Collective Bargaining Severance Cap and the Vizzoti Doctrine
Under Article 245 of the LCT, seniority severance pay is subject to a collective agreement cap, but under the Supreme Court's Vizzoti ruling the base salary can never be reduced below 67% of the employee's actual wage.
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Essential Legal Distinctions
- CBA Cap does NOT override actual wages: Statutory caps cannot confiscate more than 33% of the employee's gross earned compensation.
- Vizzoti claims are routinely settled at SECLO: Most severance cap disputes in Buenos Aires reach immediate financial settlements during conciliation.
- Severance Cap does NOT apply to vacation or bonus pay: Accrued vacation and prorated statutory bonuses are always paid on 100% of full wages.
1. Statutory Framework of the Collective Bargaining Cap (Article 245 LCT)
The second paragraph of Article 245 of the Argentine Employment Contracts Act provides that the salary basis used to calculate seniority severance pay shall not exceed three times the monthly average of wages established by the applicable Collective Bargaining Agreement (CBA).
2. Constitutional Doctrine of the Vizzoti Ruling (67% Salary Floor)
In the landmark precedent «Vizzoti v. AMSA S.A.» (September 14, 2004), the Supreme Court of Argentina ruled that applying a strict statutory cap is unconstitutional whenever it confiscates more than 33% of the employee's actual remuneration. Consequently, the calculation basis can never be lower than 67% of the employee's best gross normal monthly wage.
3. Practical Calculation Example
If an employee earning $3,000,000 monthly with 6 years of service is dismissed under a CBA cap of $1,200,000, the Vizzoti doctrine elevates the computation basis to $2,010,000 (67% of $3,000,000), yielding $12,060,000 instead of $7,200,000.
Frequently Asked Questions
What if my severance was calculated using a strict CBA cap?
You are entitled to claim the difference in SECLO under the Vizzoti doctrine. Employers cannot pay less than 67% of your actual wage per year of service.
Does the Vizzoti ruling apply to non-unionized managerial staff?
Yes. Argentine labor courts apply the 67% rule to unionized and executive positions alike.
What if no CBA cap was published by the Ministry of Labor?
If no official cap exists for the category, severance pay must be computed using 100% of the actual wage without limitations.
How are variable sales commissions factored in?
The highest normal monthly earnings in the preceding 12 months, including recurring commissions, serve as the computation basis.