Law 27,802: Modifications to the Labor Regime, Dismissals, and Creation of the FAL Ley 27.802: Modificaciones al Régimen Laboral, Despidos y Creación del FAL
Law 27,802 (Official Gazette, 3/6/2026), known as the Labor Modernization Law, introduced fundamental reforms to the employment contract regime in Argentina. Among its most salient innovations are the modification of the severance base for dismissal without cause (Article 245 LCT), the conventional authorization of a Severance Fund, and the mandatory creation of the Labor Assistance Fund (FAL), significantly altering the financial engineering of termination claims.
Delimited Legal Text (Relevant Articles)
Article 51 (Modification of Art. 245 LCT). "In cases of dismissal ordered by the employer without just cause, having or not mediated prior notice, this must pay the worker an indemnity equivalent to ONE (1) month of salary for each year of service or fraction greater than THREE (3) months, taking as a base the best monthly, normal and habitual remuneration accrued during the last year... Through collective labor agreement, the parties may substitute this severance regime for a severance fund or system whose cost will always be borne by the employer."
Articles 58 to 72 (Labor Assistance Fund - FAL). Each company is required to set up a specific account in a financial entity, intended exclusively to meet possible severance payments for dismissal. This mechanism does not exempt the employer from their responsibility but acts as a capitalization and safeguard scheme to guarantee the worker's credit.
Own Commentary: The New Severance Ecosystem
The enactment of Law 27,802 sparked an intense legal debate on the scope of the flexibilities introduced, which pivot on three central axes that human resources professionals and labor lawyers must master: the optional Severance Fund, the mandatory Labor Assistance Fund, and the new guidelines for registering labor relations.
1. Modification to Article 245: The Severance Fund Alternative
Article 51 of the law modifies the traditional Article 245 of the Labor Contract Law (LCT). While it maintains the central formula of one month's salary per year of seniority, it introduces a key power: through negotiation in a Collective Labor Agreement, the parties (union and business chamber) can substitute this severance regime for a "severance fund or system". It is a model freely inspired by the construction industry regime (Law 22,250), in which the cost continues to be borne by the employer (through periodic contributions) but is "decoupled" from the sudden contingency at the time of dismissal.
2. The Labor Assistance Fund (FAL)
Regulated between articles 58 and 77 of the regulations (effective as of June 2026), the FAL requires companies to open an account in a financial entity. Unlike the Severance Fund, the FAL does not replace Article 245 if there is no collective agreement that so provides. On the contrary, it operates as a specific and mandatory allocation account intended to safeguard the availability of funds to meet dismissals and severance contingencies. For SMEs, maintaining this contribution represents a new cash flow scheme that must be integrated into the recurring labor cost structure.
3. Employment Promotion and Historical Repeals
Regarding employment and registration, law 27,802 brought the Labor Formalization Incentive Regime (RIFL). This regime seeks to simplify the whitewashing of labor relations with significant reductions in fines and contributions. The flip side is the severity with which the tax authorities (ARCA) operate in case of detecting exclusions and the exclusion of benefits to those who evade their contributions to the Labor Assistance Fund.
Impact on Claims and Indemnities
The scheme established by Law 27,802 drastically modifies the strategy when facing a dismissal. On the one hand, if the activity adhered to the Severance Fund through an agreement, litigation for the payment of seniority severance decreases radically: the worker receives the accumulated fund. However, the employer maintains responsibility if the funds were not deposited in due time and form, enabling claims for withholding of contributions or direct execution.
On the other hand, the existence of the mandatory FAL introduces a safeguard against employer insolvency, granting a real guarantee to workers. Failure to establish the FAL or the diversion of its funds exposes the directors of the company to joint and criminal-tax liability.
Related Jurisprudence and Constitutionality
Although the law is recent, the doctrine estimates that legal battles will revolve around the constitutionality review when conventional mechanisms (Severance Fund) end up granting reparations much lower than those set in the historical LCT. Labor courts will continue to resort to the famous "Vizzoti v. AMSA" ruling (2004) of the CSJN as a yardstick to measure if the severance outcome suffers a "confiscatory cut" (greater than 33%) that violates the protection against arbitrary dismissal (art. 14 bis CN).
Frequently Asked Questions (FAQ)
Did Law 27,802 eliminate severance pay under Article 245?
No. Article 245 remains in force as a general rule. The law allows unions and chambers, through the Collective Agreement, to replace it with a "Severance Fund", but if the agreement does not adopt it, the employer must pay the traditional severance.
What is the difference between the Severance Fund and the FAL?
The Severance Fund is an option enabled by agreement that replaces the severance. The FAL (Labor Assistance Fund) is a mandatory bank account that the employer must have to provision funds for severance, without replacing the applicable legal amount.
What happens to dismissals that occurred before June 2026?
The severance modifications and the requirement of funds are not applied retroactively. Dismissals notified before the new norm came into effect are resolved with the legislation applicable at that exact moment.
Check the text of the regulations and sectoral caps on InfoLEG - Ministry of Justice and Human Rights.
Validity Notice: The information contained on this page is a doctrinal analysis of the norm and does not constitute legal advice applicable to a specific case.