Severance pay in Argentina: how much will be paid in July 2025?

In Argentina, the law protects workers against unjust dismissal with financial compensation proportional to the time worked. This right is regulated by the Employment Contract Law and remains in effect in July 2025, maintaining the traditional calculation system.

The amount to be paid includes seniority compensation , based on the highest gross monthly salary of the previous twelve months, multiplied by the number of years worked. There are also additional items that complete the final settlement, and legal limits that must be respected when calculating total compensation.

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The main compensation for unjustified dismissal is the compensation based on seniority. According to current legislation, this is calculated by multiplying the highest gross monthly salary of the previous twelve months by the number of years of service with the company . In cases where the employee has worked more than three months in addition to a full year, a full year is considered for the calculation.

This salary includes all common remuneration items, such as overtime, commissions, bonuses, Christmas bonuses (SAC), and travel expenses . However, the salary considered cannot exceed three times the average salary established in the applicable collective bargaining agreement , which represents a legal limit.

Despite this limit, the Supreme Court of Justice , in the "Vizzoti" ruling, established that applying the cap cannot reduce compensation by more than 33% compared to the original calculation. Consequently, if the cap affects a larger proportion, the figure must be adjusted to comply with this limit.

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A worker with 5 years and 4 months of seniority ( 6 years are counted), and a gross monthly salary of $500,000 :

• No limit :

  $500,000 × 6 = $3,000,000

• Limit per agreement (average $60,000 → limit = $180,000):

  $180,000 × 6 = $1,080,000

• Minimum adjusted due to Vizzoti ruling (maximum reduction of 33%):

  $3,000,000 – 33% = $2,010,000

In addition to seniority compensation, Argentine law establishes a series of supplementary payments that are part of the final settlement and must be paid to the dismissed employee.

One of these is the severance pay in lieu of notice , which is payable when the employer fails to provide at least one month's notice of termination (or two, if the employee has more than five years' service). This amount is equivalent to the salary the employee would have received during the unfulfilled notice period.

Also included is the severance pay , which applies when the dismissal occurs on any day of the month, allowing the employee to receive the full month's pay. This is in addition to the proportional bonus (SAC), the days worked in the current month, and the payment for unused vacation time , along with the proportional bonus for those days.