Lawyer. Employment advisor of companies and chambers of business. Academic Counselor for Libertad y Progreso.
The additional payment for employees in the private sector was mandated by Executive Order. However, strictly speaking, the Executive has no power to order something like this. Which principles have not been respected with this decision?
LA NACIÓN: At the end of 2022, the Government imposed the obligation on the employers in the private sector to pay a bonus to their employees. This decision has had subsequent heterogeneous effects under rather peculiar circumstances. This obligation was imposed on the most vulnerable employers, SMEs, thus affecting under-resourced businesses. It was an arbitrary and discriminatory measure, which could have a significant impact in an election year.
The Executive ordered this payment without having legal or constitutional authority to do so. In addition, this bonus is not counted as wages, contrary to case law and Supreme Court precedents. In fact, the Courts have already held that this kind of benefits are null and void. And this measure has also done away with Unions’ and Businesses’ rights in collective bargaining; now Congress needs to ratify this questionable rule.
First of all, most small and medium-sized enterprises in different industrial sectors have not been able to pay the bonus, and are asking for payment plans or deferrals. At medium-sized and big companies, only a handful of employees have received this bonus, based on the cap or salary limit set forth in the EO.
Specifically speaking, Emergency Executive Order 841/2022 -as if with an «emergency» EO higher-ranking provisions could be ignored- mandated a one-time bonus for companies in the private sector in the amount of ARS 24,000, non-salary in nature, for those employees who earn a net salary below ARS 161,859 (accrued December 2022). Those who earn salaries up to ARS 185,849 should receive the relevant amount until reaching that cap.
Payments should also be made in proportion to working hours. Full payment of the bonus goes to those who work 8 hours per day up to 48 hours a week. The deadline for payment was December 2022.
The bonus is not counted as wages, although most precedents and scholars’ opinions indicate that the Executive has not authority to decide on the legal nature of a benefit in breach of the Employment Contract Act. That is why it is automatically deemed to be risky: legal actions could be filed seeking a declaration of unconstitutionality and payment of penalties under Acts No. 24013 and 25323. In the matter of “González M.N. v Polimat” dated May 2010, the Supreme Court invalidated the EO issued by former President Néstor Kirchner about non-salary payments.
Still, the Executive does not have authority to mandate raises or pay increases. The Executive could not even mandate such an adjustment by issuing an EO regulating the Employment Contract Act. It would be invalid because it would be a regulatory exception that alters the spirit of the law, as provided by subsection 2 of Article 99 of the National Constitution.
Therefore, this bonus can be challenged because the Executive is exercising powers that are specific to unions and employers under collective agreements or by legal remedies. These are the rights of employers within the scope of business risks (Paul Durand).