Compensation for illness and labor related accidents

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Legal Update

The Executive issued Emergency Decree No. 669/2019 through which it was decided to amend the way of updating the “basic income” set forth in section 12 of Law No. 24,557 of Labor Risks in order to afford the payment of compensations for worker’s decease and for permanent labor disability.

The goal is to avoid possible and foreseeable mismatches and imbalances in the financing of the labor risk coverage system that might affect its solvency and sustainability with the subsequent damage for workers and deterioration of the financial situation of the insurance companies; all of those issues are attributable to the current financial and economic situation, as explained in the whereas clauses of this new regulation.

Given such scenario, the reference active interest rate applied until today and set by the Banco de la Nación Argentina is substituted by the Average Taxable Income Rate for Stable Workers (RIPTE).

We highlight that the RIPTE is clearly lower than the evolution of the above mentioned reference active interest rate, taking into account that the former had, in 2018, a 30.6% variation, while the latter had a 71.77% average increase during that same year. This situation shall inevitably entail a reduction in the amounts to be paid by the insurance companies.

These figures have raised an alert on the need of reaching financial stability for the labor risk compensation régime by considering as an immediate alternative to achieve the changes deemed essential in the provisions of section 12 of Law 24,557, the issuance of a rule like the one commented above, as set forth in section 99, third paragraph of the National Constitution; said rule shall be submitted to the consideration of Legislative through the Permanent Bicameral Commission.

Finally, the commented rule states that these amendments shall be applicable to all cases, regardless of the date in which the first invalidating statement had occurred.

In order to access the commented rule, click here (available only in Spanish).

Should you need further information do not hesitate to contact Esteban Carcavallo or Edgardo Isola