The Supreme Court Curbs the Excesses Committed by Labor Courts

Once again the Supreme Court has handed down a landmark ruling rejecting the decision by Panel I of the National Labor Court of Appeals on arbitrary grounds; it had ordered the Defendant to pay the Plaintiff ARS 8 million for a minor injury in his right-hand little finger with a 26% degree of disability.

Published in the magazine Consejo Digital on June 25, 2019
As a matter of fact, in Appeal on points of fact by Congeladores Patagónicos S.A. et al on accident under civil law (June 11, 2019) the Defendant was ordered to pay ARS 2 million, whose updated amount totals the abovementioned amount.

Lower Court No. 66 had rejected the complaint, and then Panel I of the Labor Court of Appeals revoked it and rendered the abovementioned decision. The Court had ignored that the Workers’ Compensation Act [Ley de Riesgos del Trabajo] establishes 5% degree of disability for the total loss of a little finger. As a result, the Supreme Court found that this decision is groundless, disproportionate and unreasonable.

There are other similar cases where Labor Courts have awarded disproportionate compensation, unrelated to the facts presented. Remember that the Court of Appeals has ordered a company to pay compensation for evidence submitted in another action against the same employer; amounts have been adjusted with overlapping interests and updates; and cases have been decided without the supporting facts that have led to the lawsuit.

The element of arbitrariness that supports this and many other rulings as a solution to a court decision that breaches fundamental rights is not self-sufficient rationale for an extraordinary appeal but an appropriate means to ensure that some of the guarantees enshrined in the National Constitution are duly recognized in case of breach or violation in relation to the matter to be decided (thema decidendum), such as the right to defense at trial (Article 18 of the National Constitution), property rights (Article 17 of the National Constitution) or due process (Article 18 of the National Constitution).

In relation to these grounds, Labor Courts have been often questioned in many of their decisions, like in Marando, Catalina Graciela v QBE Argentina ART S.A. on accident – special law, simply because there is an unjustified discrepancy with the award based on the enforcement of formulas arising out of the Employment Contract Act [Ley de Contrato de Trabajo].

The Court also ratified the prevailing rule in a decision that had to be issued again based on the challenged grounds. As a matter of fact, there is the Pastore case about classifying health professionals as freelancers who at some point in their career claim they are employees seeking regularization and payment of penalties under Act No. 24013 and related laws, as appropriate. In another ruling the Supreme Court ratified the original decision, classifying the Plaintiff as a freelancer under a services contract, which is then rejected by the Labor Court of Appeals that rendered judgment contrary to the Highest Court’s criterion, thus ignoring the Cairone case. (Supreme Court, February 19, 2015, LA LEY, AR-JUR-143-2015).

One of the first precedents, though controversial, is Bértola, Rodolfo v Hospital Británico (Supreme Court of Justice of Argentina, LA LEY, DT 2003-34). The Claimant was the Chief of Obstetrics, and evidence showed that his title was symbolic, he worked as an independent contractor, rented an office space at the hospital for private consultations, coordinated his own schedule and assigned himself rest periods, trips abroad to symposiums and performed other activities for third parties.

The Supreme Court has also ruled in another fundamental case that put an end to more than sixty years of debate that merely registered unions and unions with legal status are the only authorized parties to organize a strike action, and not groups of workers who go on strike without the support of their union (Orellano, Francisco Daniel v Correo Oficial, Supreme Court of Justice of Argentina 93/2013 -49-0- June 7, 2016). In turn, it stated that under Article 14 bis of the National Constitution the right to strike is to be exercise by workers’ formal organizations (i.e. unions), and not by a group of workers without the support of their representative entity lacking legal standing to call a strike licitly.

The Supreme Court also confirmed that non-salary benefits arising out of collective bargaining, even under collective agreements approved by the Department of Labor, are unconstitutional because they are agreed by parties in breach of and contrary to the Employment Contract Act [Ley de Contrato de Trabajo] and ILO Convention 95 (Supreme Court of Justice of Argentina, Días, Paulo Vicente v Cervecería y Maltería Quilmes, June 4, 2013, XLIV:485). Therefore, these benefits should be included in the basis for calculating all work-related payments, and for the sake of consistency, they should pay taxes, social security contributions and union dues.

The Supreme Court has become a major critic of Labor Courts’ rulings, reorienting many cases, declaring that some decisions are arbitrary but reflecting the need to establish criteria for creating a framework of foreseeability and legal security that are often missing in the judgments that are being challenged.

By Julian A. de Diego
Director of the postgraduate course on Human Resources at the School of Business at UCA.