Argentina: The Supreme Court Orders Again to Reduce the Interest Rate and Fines in Labour Lawsuits
The Supreme Court of Argentina has ordered again to reduce the interest rate applicable in labour lawsuits. On 13 August 2024, the Supreme Court ruled in the lawsuit “Lacuadra Jonatan c/DIRECT TV Argentina S.A. y otros s/Despido” that it is not appropriate to apply the CER index plus 6 percent to update credits in labour lawsuits, as Labour Courts of the City of Buenos Aires were applying.
The Supreme Court understood that the CER was not an interest rate, but an index applied to foreign currency obligations, which lacks legal support (since the Civil and Commercial National Code only authorizes the updating of credits through interest rates and not indexes) and produces an unreasonable result.
This is the second ruling issued by the Supreme Court ordering the reduction of interest rates for labour lawsuits, after the same decision took place in the lawsuit “Oliva, Fabio Omar v. COMA S.A. s/ despido” (Oliva, Fabio Omar v. COMA S.A. on dismissal) in February 2024.
Likewise, on 13 August 2024, the Supreme Court ruled in the lawsuit “Dominguez, Yanina Vanesa c/Muresco S.A. on dismissal” that the fine in favour of the employee, established by Section 132 bis of the Labour Contract Law, for failure to pay social security obligations by the employer, was unconstitutional. The Supreme Court understood that the result was disproportionate and unreasonable and that the legal rule did not establish a legal cap on the possibility of reducing the fine.
As a conclusion, two rulings were issued by the Supreme Court, in which the Supreme Court ordered the lower Labour Courts to reduce the rulings to reasonable and proportionate amounts. In practice, this means that the labour courts will have to apply a new interest rate in labour lawsuits, which will result in decrease in the amount of interest as well as reduce the fines eventually applicable in those cases in which the results are unreasonable, reducing the costs of labour lawsuits.
