Labor Assistance Fund: Implementation Postponed and Waiting Period Extended to 12 Months – Barreiro

Through Decree 1228/2026, published in the Official Gazette on October 20, 2026, the National Executive Branch introduced significant amendments to the Labor Assistance Fund (Fondos de Asistencia Laboral, FAL) regime, created by Labor Modernization Law No. 27,802 and regulated by Decree 408/2026.

The new provisions postpone the entry into force of the regime and extend the period during which companies must accumulate contributions before they can use the Fund’s resources.

Below, we summarize the main features of the amendments and their practical implications for employers.

1. What Is the Labor Assistance Fund (FAL)?

The FAL is a financing mechanism designed to facilitate compliance with certain severance obligations arising from the termination of employment relationships.

The regime provides for the creation of funds through mandatory monthly employer contributions, which may be applied to the payment of the severance compensation covered by law.

It is important to note that the FAL does not replace or eliminate the current severance regime. Companies remain responsible for paying the full amount of any severance due under the Employment Contract Law (Ley de Contrato de Trabajo, LCT) and the applicable professional statutes.

Accordingly, the existence of resources accumulated in the Fund neither limits employees’ severance rights nor releases employers from their obligations.

2. New Effective Date

Decree 1228/2026 provides that the regime will take effect on December 1, 2026, instead of November 1, 2026, as originally scheduled.

The postponement responds to the need to complete the operational, technological and administrative adjustments required for its implementation.

Companies should therefore take this new date into account when organizing operational enrollment, registration and contribution payment procedures.

3. Mandatory Contributions

The regime establishes a mandatory monthly contribution payable by employers, calculated on the remuneration that serves as the basis for employer contributions to the Argentine Integrated Social Security System (Sistema Integrado Previsional Argentino, SIPA).

The applicable rates are as follows:

Micro, small and medium-sized enterprises (MSMEs): 2.5%.
Eligible non-profit entities: 2.5%.
All other private employers: 1%.

These contributions will be paid through the filing and payment mechanisms established by the Argentine Tax and Customs Collection Agency (ARCA).

It should be noted that Law No. 27,802 provides for a corresponding reduction in certain employer contributions, subject to the requirements and exclusions set forth in the regulations. Therefore, the FAL contribution should not automatically be interpreted as an equivalent increase in total labor costs.

4. Extension of the Waiting Period

This is one of the main amendments introduced by the new decree.

The minimum waiting period is extended from 6 to 12 full and consecutive monthly periods.

The period is calculated from the calendar month in which ARCA records the effective payment of the employer’s first contribution.

Consequently, during this initial period, companies must accumulate resources without being able to apply them to the payment of the severance obligations covered by the regime.

The measure seeks to ensure that the funds reach a sufficient level of capitalization before they begin to cover employment obligations.

5. Which Severance Payments May Be Financed?

The FAL may be used to contribute to the payment of certain obligations arising from the termination of employment, including:

Seniority-based severance or dismissal compensation (Section 245, LCT).
Payment in lieu of notice (Section 232, LCT).
Payment for the remainder of the month of dismissal (Section 233, LCT).
Compensation provided for certain cases of disability, death, force majeure and other grounds expressly set forth in the LCT.
Notice, month-of-dismissal and severance payments established under certain professional statutes.

The use of the funds is subject to the applicable legal and regulatory requirements, including the conditions regarding the registration of employment relationships.

If the available resources are insufficient, the employer must cover the difference with its own funds.

6. Fund Management

The resources will be managed through collective investment vehicles authorized and supervised by the National Securities Commission (Comisión Nacional de Valores, CNV), mainly mutual funds and financial trusts.

Each employer must have an individual account identified by a code known as the FAL ID.

ARCA’s regulations, set forth in General Resolution 5907/2026, govern the identification, filing and payment mechanisms for contributions.

In addition, investments will be subject to the guidelines on security, liquidity, diversification and capital preservation established by the Ministry of Economy.

7. Practical Implications for Companies

In light of the new regulations, we recommend that employers:

Verify their classification as an MSME, non-profit entity or large company in order to determine the applicable contribution rate.
Coordinate with their Human Resources, Payroll and Finance departments the adjustments necessary to calculate contributions once the regime takes effect.
Select an authorized entity and obtain the FAL ID, in accordance with the procedures established by the CNV and ARCA.
Review their labor contingency projections, bearing in mind that the regime does not change the employer’s severance liability and that the resources will be subject to an initial 12-month waiting period.
Keep employment records up to date, since the ability to use the Fund’s resources depends on compliance with the registration requirements set forth in the regulations.

8. Final Remarks

The implementation of the FAL introduces a new mechanism for providing for and financing companies’ severance obligations.

However, it does not change the grounds for termination of employment, the severance compensation provided by law, or the employer’s liability to the employee.

The postponement of its entry into force to December 1, 2026, and the extension of the waiting period to 12 months require companies to review their financial provisions and adapt their administrative procedures.