Labor Settlement vs. Voluntary Agreement before the MTSS

Voluntary Agreements before the MTSS

The voluntary agreement is a process carried out before the Ministry of Labor and Social Security (MTSS), at the request of the worker, by mutual agreement with the employer, to implement the final liquidation upon exit or the payment of labor entitlements. It proceeds for amounts equal to or greater than 50 Readjustable Units (Unidades Reajustables). The worker who requests the instance must notify the employer of the day and time granted; there is no notification from the MTSS.

Legal assistance is not mandatory for either party to execute the agreement. The worker only receives verification of the exit liquidation that will be paid, and the content of the agreement is limited to a record stating the payment of certain entitlements. Unlike a settlement (transaction), mutual concessions or doubtful or uncertain rights are not made explicit in the voluntary agreement.

Regarding its effects, it has no transactional effects. This means that the voluntary agreement does not prevent the worker from subsequently claiming not only the entitlements that were not paid but also differences on the entitlements that were paid.

The New Development: MTSS Resolution No. 111/026

MTSS Resolution No. 111/026 updates the procedure for executing voluntary agreements and unifies the criteria in the offices across the country. Among other changes introduced, it stipulates that the worker must attend presenting the liquidation prepared by the employer and the last twelve salary receipts. It also provides that the agreement may be executed in the office corresponding to the location where the employment relationship developed or at the employer's address, at the worker's choice, and exceptionally at another dependency if both parties agree.

The resolution also approves a single model record for all dependencies, which only records the entitlements whose liquidation and payment are the object of the agreement, and it specified the accepted payment methods: cash, bank transfer, check, bill of exchange, or bank money orders.

The update aims to bring more order, documentation, and predictability to the administrative procedure, and in this sense, it is a welcome improvement. However, it does not modify the legal nature of the voluntary agreement or its effects: it still does not constitute res judicata (final judgment), it is still not indivisible, and it still does not prevent the worker from claiming afterwards.

The Settlement (Transaction)

The Civil Code defines the settlement, in its text, as "a contract by which, by making reciprocal concessions, the contracting parties terminate a pending lawsuit or prevent an eventual lawsuit" (Art. 2147 Inc. 1). The elements that the settlement requires in the labor sphere emerge from this definition: pending or eventual lawsuit, reciprocal concessions, and doubtful or uncertain rights. Furthermore, labor justice requires that the worker have legal advice.

Regarding its effects, the settlement has transactional effects, as its name indicates. For practical purposes, the signing of a judicially approved settlement allows the company to defend itself by raising two exceptions in the face of a subsequent claim: that of settlement and that of res judicata.

The least favorable aspect of this instrument is that it requires legal assistance from each party, including the worker, which generally implies an additional cost for the worker that cannot be imposed on them.

Conclusions and Practical Recommendations

The voluntary agreement formally records the payment of a determined amount for a determined concept, and the commented update adds more order and uniformity to this procedure. It is also positive in that it usually generates a psychological effect on the worker, who assumes that after signing it, they cannot claim further.

However, from a legal point of view, that record is worth no more than a salary receipt signed against a bank transfer. Added to this is a practical risk: the workload at the MTSS offices can delay the payment of entitlements beyond the 10-calendar-day period provided for by the regulations, which can make the penalty of Law 18.572 and the damages of Law 10.449 enforceable if the matter ends up in court.

The settlement, on the other hand, allows the matter to be definitively closed regarding the entitlements that were the object of reciprocal concessions: it enables raising the exceptions of settlement and res judicata against any subsequent claim. This closure is further reinforced if the agreement is approved by the competent court.

In summary, if the company chooses to implement the payment through a voluntary agreement before the MTSS, it must bear in mind that this procedure serves as a payment agreement and as a record that certain entitlements were paid. If, however, it seeks to close the issue 100%, without leaving the door open to subsequent claims about what was paid, the path is the settlement, with legal assistance from both parties.