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Argentina: Salary Payments in Foreign Currency

Author: Nicolás Grandi

Earlier this year, Chamber VIII of the National Labour Court stated, in the case “Incidente de Recurso de Queja, Espinoza, Cristian Omar v. Club Atlético Huracán s. despido s. incidente de recurso de queja”, that if an employee’s salaries are paid in foreign currency, it is not possible to convert them to Argentine pesos in case of a claim. Previously, in May 2021, Division V of the Court had already pronounced similarly in the case “Fernández, Carlos Alberto v. Paradigm Geophysical S.A. and others s. dismissal”.

However, this is not a recent discussion. Labour Courts had already been dealing with this issue and taking sides about it, though in different economic contexts and situations. For instance, in 2005, during the convertibility period, in the case “Segura, Néstor v. Daikin Air Conditioning Argentina S.A.”, Division X of the Court determined the plaintiff’s right to continue receiving his salary in dollars after the enactment of Law No. 25,561. Likewise, in 2020, in the case “Sánchez, Jorge José v. GE Oil & Gas Products & Services Argentina S.A. y otros s/ despido”, Division VI of the Court approved a settlement agreement in foreign currency.

However, adopting this form of payment entails certain risks for the employers who choose it. Firstly, labour authorities may claim that payment in foreign currency exceeds the 20% limit allowed for payment in kind. While the risk of this occurring is low, as the rationale behind the rule is to protect the employee, and the dollar is a stronger currency than the Argentine peso; if fines for such infringement are imposed, they will not typically be very significant. Secondly, employees who do not receive their salaries in a foreign currency may bring a claim based on discrimination, in which event the company will have to prove that the distinction/selection is based on objective criteria. Additionally, once the benefit has been granted, employees will have a vested right to continue to receive payment in dollars so that, in the event of resuming payment in Argentine pesos without their consent, there is a risk that they claim the previous conditions to be maintained.

Finally, and to reduce the risks mentioned above, we suggest that employees who agree to this form of payment send a written letter to their employer requesting payment in foreign currency and providing the details of an account of their exclusive ownership into which they wish the dollar equivalent of their salary to be disbursed.