What Severance Pay Rules Must Employers Follow in Argentina?

Which Employees Qualify for Severance Pay?

• Employees hired under the Labor Contract Law with an open-ended (indefinite) contract who are dismissed without just cause.
• Employees whose fixed-term contracts are ended early by the employer without a legally valid reason.
• Employees who experience constructive dismissal due to serious employer breach and resign with justified cause.
• Employees affected by certain collective redundancies or economic dismissals where legal procedures are followed.
• Employees with seniority of at least three months, unless a specific probationary rule applies to reduce entitlements.
• Employees who are not excluded by specific statutory regimes (for example, some public-sector or domestic worker rules).

What Are the Legal Timelines for Paying Severance?

In Argentina, severance must be paid in a single lump sum and is generally due at the time of termination or within a very short, practical window thereafter. In practice, your company should aim to settle all termination amounts on the employee’s final working day or within a few business days. Delays can trigger interest, penalties, and increase the risk of litigation. If the employee challenges the dismissal, courts will still look at whether you paid promptly and in full. To stay safe, plan cash flow so severance, accrued salary, unused vacation, and proportional bonuses are ready before you deliver the termination letter.

What Penalties Apply if Severance Is Not Paid Correctly?

If your company underpays or delays severance in Argentina, you face both financial and procedural risks. Courts tend to interpret employee protections broadly, and non-compliance can quickly multiply the cost of a termination. You may also face claims for moral damages and additional fines if authorities find bad faith or discriminatory motives.

• Courts can order payment of the unpaid severance plus statutory interest from the date it fell due.
• Labor laws allow for surcharge penalties and fines where employer non-compliance is proven.
• Failure to document and register terminations correctly can trigger social security and tax assessments.
• Employees may claim moral or punitive damages if the dismissal is abusive or discriminatory.
• Litigation costs, legal fees, and reputational damage can far exceed the original severance amount.

Does Outsourcing Employment via an EOR Change Severance Liability?

Using an Employer of Record (https://www.playroll.com/employer-of-record) in Argentina does not remove the underlying obligation to respect local severance rules. The EOR is typically the legal employer on paper and must calculate and pay statutory severance when a qualifying termination occurs. However, your company usually directs the decision to terminate and will bear the economic cost under the service agreement. If authorities consider your company a joint or co-employer, you could share liability for unpaid amounts. Clear contracts and compliant termination processes with the EOR are essential to avoid disputes and unexpected exposure.

Be 100 Percent Compliant in Offering Severance with Playroll

Argentina’s severance rules are technical, and mistakes often happen around salary bases, seniority calculations, and special protections for certain categories of workers. Playroll helps your team navigate these rules by combining local legal insight with standardized processes, so every termination is planned, documented, and costed correctly. You stay in control of business decisions while we help you align them with statutory requirements.

With Playroll, you can model different termination scenarios, understand the severance impact before you act, and ensure payments are made on time through compliant local channels. Our Employer of Record and global payroll tools centralize documentation, reduce manual errors, and create a clear audit trail if a dispute arises, helping your company stay fully compliant in Argentina and beyond.