Settling Employee Conflicts in SECLO

I sometimes think the employee/employer relationship in Argentina is set-up to deliberately generate conflicts. As an employer, you will find that it is only a matter of time until these labor conflicts rear their ugly head. When they do occur, the best option is to resolve them quickly, removing the employee and ensuring that the employee's legal options are limited.

As any employer in Argentina will tell you, labor conflicts are expensive. I know Argentines who have purchased apartments with the money they have won in labor disputes. Worse yet, every employee knows that the labor court judges are on their side and that employees win well over 90% of labor lawsuits.

After deciding to remove an employee, if you can come to an arrangement with him or her, a good option to use is the Labor Ministry's SECLO (Servicio de Conciliación Laboral Obligatoria) service. You will need to put the agreement in writing, fill out a form to request a date, and go personally with the employee to the Labor Ministry at Callao 110. Both the employee and the employer should be represented by council. In practice, two lawyers from the employer should be used to avoid complications. If you allow the employee to bring his own lawyer, you're just opening a door to further claims.

At the end of this process, the Labor Ministry will endorse the signed agreement and it becomes equivalent to a court judgment. The employer is obligated to pay the amount agreed upon and the employee gives up his or her right to any future legal remedies against the employer. It is important to note that the employer never admits to any kind of guilt or responsibility in these agreements, so they cannot be used as proof for other claims by third parties (i.e. the tax office, social security agency, other employees, etc).

Settling Employee Conflicts in SECLO

Different Ways of Hiring Argentine Lawyers

In Argentina there are typically three different ways of hiring a lawyer:

1. Fixed monthly fees (abono mensual). This is the most common way to hire a lawyer and the preferred method by most small to mid size companies (pymes). The fee could range anywhere from $1000-3000 pesos for a start-up phase company with very little need for legal services on up to $5000-10000 pesos for larger companies who have active legal disputes on an on-going basis.
2. Fixed fee for specific services. This would be a fixed fee for doing a specific service, such as a specific contract, drafting the formation documents for a company, etc. This is the next most common way to contract a lawyer.
   
3. Finally, you have the billable hour. This is used only by top tier law firms that are working on huge jobs for major multinational clients. The vast majority of Argentina small businesses do not pay lawyers on an hourly basis.

My recommendation is that micro businesses in the start-up phase pay lawyers for specific jobs. Once the company begins to hire employees, starts getting visits by unions, needs contracts drafted on a regular basis, and begins to have disputes, then it is time to get a lawyer for a fixed monthly fee.

I have nothing against lawyers (my father is a lawyer), but I have always detested the system of the billable hour. There is nothing worse than hiring a lawyer to do a simple job and getting back a bill that costs 5-10 times what you thought it would cost. That's why I would never recommend anyone to pay a lawyer hourly, especially in Argentina. I pay lawyers in the US hourly because that is the only way they will charge, but given that Argentina is a bit more evolved in respect to legal billing, it makes sense to take advantage and contract a lawyer per job or by the month.

I have three different lawyers I use on a semi-regular basis:

Employment Lawyers
The lawyer I use most often is my employment lawyer, which we have on a monthly contract. It is a given that when you are dealing in industries which are 100% unionized and you have to take on employees who are uneducated, conflictive, and uncooperative, there are going to be employment disputes. The most common employment dispute is the firing. The company will fire a conflictive or unproductive employee and deny severance, stating the employee was fired with cause while the employee will allege that the firing lacked just cause and demand the required severance pay.

Corporate/Contract Lawyers
I use my corporate lawyer on a per-job basis when we need contracts drafted or analyzed, we are performing a merger or acquisition, forming a new company, we are negotiating the terms of a lease, etc.

IP Lawyers
To register a patent or trademark in Argentina, you will need an IP lawyer. Every time I start a new company and we need a trademark registered, I use an IP lawyer to handle the registration on a per-job basis.

Obviously each business will have their own individual legal needs depending on what line of business they are in, but every new business will probably need lawyers specalized in the areas outlined above.

Different Ways of Hiring Argentine Lawyers