In brief
By means of Decree 408/2026 (the “Decree”), the National Executive Branch approved the regulation of the Labor Assistance Fund (FAL), established under the Labor Modernization Law No. 27,802, thus completing the regulatory framework for its implementation and operation.
The regime establishes a system aimed at funding the payment of certain severance compensations, as well as amounts agreed in termination agreements under Section 241 of the Employment Contract Law No. 20,744 (ECL). It will be implemented through the creation of funds managed via collective investment vehicles authorized by the Argentine Securities Commission (CNV), such as mutual funds and financial trusts, without modifying the existing severance regime.
The Decree regulates key operational aspects of the system, including the opening of an individual account in the name of the employer, the assignment of a specific identification number, the mechanism for allocating contributions, and the possibility of portability between investment vehicles, as well as cases of suspension or interruption of contributions under certain conditions.
It also establishes a specific procedure for the validation and payment of severance amounts directly to employees from the funds, based on sworn statements submitted by the employer, who remains exclusively responsible for the proper determination of the amounts to be paid.
In focus
New Labor Assistance Fund regime
The Decree regulates the operation of the Labor Assistance Fund (FAL), created by Law No. 27,802, establishing a framework designed to finance the payment of certain severance compensations through monthly employer contributions.
The regime does not replace or alter the current severance system, but rather introduces an advance funding mechanism based on the accumulation of resources in individual accounts per employer, earmarked exclusively to meet obligations arising from the termination of employment relationships.
To this end, employers must set up an individual account through collective investment vehicles authorized by the CNV, such as mutual funds or financial trusts, managed by authorized entities.
Operational framework
The Decree provides that contributions to the FAL will be integrated within the social security system, being declared and transferred by the Tax and Customs Control Agency (ARCA) to the employer’s individual account. ARCA will establish the procedures for the declaration and payment of such contributions.
Each employer must have a specific identifier associated with its account, which will be used to ensure the correct allocation of funds. In the event of non-compliance, the Decree provides for an automatic allocation mechanism of an investment vehicle, as well as the temporary retention of contributions until regularization.
It also regulates the possibility of transferring funds between different investment vehicles, establishing portability conditions and requirements related to prior coverage of labor contingencies.
The Decree further provides that deposited funds must be invested in local instruments and establishes a cap on management fees.
Scope and coverage of the fund
The FAL applies to private sector employers (with the exception of activities governed by Laws No. 22,250 – Construction Industry – and No. 26,844 – Domestic Workers) and requires monthly contributions, which will be paid through the procedures established by ARCA. These contributions are allocated to an individual account per employer.
The system applies only to duly registered employees and includes a minimum waiting period to access coverage.
In cases of deficient registration, coverage will be limited to the information effectively reported, without prejudice to the employer’s liability for any differences.
Severance payment procedure
The Decree establishes a specific mechanism for requesting and paying severance through FAL funds.
The employer must submit a sworn statement containing the details of the termination and the calculation of severance, based on which the managing entity will validate certain formal aspects and proceed with payment directly to the employee.
The regulation expressly provides that the determination of amounts remains the sole responsibility of the employer, and the intervention of the fund does not imply validation of the calculation.
Transfer of establishment and reorganizations
In cases of transfer of establishment, transfer of personnel or corporate reorganizations, the continuity of the FAL is ensured through the transfer of the employer’s individual account to the continuing or resulting employer.
For this purpose, the parties must document the transaction, evidencing the transfer, the assignment of the affected personnel, and the exclusive allocation of the funds to their legal purpose. In partial transfers, the funds will be transferred proportionally to the affected workforce.
The managing entity will execute the transfer of assets and maintain the traceability of the funds, while the continuing employer must notify the relevant authorities.
Financial and tax aspects
FAL resources must be invested exclusively in financial instruments issued and traded in Argentina, aimed at promoting the development of the local capital markets.
A cap on management fees is established, along with requirements regarding traceability and segregation of assets per employer.
From a tax perspective, the regime provides for specific treatment, including exemption of investment returns from income tax, deductibility of contributions, and exemption from the tax on bank debits and credits for accounts used under the regime.
Impact on employer contributions and oversight
The regime provides for a reduction in employer social security contributions equivalent to the FAL contribution, subject to certain conditions and limitations in cases of suspension of contributions.
Oversight will be carried out jointly by the Ministry of Labor, ARCA and the CNV, including monitoring, information exchange and enforcement mechanisms in case of non-compliance.
Entry into force
The entry into force of the regime is postponed to 1 November 2026, and a 45-day period is established for the issuance of complementary regulations by the relevant authorities.
Estanislao Marina, Associate, has contributed to this legal update.
Download the Spanish version of Argentina: Labor Assistance Fund – Regulation of Title II of Law No. 27,802 – Decree 408/2026.