02 Jun 26 Regulation of the Labor Assistance Fund

Agustín L. Cerolini, Martín Chindamo, Valentina Circolone and Tomás Mingrone

On June 1, 2026, the Argentine Executive Branch enacted Decree No. 408/2026 (the “Decree”), regulating Title II of Law No. 27,802 (the “Labor Modernization Law”) concerning the Labor Assistance Fund (the “LAF”). The Decree establishes the operational framework for the implementation of this new regime, designed to contribute to the fulfillment of certain severance-related obligations arising from the termination of registered employment relationships, without modifying the existing statutory severance system.

Implementation

The Secretariat of Labor, Employment and Social Security, the Customs Control and Revenue Agency (the “ARCA”, by its acronym in Spanish), the National Securities Commission (the “CNV”, by its acronym in Spanish), and the Secretariat of Finance must issue the supplementary and clarifying regulations necessary for the full implementation of the regime within 45 business days from the publication of the Decree.

In addition, the entry into force of the regime has been postponed until November 1, 2026.

Accordingly, the effective implementation of the LAF will depend on the issuance of the complementary regulations and on the operational adaptation of employers, authorized entities, and governmental agencies involved.

In practical terms, the LAF will operate as a pre-funded financing mechanism through which employers will be required to make monthly contributions into an individual account. Such funds will be managed through collective investment vehicles authorized and supervised by the CNV, such as mutual funds (“MFs”) or financial trusts (“FTs”) established in Argentina.

Scope of the Regime

The regime will apply to all private-sector employers, whether individuals or legal entities, including employment relationships governed by the Argentine Employment Contract Law and the Agricultural Labor Regime. It will also apply to Micro, Small and Medium-Sized Enterprises that duly certify such status, as well as certain non-profit entities registered with ARCA, provided they meet the requirements and parameters established by the applicable regulations.

Excluded from the regime are employment relationships within the public sector, those governed by Law No. 22,250 – construction industry –, and those covered by Law No. 26,844 – domestic workers –.

For purposes of LAF coverage, the regulations require that employees shall be duly registered, meaning that the employment relationship must have been formally registered and reported in accordance with labor and social security regulations for at least twelve months prior to termination. Consequently, the LAF will not provide coverage for unregistered employment relationships or those registered for less than such period.

Employer’s Individual Account

Each employer must select a CNV-authorized entity — under the terms to be regulated by the CNV — choose the corresponding collective investment vehicle, and open an individual account. Such account will be separate, independent, non-attachable, non-transferable, and exclusively dedicated to the purposes established by the regime. The account will not be individualized for each employee but will instead operate as a pooled employer account intended to cover obligations arising in connection with all employees included in the regime.

Upon opening the account, the authorized entity will assign a unique identifier known as the LAF ID which must be reported to ARCA to enable the proper allocation of monthly contributions. If the employer fails to provide a valid LAF ID, ARCA will retain the corresponding amounts until the situation is regularized. If one month elapses without regularization, the CNV may assign an authorized collective investment vehicle ex officio.

Contributions and Investment of Funds

Monthly contributions to the LAF must be reported and paid together with social security obligations, under the procedures established by ARCA, which will act as the collection and fund-allocation authority. Failure to make contributions, insufficiency of funds, or lack of available resources in the account will not give rise to liability on the part of the National Government, and the employer will remain solely responsible toward the employee.

LAF resources may only be invested by the selected collective investment vehicle in financial instruments or securities issued and traded in Argentina. Instruments whose underlying assets are issued or traded abroad are expressly excluded. The regulations also provide for portability, allowing employers to transfer accumulated funds to another CNV-authorized collective investment vehicle, subject to compliance with the applicable requirements.

Payment of Severance Obligations

Upon termination of an employment relationship covered by the regime, the employer must submit an electronic sworn statement to the authorized entity managing the relevant collective investment vehicle. The statement must include, among other information, the employee’s identification, the cause of termination, the severance calculation, the amount to be transferred, and the employee’s bank account details. Once complete and accurate information has been submitted, the authorized entity must transfer the funds directly to the employee within a maximum period of five business days.

The regulations expressly provide that the accuracy of labor-related calculations and severance amounts remains the sole responsibility of the employer. Likewise, in cases of deficient registration, LAF coverage will be limited to the information effectively registered, without prejudice to the employer’s full liability for any differences owed and any applicable penalties.

Waiting Period and Suspension of Contributions

The Decree establishes a minimum waiting period of six consecutive full monthly contribution periods, during which employers must make contributions before they may use accumulated funds to satisfy covered labor obligations. This period will be calculated from the month in which ARCA records the effective payment of the employer’s first contribution. The regulations also contemplate the possibility of suspending or interrupting contribution obligations when the balance available in the employer’s individual account is sufficient to cover the labor contingencies associated with its workforce, subject to the requirements established by the competent authorities.

Tax Treatment and Reduction of Employer Social Security Contributions

Employer contributions to the LAF will be deductible for Argentine Income Tax purposes. Additionally, returns, interest, and other income generated by investments made under the regime will be exempt from Income Tax, pursuant to the provisions of the Labor Modernization Law.

Furthermore, bank accounts used exclusively by the MFs and FTs through which the LAF is implemented will be exempt from the Tax on Credits and Debits in Bank Accounts and Other Transactions.

The Decree also regulates the reduction of employer social security contributions contemplated by the Labor Modernization Law, allowing employers to deduct the portion corresponding to LAF contributions from employer contributions payable to certain social security subsystems, provided the employment relationships are covered by the regime.

Management Fees

The Decree provides that fees charged by authorized entities for managing collective investment vehicles will be subject to an overall cap of 1% per year of total assets under management. This limit includes all compensation received by the authorized entities as well as any other participant involved in the LAF structure. Such fees may accrue and be charged directly to the mutual fund or financial trust with the frequency established by the CNV.

Cerolini & Ferrari Abogados
Partners: Agustín L. Cerolini and Martín Chindamo and Associates: Valentina Circolone and Tomás Mingrone.