Insurance and Reinsurance

Employers’ liability for accidents under Argentine law

Introduction

In 1995 the Occupational Risks Law 24.557 (“LRT”) was passed—and it has been recently amended by Decree No. 1694/2009. The LRT created the system of Occupational Risks with the purpose to prevent risks and compensating damages resulting from working practices.


In this sense, and in accordance with the regime regulated by the LRT, employers must choose either to be affiliated compulsorily to the Occupational Risk Insurers (“ART”) that they freely choose, or self-insure themselves.

ARTs are entities governed by private law, authorized by the National Insurance Superintendence (“SSN”). Employers which opt to be affiliated to an ART must register the entering and exiting of the workforce of the company and ARTs may not reject affiliation by any employer. In this sense, if an employer not included in the self-insurance regime fails to join an ART, it shall be directly liable before any beneficiaries for the benefits stipulated in the LRT. Likewise, if the employer fails to declare its obligation to pay or the hiring of an employee, the ART will award the benefits and may then make a claim against the employer for the cost thereof.

Mandatory insurance and self-insurance

Employers may protect themselves against the risk of occupational accidents and illness by hiring a mandatory insurance regulated by the LRT or by self-insuring themselves. Employers may self-insure when they can prove their economic-financial solvency and guarantee the services to award the benefits established in the LRT.

            Prevention of occupational risks

The LRT establishes the obligation to adopt measures aimed to effectively prevent occupational risks. If an occupational illness occurs as a result of the employer’s failure to comply with the health and safety in the workplace regulations, the LRT establishes the possible application of penalties which will be determined by the Occupational Risks superintendence (“SRT”) in its role as supervisory body.

            Situations covered

Situations covered by the LRT are:

Listed occupational illnesses 
Unlisted occupational illnesses due to or during work, determined by a special procedure established in this respect 
Accidents on the way to and from work
Accidents that occur due to or during work 
Disability, partial or total, and permanent, provisional or definitive incapacity 
Death.

             Benefits


The LRT establishes the benefits that the ARTs will award to an employee who is a victim of any of the occupational eventualities covered. The LRT’s benefits are divided into those paid in cash and those given in kind or in services. Benefits in kind are those that the employee requires for psychological and physical recovery. Cash benefits are those paid to make up for the total or partial loss of income, or the sums paid as compensation to make up financially for the damages sustained by the victim.


            Employers' legal liability

The LRT benefits exempt employers from any additional civil liabilities before their employees, except for cases falling under section 1072 of the Civil Code, that is, willful misconduct by the employer. In such event, the victim or his or her successors may claim compensation for the damages and losses in accordance with the provisions of the Civil Code, without prejudice to the victim retaining the entitlement to LRT benefits due by ARTs or self-insured employers.

Nevertheless, it should be noted that in several precedents the Supreme Court has declared unconstitutional the section of the LRT limiting the liability of the employer as set out above, and effectively exposing employers and ARTs to higher compensations.

            Conclusion

The system established by the LRT has been questioned by the Supreme Court, which has almost led the system to crisis, generating additional costs for employers and ARTs.

In general, the arguments have concerns on the quality and scope of services and the insufficient cash benefits. The industry is carefully watching the judicial response to the last reform implemented in 2009, which was aimed to solve some of the issues formerly raised.


For further information on this topic please contact Martín G. Argañaraz Luque