Argentina: Courts uphold Termination of Employment by Mutual Agreement during COVID-19 crisis

On 8 July 2021, the Labour Court, in the case Corvera, Jose Marcelo v. Aldana Textil SRL y otro s/despido, ratified the validity of an employment termination contract entered into by mutual agreement between the employee and the company, instrumented through a public deed, under the terms of section 241 of the Employment Contract Law.

Section 241 of the Employment Contract Law provides that “The parties, by mutual agreement, may terminate the employment contract. The agreement must be formalised by means of a public deed or before the judicial or administrative labour authority. The agreement entered into without the personal presence of the employee and the requirements set forth above shall be null and void”.

In the case under analysis, the employee claimed that the agreement was null, alleging that it concealed a dismissal without cause, and that he had entered into the agreement without the counsel of an attorney.

The Labour Court rejected the claim given that the agreement was executed by public deed, and, consequently, ruled that its content is truthful and that the employee did not formally claim before a court that it was false. The Labour Court also ruled that the signing of an agreement for the termination of an employment contract, by mutual agreement, does not require that the employee is counseled by an attorney (the law does not require such condition) and that each of the parties could have evaluated the benefits of terminating the employment relationship.

Finally, the Labour Court ruled that when the relationship is terminated by mutual agreement, the intervention or approval of the agreement by an administrative or judicial authority is not necessary, following the criterion recently established by the Supreme Court in the case Ocampo, Alessio Matías Yair v. BGH S.A. s/despido.

Key Action Points for Human Resources and In-house Counsel 

In conclusion, the present case ratifies the validity of mutual labour termination agreements (formalised by means of a public deed) during, in principle, the prohibition of dismissals without cause (measure enacted in response to COVID-19 pandemic), currently in force until 31 December 2021, even if the employee does not have legal counsel.