the judicial or administrative authority.
The National Supreme Court considered that a judicial or administrative official approval of the agreement (only requested in case of settlement agreements) is not a legal requirement provided in the law for this kind of employment termination agreement and that section 241 of LCL expressly provides that the termination agreement may be executed through a notary deed, as it had occurred in this particular case. Therefore, construes that the appealed ruling did not accurately assess the case in light of the applicable law.
The decision under analysis is specially, relevant under the current emergency context with a dismissals prohibition in place until September 30th 2020, involving a favorable signal regarding this kind of employment termination which legal validity ratifies.
This report cannot be considered as legal or other advice by Allende & Brea or as including all the subjects of the matters described herein. For additional information on any matter related to labor issues in Argentina, please contact Nicolás Grandi (ngrandi@allende.com) at +54 (11) 4318-9984.
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