Argentina: COVID-19 - Business Shutdowns & Reductions (Labor)

In brief

 While Argentina continues to take steps to gradually reduce COVID-19 curfews and re-open its economy, it is also undisputed that many businesses have been seriously harmed during the lockdown, and are —or will be in the short run— in need of reducing their headcount, or even of a total shutdown of operations.  


Contents

There are, however, many challenges to analyse altogether. First, the regulatory framework. Nowadays, there are different Government restrictions and regulations that may impact these decisions. Among these restrictions, there is a prohibition to terminate employees without cause, as well as to suspend them due to force majeure, lack or reduction of work, which stand out. This prohibition is due by the end of November, but it is likely that it will be extended further in time. Besides this temporary prohibition due to the COVID-19 crisis, there is another issue to consider. Due to the occupational and economic crises existing prior to the pandemic, employers must pay double severance when dismissing without cause (seniority and prior notice pay). This additional 100% pay ends by year end, but will likely be extended in time, as a way to mitigate unemployment.  

Second, the market practice. Often, employers have to deal with all sort of claims from terminated employees who press to obtain a better severance, or simply opt to litigate.  

Furthermore, the potential effect of these reorganizations in the labor relations and dealing with potential conflicts with the trade union are also challenges to consider. Other challenges include the impact on the media or the authorities. 

Some multinational companies have already accepted these challenges and started their plans to cease operations or restructure their headcounts.  

Our team has accumulated years of experience with past crises, and is currently assisting clients in navigating through these challenging times, advising on the terms of separation packages, executing agreements and negotiating with unions.  

We at Baker McKenzie are used to communicating fluently in English (from language and cultural perspectives) with corporate counsel and HR teams in the regional and global HQs.  

Unlike other local law firms, we have interdisciplinary capabilities to assist with different areas of our Firm for full support, not only in Labor and Employment matters. For example, sometimes the company needs to remove local company officers and appoint outside directors of trust (nominees), or needs to reorganize the company from a corporate standpoint. Other times, the company decides to seek a commercial solution through M&A or wishes to sell Real Estate. The company's shutdown may trigger Tax or Environmental Law issues.  

For more information, please do not hesitate to contact us.  

Thank you, and best regards, 

Baker McKenzie Buenos Aires

Our Recent Experience 

Total Shutdown 

  •  A textile manufacturer: 150 employees 
  • A global market share leader in retail store technology: 25 employees 
  • An American telecommunications equipment manufacturing company: 30 employees 
  • A leading global innovator of liquid color and additive technologies for plastics: 30 employees 
  • A British-Dutch multinational consumer goods company: 150 employees 
  • A global leader in the production of food service products: 120 employees 
  • A global, science-led biopharmaceutical business: 200 employees 
  • A leading developer and supplier: 80 employees 
  • A world-leading automotive design company: total closure of operations in Argentina 
  • The second-largest mining company in the world: project suspension and closing of operations in different jurisdictions: 300 direct employees and around 5,000 contractors 
  • A global med-tech company and the leading supplier of innovative products in the fields of healthcare and information technology 
  • Agricultural company: 60 employees 
  • Metallurgical company: 60 employees 
  • A global European airline: 40 employees 

Reductions in Force

  • A leading global innovative pharmaceutical company: 30 employees 
  • One of the largest vendors of enterprise resource planning (ERP) software and related enterprise applications: 30 employees 
  • An American multinational biotechnology company: APM´s, CEO, CFO and 10 employees. This RIF is related to compliance issues 
  • A global leader in container shipping, specializing in reefer cargo, dangerous goods and special cargo projects: 10 managers approx. This RIF is related to compliance issues 
  • An American multinational privately held manufacturer of household cleaning supplies and other consumer chemicals: 50 employees 
  • A global automotive technology leader in Seating and E-Systems 
  • A global CRO & Pharmaceutical Services Company: 22 employees 
  • An American dental equipment and supplies manufacturing company: 15 employees including the entire salesforce and the local CEO and Legal Representative 
  • A multinational commodity trading company: 90 employees  
  • An American entertainment company: 45 employees and 13 expatriates 
  • A global leader in plastic closure design, manufacturing and high speed capping equipment/application systems 
  • A global vehicle components manufacturer 

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