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Understanding Employee Rights: Key Amendments to Labor Law

In recent updates to labor legislation, substantial changes have been made to Article 245 of Law No. 20,744 (consolidated text of 1976) and its amendments. This article delves into the modified provisions, emphasizing the rights and indemnifications pertaining to employee termination. Let’s explore the alterations and their implications.

Article 245 – Severance and Seniority Compensation


The revised Article 245 addresses dismissals without just cause, incorporating significant amendments to the compensation structure for employees. The key modifications include the calculation of indemnity based on the best monthly salary over the last year, excluding annual bonuses and semi-annual or annual payments.

Calculation Method for Variable Pay

For employees on commission or with variable monthly earnings, the calculation considers the average of the last six months or the last year, favoring the employee.

Salary Cap

To prevent excessive indemnity, a cap is introduced, limiting the calculation to three times the monthly average of all remunerations specified in the applicable collective bargaining agreement.

Minimum Compensation

The amended article ensures that the indemnification is never below 67% of a one-month salary, calculated according to the prescribed method.

Alternative Arrangements

Parties, through a collective bargaining agreement, can replace the indemnity system with a termination fund. However, the employer bears the cost, with a monthly contribution capped at 8% of the taxable salary.

Article 245 bis – Discriminatory Dismissals


A new addition, Article 245 bis, addresses dismissals based on discrimination, encompassing factors like ethnicity, race, gender identity, and political or religious beliefs.

Special Indemnification

In case of a proven discriminatory dismissal, the indemnification increases by 50% compared to Article 245. Depending on the severity, the courts can elevate this compensation to 100%.


Non-Accumulative Indemnification

It’s crucial to note that this indemnification doesn’t accumulate with other special indemnification systems.

Termination Effect

Regardless of the circumstances, a discriminatory dismissal leads to the termination of the employment relationship.

Article 255 – Worker’s Reinstatement

Calculation of Seniority

This amendment clarifies the calculation of seniority, especially in cases of reemployment by the same employer. Indemnifications are adjusted based on previous payments, ensuring fairness.

Minimum Compensation Guarantee

The resulting indemnification can’t be lower than what the worker would receive for their last period of service.

Articles 276, 277 – Credit Update and Payment in Legal Proceedings

Credit Adjustment

Articles 276 and 277 focus on updating and repowering labor credits due to monetary depreciation. The update is capped at historical capital adjusted by the Consumer Price Index (CPI) plus an annual interest rate of 3%.

Legal Payment Process

Article 277 introduces a stringent process for legal payments, ensuring adherence to prescribed methods and prohibiting agreements exceeding a 20% litigation fee. It also outlines a structured payment plan for condemnatory sentences.

These amendments signify a significant step towards protecting employee rights and ensuring fair compensation in various employment scenarios. Understanding these changes is crucial for both employers and employees navigating the evolving landscape of labor law.

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