Dismissal After the Company Shuts Down: What to Do and What You Are Owed

If your employer shuts the business down for good and dismisses you, the general rule is that they owe you the full seniority severance of Art. 245 LCT (the Employment Contract Law) — the business risk, and the consequences of a commercial failure, are theirs. Only exceptionally, by proving insurmountable force majeure or after completing a Preventive Crisis Procedure, does the law allow them to pay half (Art. 247 LCT). Do not accept a reduction and do not sign a cut-down settlement without a legal audit first.

Immediate action checklist (first 48 hours)

When the shop, plant or office closes abruptly, time is against you. These steps protect your right to be paid:

• 1. Do not sign a "voluntary agreement" or an early resignation: the standard move on closure is to offer a smaller amount in cash or in instalments in exchange for your written resignation or a damaging agreement. Sign nothing your labour lawyer has not read line by line.
• 2. Show up for your shift with someone else, or with a notary: if you arrive to find a padlock, a lowered shutter or a "closed for renovations" sign, get eyewitnesses. A notarial record is the strongest proof of a lockout, though it costs money. Otherwise, send a telegram immediately demanding clarification of your employment status.
• 3. Keep the dismissal telegram and its envelope intact: if the company sends a telegram invoking "force majeure", "lack of work" or "permanent closure", keep it with the delivery envelope. It is the base document for challenging the alleged cause and demanding full severance at SECLO or in the labour courts.
• 4. Gather everything that proves your real pay and seniority: official payslips, bank transfer records or proof of off-the-books payments, work emails and WhatsApp messages with instructions. If there is a reorganisation or a bankruptcy, you will have to prove exactly what you earned and what was owed to you.
• 5. Call a labour lawyer urgently: in asset-stripping cases, timing is everything. If the company is making itself insolvent, preventive attachments and other interim measures have to be requested fast, before the assets and machinery disappear.

1. Business risk and full payment (Art. 245 LCT)

Argentine labour law runs on the principle of business risk. In plain terms: the employer keeps the profits when the business works and has to absorb the losses when it fails. You are not a partner, so the economic risk of the venture is not yours to carry.

So when a company closes arguing "there are no sales", "the economy is impossible" or "production costs are too high", that reasoning is not a legal basis for reducing your severance. In the eyes of the law it is an ordinary dismissal without cause, and the employer has an unwaivable obligation to pay 100% of the seniority severance of Article 245 LCT, plus payment in lieu of notice and the integration of the month.

2. The narrow exception: force majeure and lack of work (Art. 247 LCT)

Article 247 LCT allows severance to be cut to 50%, but only for duly justified force majeure or a lack or reduction of work not attributable to the employer.

What matters in practice is how the labour courts read that rule: extremely restrictively. Invoking a general economic crisis or a downturn in the sector is nowhere near enough. The company has to prove the triggering event was genuinely extraordinary, unforeseeable and unavoidable, and that it acted with the diligence of a competent business owner to overcome it, exhausting every option before dismissing anyone.

If your employer sends a telegram unilaterally invoking Art. 247 LCT and pays — or promises — only half of what you are owed, reject that telegram immediately and unambiguously. Rejecting it through a free labour telegram shifts the burden onto the employer to prove that supposed force majeure at trial, which in the overwhelming majority of cases fails, leaving the company to pay the withheld difference plus fines, indexation and interest.

3. The mandatory Preventive Crisis Procedure (PPC)

Before a company can legally invoke economic grounds, force majeure or lack of work to carry out mass dismissals or cut severance across its workforce, Argentine law requires it to open and complete a Preventive Crisis Procedure (PPC) before the Ministry of Labour, with the union that represents the workers taking part.

If the company never filed that procedure, or if the Ministry of Labour reviewed it and turned it down, dismissals based on economic grounds are void — or, at minimum, must be compensated at 100% with no exceptions. The PPC is not a formality you file and forget: it requires opening the company's books to prove insolvency and sustained losses over time.

4. What happens if your employer goes bankrupt or into reorganisation

When a company genuinely stops being able to pay its debts, it can file for reorganisation ("concurso preventivo") or be formally declared bankrupt by a National Commercial Court judge. Both hit the employment contract, but differently.

Reorganisation proceedings: here the company tries to keep operating and, in principle, you keep working. But any labour debt generated before the filing date — unpaid wages, for instance — is frozen by the commercial court. You will need a lawyer to file a "claim verification incident" in that court so your debt is judicially recognised and added to the liabilities to be paid, usually in instalments or over an extended term.

Declared bankruptcy: a bankruptcy ruling dissolves every employment contract by operation of law. Which severance applies depends on what caused the collapse: if the commercial judge finds the bankruptcy was due to force majeure or circumstances not attributable to the employer, Art. 247 LCT applies (half). Without that finding, Art. 245 LCT applies (full severance). Crucially, workers hold a "special and general privilege" over the proceeds of the liquidation, ranking ahead of suppliers and other commercial creditors.

5. Partners and directors held personally liable for asset-stripping

A very common scenario, especially in small businesses and retail: the fraudulent closure. The owners lower the shutter without warning, drain the company's bank accounts, move stock and machinery out overnight, then set up a new company (an S.R.L. or S.A.) in the name of front men or relatives to carry on the same business, systematically evading the labour debt they built up.

Where that bad faith is evident, the doctrine of "piercing the corporate veil" applies in full. Labour law lets you cut through the company structure and sue the partners, managers, directors and administrators jointly and severally, reaching their personal assets — homes, cars, personal bank accounts — where they abused the corporate form to defraud the law and harm their employees.

How the Court of Appeals treats the "economic crisis" defence

The national case law, and in particular the Buenos Aires labour courts, is virtually unanimous: a general economic crisis, the sudden loss of a major client, exchange-rate swings or a simple cessation of payments do not amount to the "force majeure" that would release an employer from paying full severance.

In a long and consistent line of rulings, the National Labor Court of Appeals (CNAT) has held that an employer, as a business owner, has to take the precautions its own activity demands. The reasoning runs like this: an alleged economic, financial or commercial crisis that led to the permanent closure of the plant or business is not force majeure capable of justifying release from liability or the reduced severance of Art. 247 LCT, because it is plainly a risk inherent in, and foreseeable for, a commercial enterprise — one that cannot be shifted onto the worker's shoulders.