How Severance Pay Is Calculated in Argentina: Complete 2026 Guide

To calculate your severance pay after an unjustified dismissal, multiply your highest regular monthly wage by each year of service, or fraction over 3 months, per Article 245 LCT. Add notice pay, month integration, SAC, and unused vacation pay. No cap can push that base below 67% — the floor set by the Vizzoti ruling (Supreme Court), now written directly into the reformed law.

How Is Severance Calculated for an Unjustified Dismissal in Argentina?

When you're dismissed without cause, you don't collect one single figure: you collect the sum of several independent items, each with its own legal basis and its own logic. Here is everything you need to add up to reach your final settlement.

1. Seniority severance (Article 245 LCT)

This is the main item. It equals one month of your highest regular monthly wage for every year of service, or fraction over 3 months. If you worked 5 years and 4 months, you're owed 6 full periods, because those 4 months exceed the 3-month threshold the law requires before rounding up. Severance can never be lower than one month's wages, even with less than a year of seniority.

The current text of the article, as rewritten by the 2026 Labor Reform, reads (unofficial translation):

"In cases of dismissal by the employer without just cause, whether or not notice was given, and once the probationary period has elapsed, the employer must pay the employee severance equal to one (1) month's wages for each year of service or fraction exceeding three (3) months, calculated on the highest regular and normal monthly wage earned during the last year, or during the period of service if shorter." — Article 245 LCT, as rewritten by Article 51 of Law 27,802 (Official Gazette, March 6, 2026).

2. Pay in lieu of notice (Articles 231 and 232 LCT)

If you're dismissed without advance notice, your employer owes you that notice period in cash. The length depends on your seniority: 1 month if you have up to 5 years of service, 2 months if you have more. During the probationary period, since the 2026 Labor Reform the employer no longer has to give notice at all — it used to be 15 days.

3. SAC on notice pay

The statutory year-end bonus (SAC) also accrues on pay in lieu of notice: it's calculated as 1/12 (8.33%) of that amount, because notice pay stands in for wages that, had you actually worked them, would also have generated SAC. This is well-settled case law from the National Labor Appeals Court (CNAT), not an optional benefit your employer can skip.

4. Month integration pay (Article 233 LCT)

If you're dismissed midway through a month, your employer also owes you the days remaining to complete that calendar month, plus the prorated SAC on that amount. It's a separate item from notice pay: it's owed whenever the dismissal doesn't fall on the last day of the month, whether or not you received notice.

5. Prorated SAC and days worked

On top of that, you're owed wages for the days actually worked in the month of termination, and the prorated SAC for the current half-year: half your best wage of that half-year, multiplied by days worked over total days in that half-year. Neither of these two items depends on the dismissal being unjustified — you're owed them even if you resign.

6. Unused vacation pay

If you have unused vacation days, your employer must pay them out in proportion to the time you worked in the calendar year. The number of days depends on your seniority: 14 days with up to 5 years of service, 21 days between 5 and 10 years, and a rising scale above that. They're valued based on your daily wage, following standard payroll practice in labor court.

Comparison Table: Each Item and Its Calculation Base

Best Regular Monthly Wage vs. Base Salary on Your Payslip

One of the costliest mistakes when calculating a settlement is confusing the calculation base with the "base salary" printed on your payslip. They aren't the same thing, and the difference can be a third or more of the final amount.

Since the 2026 Labor Reform, Article 245 LCT precisely defines which pay counts:

• Counts toward the base: everything earned and actually paid month by month — base salary, regular commissions, seniority or attendance allowances, overtime you're paid regularly — as long as you received it in at least 6 of the last 12 calendar months ("habitual") and in amounts consistent with that average ("normal").
• Does not count toward the base: SAC, vacation pay, and any bonus, premium, overtime, or gratuity that isn't paid every month — a December annual bonus, a semi-annual performance bonus, overtime worked once for a one-off emergency, a one-time extraordinary gratuity — even where those amounts otherwise count as wages.

Your collective agreement's base salary, by contrast, is usually only a fraction of what you actually earn: many industries pay a large share of wages as commissions, monthly bonuses, or allowances that don't appear in the base rate but do count toward your best regular monthly wage. Calculating your severance on the base rate instead of your real monthly total is the most common mistake — and the one that most benefits the employer — in settlements done without legal advice.

