Labor Assistance Fund (FAL) in Argentina: What Employers Need to Know

Argentina’s Labor Modernization Law, Law 27,802, created a new mechanism for employers: the Fondo de Asistencia Laboral, or Labor Assistance Fund (FAL). It is financed with monthly employer contributions and is designed to help cover the costs of ending an employment relationship, such as severance and notice payments.

The fund now has an operating framework. ARCA regulated it through General Resolution 5907/2026, published in the Official Gazette on October 1, 2026. The rules take effect on November 1, 2026 and apply to social security returns from the November 2026 accrual period onwards. If your company has employees in Argentina, the first contribution is close.

How the FAL works

Each covered private employer is identified in ARCA’s systems and gets an individual employer account with its own FAL identifier. Monthly contributions go into that account and are invested through collective investment vehicles authorized by Argentina’s securities regulator, the CNV.

The money is meant to help the employer pay obligations that arise when an employment relationship ends. It is not a pool of cash available for any purpose: the law and its regulations set a waiting period before the resources can be used, so starting contributions does not mean immediate access to the funds for a dismissal.

Contribution rates

The regulations set two rates, applied to the same base used for employer social security contributions:

An important detail is that FAL contributions are offset by a reduction in certain employer social security contributions. ARCA recalculates the rates for the other social security subsystems automatically. If the contributions available to absorb the FAL amount are not enough, the difference does not create a credit that can be carried forward to later months. The real impact therefore depends on each employer’s contribution profile, which is why the regulations themselves suggest assessing it case by case.

How contributions are reported and paid

• Before filing the social security return for November 2026, employers must declare their classification in ARCA’s registration system.
• FAL contributions are reported on Form 931, the monthly social security return, together with the rest of the payroll contributions.
• Payment is made through ARCA’s electronic payment voucher (VEP), in the same process as other social security obligations.

The financial side also received attention. Through Resolution 109/2026, Argentina’s Financial Intelligence Unit (UIF) exempted the mandatory employer contributions to these funds, and the returns they generate, from several anti-money-laundering controls that apply to other investment products. The reasoning is that FAL products have a specific legal purpose, identified contributors, traceable money flows and shares that cannot be redeemed.

What it means if you are hiring in Argentina

For a small foreign-owned company with its first employees, the FAL is one more line in the payroll setup, not a reason to change plans. A few points deserve attention:

1. Confirm your company’s size classification, since MSMEs and larger employers have different rates.
2. Make sure your payroll provider has updated Form 931 for the November 2026 period.
3. Model the net cost with your accountant, taking into account the offset against other contributions.
4. Remember that the fund does not replace severance planning: until the waiting period ends, terminations are paid as before.
5. Keep employment contracts and payroll records in order, since the fund relies on the same registrations.

If you are building a team in Argentina, our guides to payroll for foreign employers, Employer of Record arrangements and setting up a recruitment company cover the wider picture, and our accounting guide explains the monthly reporting cycle. Payroll can also be added to your company setup in the SAXIA quote builder.

How the FAL fits into total employment cost

When you hire in Argentina, the gross salary is only part of the cost. Employers also pay social security contributions, workers’ compensation insurance and, depending on the activity, contributions set by collective bargaining agreements. Annual bonuses and paid vacation add to the total, and termination costs depend on seniority and the reason for dismissal.

The FAL is designed to change how part of those termination costs is funded: instead of paying everything when the relationship ends, the employer builds up resources month by month. For a company planning its first hires, the practical effect is that payroll budgets should include the FAL line from November 2026, even though part of it is offset against other contributions.

Frequently asked questions

Does the FAL apply to contractors?

The fund is linked to registered employment relationships and to the social security return employers file for their employees. Independent contractors who invoice the company are not part of it, but misclassifying employees as contractors remains a significant labor risk in Argentina.

Can the company use the money in the fund for other purposes?

No. The resources are tied to the legal purpose of the fund, which is helping cover obligations arising from the end of employment relationships, and they are subject to a waiting period before they can be used.

Is the FAL the same as severance insurance?

Not exactly. It is an employer account funded with mandatory contributions and invested through regulated collective investment vehicles. It helps finance termination costs but does not replace the employer’s legal obligations to its employees.

This article is for general information only and does not constitute legal or tax advice. Operational details of the FAL may be adjusted by ARCA and the CNV; check the latest rules with ARCA or your payroll provider.