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Retail in Argentina: summary of the impact of Covid-19

by | Apr 18, 2020

Covid-19 is having a huge impact on all business fields. We will summarize some of their impacts on retail in Argentina

1. Preventive and mandatory social isolation

By Decree No. 297/2020, as amended, the Executive Branch has imposed a preventive and mandatory social isolation, for all permanent or temporary residents, from March 20 through April 26, 2020, inclusive.

The lockdown entails that people must comply with the following obligations: a) Stay at their habitual residences, or at the residences where they were at  12 a.m. on March 20, 2020; b) Abstain from attending work; c) Abstain from moving about in routes, roads, and public spaces. People will only be allowed to barely minimum and essential trips to stock up on cleaning products, medicines, and food.

During the “quarantine”, cultural, recreational, sporting, religious, or any other type of events involving the gathering of people, will be banned. Stores, shopping centers, wholesale and retail establishments and any other place that requires the presence of people must remain closed.

Violations of the established prohibitions may constitute criminal offenses against public health and disobedience and resistance to the authority, and subject to indictment.

Notwithstanding the explained social confinement, people affected to certain activities and services considered essential are exempted from the lockdown,  but their movements must be strictly limited to perform the relevant activities and services.

Additionally, by Decree No. 274/2020, as amended, the Executive Power closed the borders and prohibited the entrance to the country of any people, even if they are Argentine citizens, with very limited exceptions (e.g. people affected by the transfer of goods for international trade operations; and people affected by the operation of flights and sanitary transfers, as long as they are asymptomatic and comply with the local health recommendations, both inside and outside the country). The measure will be in place until April 26, 2020, inclusive.

2. Retail businesses allowed to operate

From a retail point of view and until April 26, 2020, inclusive, only will the following activities and services legally deemed essential be allowed to operate:

  • Wholesale and retail supermarkets and local retail stores. Pharmacies. Hardware stores. Vets. Gas carafes suppliers;
  • Home delivery of food, medicines, hygiene products, cleaning products, and other necessary supplies;
  • Laundry services;
  • Restaurants, prepared meals and fast food outlets, may sell their products through home delivery services, abiding by specific protocols established by the health authority. In no case will they be able to provide on-site customer service;
  • Sale of building supplies and materials by construction material suppliers;
  • Essential maintenance and fumigation services;
  • Shops for the maintenance and repair of cars, motorcycles, and bicycles, exclusively for public transport, vehicles of the security and armed, and vehicles affected to health services or personnel with authorization to move;
  • Sale of spare parts, parts and pieces for cars, motorcycles, and bicycles only under the modality of a door-to-door delivery;
  • Manufacture of tires; sale and repair of the same exclusively for public transport, vehicles of the security and armed forces, and vehicles affected to health services or personnel with authorization to move;
  • Sale of bookstore articles and computer supplies, exclusively under the modality of home delivery;
  • Sale of manufactured goods from retailers, through e-commerce platforms, telephone sales and other mechanisms that do not require personal contact with customers and only through home delivery mode with proper health checks, protocols and logistics planning; and
  • Optical, with pre-shift appointments.

All other activities and services of retail in Argentina not included on the list of open are prohibited.

3. Facility Lease

The Executive Branch has issued Decree No. 320/2020 bringing about the following emergency measures until September 30, 2020: (i) the freezing of lease prices; (ii) the extension of terms, and (iii) the suspension of evictions.

4. Some employment regulations

Some employment regulations may also affect retail in Argentina. Under Resolution No. 279/2020 issued by the Ministry of Labor, Employment and Social Security, except for those employees affected to those activities and services qualifying as essential, workers are discharged from attending their workplaces. If the employees may work from their isolation locations, performing their usual tasks or similar ones, they have to arrange with their employers their teleworking conditions, cooperatively and in good faith.

During the lockdown, all workers shall be entitled to their full normal income, whether they perform their services or not. Those employees affected to essential activities and services may be required to work extra time and their shifts reorganized.