What Changed in the Calculation With the 2026 Labor Reform (Law 27,802)?

Law 27,802 (Official Gazette, March 6, 2026) amended Article 245 LCT through its Article 51, and applies to every dismissal occurring from that date onward, regardless of when the employment relationship began. Dismissals before March 6, 2026 are still governed by the prior text. These are the changes that directly affect the calculation:

• Redefines the wage base: courts used to disagree on whether SAC and non-monthly bonuses should count toward the Art. 245 base. The CNAT had already ruled against including them, in En Banc Precedent No. 322, "Tulosai, Alberto Pascual v. Banco Central de la República Argentina re: Law 25,561," and the new law now confirms that nationwide, expressly.
• Defines "habitual" and "normal": a wage item is habitual if you earned it in at least 6 of the last 12 calendar months; for variable items (commissions, overtime, monthly bonuses), "normal" means the average of the last 6 months or the last year, whichever is more favorable to you.
• The 67% floor is no longer just case law: the Vizzoti doctrine is now written directly into Article 245 LCT. The union-agreement cap still exists, but the base can never be reduced below 67% of your real best wage.
• One-month minimum: severance can never be lower than one month's wages, calculated under this same system.
• Optional severance fund: through a collective bargaining agreement, the union and employer association for your industry may replace this indemnity system with an employer-funded severance fund, similar to the one already used in construction. It's an option, not a requirement — if your collective agreement doesn't provide for it, the traditional formula in this guide still applies to you.
• Becomes the sole remedy: collecting the Art. 245 severance extinguishes any other claim over the dismissal, including civil or tort claims, unless the underlying conduct amounts to a criminal offense.

One more change, outside Article 245 but directly relevant: if you have to claim these amounts in court, they are now updated by the Consumer Price Index (CPI) plus 3% annual interest, from the date each amount became due until actual payment (Art. 276 LCT, as amended by Art. 54 of Law 27,802).

Severance Cap: the 67% Floor Under the Vizzoti Ruling

The second paragraph of Article 245 LCT allows collective bargaining agreements to cap the wage base, up to three times that agreement's average wage. The problem is that, in industries with outdated agreements, that cap can sit far below the worker's real wage, watering the severance down to a token amount.

The Argentine Supreme Court solved that problem in "Vizzoti, Carlos A. v. AMSA S.A. re: Dismissal" (September 14, 2004): it held that applying the union cap without limit violates the constitutional guarantee against arbitrary dismissal whenever it reduces the real wage by more than 33%. The case involved a medical director with 26 years of service, whose healthcare-sector union cap watered his severance down to a small fraction of what he would have received uncapped. The Court set the floor at 67% of the worker's real wage. You can see the full numeric breakdown of the case on our dedicated case-law page.

That rule — a union cap can never reduce your calculation base by more than 33% — is still good law, and since the 2026 Labor Reform it no longer depends on a judge applying it case by case: it's written directly into Article 245 LCT. If your collective agreement sets a cap that puts you below 67% of your real best wage, you're entitled to claim the difference.

Worked Example of a Severance Settlement (2026)

Employee with 6 years and 4 months of service (counted as 7 periods, because the 4-month fraction exceeds the 3-month threshold). Best regular monthly wage: $1,200,000. The previous December, they also received a one-time annual bonus of $500,000, which does not count toward the base because it isn't paid every month. They are dismissed without cause and without notice on March 18 (a 31-day month):

• Seniority severance (7 periods): 7 × $1,200,000 = $8,400,000.
• Notice pay owed (2 months, over 5 years of service): $2,400,000.
• SAC on notice pay (1/12): $200,000.
• Month integration pay (13 remaining days): $520,000.
• SAC on integration pay: $43,333.
• Days worked in March (18 days): $720,000.
• Prorated SAC (77 days of the half-year out of 181): $255,249.
• Unused vacation pay (21 annual days by seniority, prorated): $212,647.
• SAC on unused vacation pay: $17,721.
• ILLUSTRATIVE TOTAL SETTLEMENT: $12,768,950 (figures rounded to the nearest peso).

Notice that the $500,000 annual bonus never enters the Article 245 calculation at any point: that's exactly the effect of the 2026 Labor Reform explained above. Before the reform, that point was open to dispute depending on the court; today the law settles it expressly.

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