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Argentina: National Supreme Court of Justice rules on the disproportionality of the method for updating amounts in employment lawsuits

By 2 Mins Read

In brief

On 29 February 2024, the National Supreme Court of Justice (SCJ) issued a ruling in the case Oliva, Fabio Omar v. COMA S.A. re. dismissal, whereby it established that the capitalization formula applied to employment lawsuits (“Resolution 2764”) by the National Employment Appellate Court (NEAC) is disproportionate and contrary to the guidelines of the Argentine Civil and Commercial Code (CCC).

In focus

Resolution 2764 became effective in September 2022 and established that, as of the time an employment credit was enforceable, it should be updated with the banks’ loan interest rates. The resulting interest had to be capitalized when the complaint was served and be successively capitalized once a year until the date of the final calculation of the amounts awarded at judgment.

Such formula was applicable to lawsuits that had not yet reached final judgment by Resolution 2764’s effective date. For further information on Resolution 2764, we recommend reading our labor alert where we analyzed its parameters.

The SCJ stated in its ruling on the Oliva case that the formula of Resolution 2764 led to a noticeably disproportionate result, since it had raised the case’s award by 7734%, and that the periodic and successive capitalization is contrary to the provisions of the CCC, which does not allow the application of interest over interest.

The SCJ also highlighted in its ruling that Section 770 of the CCC only allows a single capitalization in the event that someone seeks in court payment of obligation to give money, in which case the accrual operates from the date of the complaint’s service of notice. However, it does not allow successive, periodic capitalizations during the judicial process.

Based on this ruling, the SCJ instructed the NEAC that previously intervened in the case to issue a new ruling in line with these new parameters.

Although the CSJN Ruling applies to this particular case, it represents relevant case law that would modify the terms of Resolution 2764 and would limit future rulings of the NEAC and lower courts, which would have to adjust to these new criteria of the Oliva precedent.

Click here to access the Spanish version.

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Diego Bongiovanni is a partner in Baker McKenzie’s Buenos Aires office.

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Alberto Gonzalez Torres practices in the area of employment law. He is a member of the Buenos Aires Bar Association and the San Isidro Bar Association. Alberto frequently contributes to The Global Employer — a Firm-sponsored publication — and has served as speaker for several Baker McKenzie conferences. He also co-authored Argentina's Proposed Labor Law Agreements for the National Law Center.

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Matias Herrero is a partner in Baker McKenzie's Buenos Aires office. He routinely advises on a broad scope of employment matters, including executive and massive terminations, companies’ closing, local and international executive hirings, and employee compensation and benefits.

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Daniel Orlansky practices mainly in the areas of employment and labor law. He is a litigator and handles complex litigation cases. He also frequently lectures on employee mobility and expatriate issues.

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