Personnel hired while the social confinement is in place must be considered working under temporary employment contracts.

Besides, dismissals without cause, and dismissals and suspensions without payment (furloughs), based on lack of work and force majeure, are prohibited for a 60-day term as from 12:00 am of March 30, 2020 (Decree No. 329/2020). Those dismissals or furloughs carried out despise the prohibition, will be null and void, and the existing labor relationships and conditions will remain in force.

However, employers may individually or collectively agree with their employees on a leave of absence from their workplaces as long as the employees are compensated with a monetary allowance inferior to their usual salaries. Payments will be deemed as “non-remunerative”, discharging the employers from making social security contributions except for those allocated to welfare entities. Agreements must be approved by the controlling work authorities.

Finally, the Executive Branch has issued Decree No. 332/2020 structuring the so-called Emergency Assistance Program for Work and Production (hereinafter the Program) helping those companies stressed by the emergency.

The Program will provide certain benefits to the following employers: (i) those whose economic activities are critically affected within the geographical areas where they are carried out; (ii) those who have a significant number of employees infected with Covid-19, or in mandatory isolation, or with labor discharge because they pertain to risk groups or have family care duties related to Covid-19; and (iii) those with a substantial sale reduction. The timeframe to evaluate if the employers meet said requirements is that reaching from March 20 through April 30, 2020

The Program excludes employers whose activities are essential or those who have not suffered a relevant reduction in their activity within the stated timeframe. However, those employers excluded because of their essential activities and services may still apply to join the Program if there exist special circumstances that would have had a high negative impact on the development of their activities or services; the Chief of the Cabinet of Ministers may accept or deny such requests, based upon the counsel of the Program´s Assessment and Monitoring Committee.

Those employers qualifying for the Program may get one of the following benefits:

  • Maturity deferrals of the employers´ contributions to the Argentine Integrated Social Security System;
  • Reduction of up to 95% of the employers´ contributions to the Argentine Integrated Social Security System accrued during April 2020. Employers with more than 60 employees on February 29, 2020, must start a Crisis Prevention Procedure to enjoy such reduction;
  • A compensatory salary allocation paid by the Federal Government in the case of companies up to 100 workers included in the collective bargaining agreement regime. The amounts to be acknowledged vary upon a sliding scale. This compensatory salary allocation will be considered on account of the payment of the personnel’s normal salaries, and the employers must pay the remunerative balance;
  • A health emergency assistance, paid by the Federal Government and consisting of a “non-remunerative” amount with no contribution to the Argentine Integrated Social Security System, for companies with a payroll of more than 100 workers.

5. Taxes

Except for those benefits mentioned under the item Employment Packages, no tax rebates are in place for retail business up to the present.

6. Other Covid-19-related measures

Under the Resolution No. 202/2020 of the Ministry of Labor, Employment and Social Security, employers must report to the health authorities those situations considered “suspicious cases” of Covid-19 (e.g. people who have been in contact with confirmed or probable cases of COVID-19, or who have medical confirmation of having contracted Covid-19).

Further, the Province of Buenos Aires established that employers must implement a special protocol on health and safety in the workplace (Resolution No. 135/2020 of the Ministry of Labor).

Finally, certain regulations of the Civil and Commercial Code of the Nation (the CCCN) devised for exceptional contractual circumstances may apply to the Covid-19 emergency, such as the Acts of God and Force Majeure provisions that might defer or release from performing obligations, or the Undue Hardship provisions that might entitle to request the total or partial termination of contracts or the renegotiation of its terms and conditions.

 

Mario E. Castro Sammartino

For additional information on these or any other issues related to doing business in Argentina, please, sign up for our Legal Blog or contact us at any time.

Our publications exclusively express the author´s opinion and do not purport to be legal counsel on any case. Should you need it, you must consult with your trusted lawyer.

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