Argentina: Interest Rate Reduction in Labour Lawsuits

In line with the Supreme Court of Argentina’s ruling in “Oliva, Fabio Omar v. COMA S.A. on dismissal,” the National Labour Court of Appeals reduced the interest rate to be applied in labour lawsuits.

Indeed, in February 2024, the Supreme Court decided to overturn the annual, regular, and successive capitalization of interest applied by the National Labour Court of Appeals of the Federal District, Argentina (“CNAT”) according to Act 2764/2022 (the “Act”), which entailed capitalizing interest once a year, every year, from the date of the complaint’s notification to the date of judgement settlement.

Through this decision, the Court determined that the annual, regular, and successive interest capitalization based on the CNAT’s Act was inconsistent with the provisions of the National Civil and Commercial Code and that this practice resulted in a disproportionate and unsupported economic result that exceeded any reasonable standard.

In March 2024, through Act 2784, the National Court of Appeals mandated a one-time capitalization of interest at the time of the complaint’s notification and the application of interest based on a CER index (reflecting inflation), along with an annual 6% rate.

In practice, this represents a decrease in the interest rate applied in labour court cases, consequently lowering the costs linked to unfavourable judgements in labour lawsuits.

 

This report cannot be considered as legal advice or advice of any other kind from Allende & Brea.