Even though Law No. 26,773 maintains the current structure of the Labor Risks Law No. 24,557 and amends only a few of its sections, it represents a clear step forward in the legal field of the labor risks regime.

On October 26, 2012, Law No. 26,773 that modifies the current Labor Risks Law No. 24,557 (hereinafter referred to as “LRL”), was published in the Official Gazette. The bill finally approved was the one submitted by the Executive Branch to the Argentine Congress.

Law No. 26,773’s approval was criticized by certain union entities and has been received with relief by business associations.

Even though Law No. 26,773 is limited to modify only a few sections of the LRL, by keeping its current structure, it represents a clear step forward in the legal field of the labor risks regime. The LRL has shown, many times, that it was not effective in order to give reasonable and dynamic solutions to the problems arising within the scope of labor accidents and professional illnesses. Such lack of effectiveness has led the Argentine Supreme Court to establish certain interpretation guidelines of such law, throughout precedents such as “Castillo”, “Aquino” and “Milone”, in a clear attempt to amend the outdated law.

Law No. 26,773 brings predictability to the corporate field, since the LRL’s deficiencies triggered many different judicial rulings which –unintentionally- brought an absolute lack of security while repairing misfortune events since the employees did not clearly understand what their rights were and the companies did not know precisely what were their obligations; all of this derived in significant extra costs and a total lack of judicial security to resolve situations derived from labor misfortunes.

Hence, one of the most important changes brought by Law No. 26,773 is the elimination of what was locally known as “double track” (“doble vía”) and its replacement for an “exclusive option”. From now on, this means that employees who suffered an accident or a professional illness will have to choose between collecting the statutory severances granted by the Labor Risks Insurance Companies or otherwise taking legal actions and request the application of civil law at Court. The possibility of accumulating severances is finally eliminated; this was happening in reality, despite the opinion of certain scholars to the contrary. The elimination of the double track will necessarily lead to a significant reduction of the so-called “trial industry”.

Furthermore, the new Law includes the update of the severance amounts, together with the general principle of making just one single payment, with an additional 20% when the damage is produced at the workplace. These changes imply an improvement for the employee who suffered an accident or a professional illness.

Along with other recent amendments we found that, within the text of Section 2 of the Law, the worker who suffered an accident or an illness shall be entitled to collect the sums of money as from the moment of occurrence of the misfortune event or the date of determination of the causal link with the professional illness. The terms of Section 2 show the commencement of the victim’s assistance. This full assistance will help the employee to make a more educated decision as to whether to accept the statutory severances or take legal actions.

Section 3 of the Law grants an improvement for employees who suffer a total disability or who die, since it provides an additional severance amount which will never be lower than AR$ 70,000.

Other important novelties introduced by the new Law are:

  1. The elimination of Periodical Installments, which are replaced by a single payment. The legal doctrine issued by the Argentine Supreme Court in re: “Milone” and “Torales” has been taken into consideration to support this change. It would have been better to give the employee an option to choose the severance payment method, since history shows that the collection of a single payment has not been very effective for the victims.
  2. The jurisdiction of Civil Courts for cases that aim to obtain full reparation. It is worth mentioning that this new event shall be automatically applied within the City of Buenos Aires and each of the provinces will have to decide whether they will join this initiative or not. This change is very reasonable since civil judges are better attuned for setting and establishing responsibility rules and damage reparations.
  3. The creation of the “Labor Risks Insurance/Mutuals” which could be associations between unions and companies, as a result of the collective negotiation.
  4. Section 7 sets forth the employer’s possibility to hire an insurance coverage that will be applicable to “other responsibility systems”. It seems like an interesting initiative since it grants predictability to businessmen, and an additional track for employees to collect their severance. The National Superintendence of Insurance will be the controlling agency in charge of setting the rules to hire such insurance coverage. As to the fee regime, the new Law has introduced significant changes at a reasonable cost.
  5. Within the scope of Section 11, the fee regime will be subject to the terms of Section 26 of the Law No. 20,091 (Insurance and Controlling Entities Law) and will have to be approved by the National Superintendence of Insurance. After one year since the incorporation of the fee to the employer’s contract, the Labor Risks Insurance Company will be entitled to modify it, “…by giving due prior notice with 60 days in advance …” Even though –in practice- we have not yet been able to analyze the performance of the fee regime, we can say that such system constitutes a step forward in the field and creates a favorable scenario for the employer.

In sum, Law No. 26,773 implies an evolution in the regulation, which gives predictability to the system considering that the increase of severances together with the introduction of the “exclusive option”, allow us to see that there will be a decrease in the litigation rate, that –in future- will be for the benefit of all parties involved within the labor risks system.