Prohibition of Paying Remunerations through a Payment Service Provider

The Ministry of Labor, Employment and Social Security issued Resolution 179/2020 ("the Resolution") dated March 11, 2020 repealing the Resolution 168/2018 of April 6, 2018, which allowed employers to use mobile communication devices to pay employees’ remunerations.  The Resolution was issued within a framework where the Argentine Central Bank (the “BCRA” after its Spanish acronym) had begun to provide a regulations applicable to payment service providers that offer payment accounts (i.e. e-wallets) (“PSP”).

The Resolution determines that, although the use of payment methods supported by technological tools or devices could offer some benefits, from a formal point of view "mobile payment platforms" cannot be assimilated to "accounts opened with official banks or savings institutions", since these platforms do not comply with the requirements established by the Financial Institutions Law; therefore, do not comply with the provisions of the Labor Contract Law and its amendments. In addition, the resolution states that the transfer of funds or electronic payments, although they can be credited immediately, cannot be considered a "cash" payment since they must be made with bills as a generally accepted means of exchange for the payment of goods and services.

Moreover, the Resolution highlights that "experience has shown that the alternative established by Resolution 168/2018 has not generated real benefits in the lives of citizens or in the economic activity".

Likewise, the Resolution argues that enabling the payment of wages through online salary accounts would imply placing workers, as well as employers, in a state of defenselessness, since the PSPs do not have the same legal and regulatory status as financial institutions. Furthermore, this Resolution states that from the point of view of the worker who receives its salary in a virtual account, "its lack of protection is manifest insofar as this online account is not covered by the protection of the user of financial services, which includes the requirements for the disclosure of information and mechanisms for complaints.”

Lastly, the Resolution concludes by stating that "in the absence of BCRA rules regulating online salary accounts, these accounts do not comply with strict information security requirements, nor are they subject to requirements regarding their solvency and liquidity positions".

For these reasons, the Resolution orders that employers who have obtained the explicit acceptance of the employees for the use of mobile communication devices or any other electronic means as channels for the immediate transfer of funds for the accreditation of remunerations must provide new means of payment in accordance with the provisions of Section 124 of the Labor Contract Law within a non-renewable period of ninety (90) working days. Upon expiration of the ninety (90) working day term, all agreements that had been signed by the Secretariat of Labor by application of Resolution 168/2018 will be repealed.