Argentina: Labour Reforms
On 20 December 2023, Decree No. 70/2023 was published on the Official Gazette, which set forth the economic emergency in Argentina until 31 December 2025 that provided multiple reforms to implement in the local economy. Please find below the most relevant labour reforms.
1) Elimination of numerous labour fines in favour of the employee
Eliminates multiple fines in favour of the employee for defective registration of the employment relationship, for forcing the employee to claim payment of severance, or for failure to deliver the work certificates. In other words, it eliminates fines that were equivalent to (i) 25% of wages; (ii) 50% of the severance payment; (iii) 100% of the severance payment for dismissal without cause; and (iv) 3 salaries, as well as fines in favour of the employee for failure to pay withheld social security contributions or delay in the payment of the severance, which significantly increased the cost of employee termination.
2) Simplification of the registration of the employment relationship
The registration of employees is simplified by acknowledging electronic pay slips and authorising receipts and proof of payments in digital format, with the same effect as in paper format.
3) Possibility of approving agreements with the employee as res judicata
The employer and the employee may request the labour authority to approve as res judicata agreements relating to modifications of essential elements of the employment contract or the termination of the employment relationship by mutual agreement, which until now the labour authorities in the City of Buenos Aires did not approve on the grounds that there was no dispute.
4) Subcontracting
Employees hired by third party companies will be considered direct employees of the companies that register the employment relationship, modifying the opinion of the national labour courts in the City of Buenos Aires that considered it a defective registration of the employment relationship on the understanding that the actual employer was the company that hired those employees.
5) Delivery of work certificates to the employee
Simplification of the delivery of work certificates to employees either through website upload by the employer or providing the work certificate when it’s updated and available through the social security institution’s website.
6) Probationary period
The trial period is extended from 3 to 8 months.
7) Pregnancy protection
The employee is allowed to request to work up to 10 days before the birth date, modifying the prohibition to work during the 30 days prior to the birth date.
8) Working hours and overtime
Collective bargaining agreements may establish a system of overtime, banked hours, and compensatory time off, complying with the minimum unavailable 12-hour rest period between working days.
9) Blockade of plants
Participation in blockades or plant takeovers is considered a just cause for dismissal.
10) Calculation of severance pay for dismissal without cause
In cases of dismissal by the employer without just cause, the basis for calculating the severance payment for length of service shall not include the Supplementary Annual Salary, neither the half-yearly nor annual payments. For those employees paid on commission or with variable salaries, the average of the last SIX (6) months shall be considered, or of the last year if it is more favourable to the employee.
11) Replacement of severance compensation by a severance fund
By means of a collective bargaining agreement, the parties may replace the severance compensation payable to employees in case of dismissal without cause by a severance fund or system, which cost shall always be borne by the employer, with a monthly contribution that may not exceed EIGHT PERCENT (8%) of the employee´s salary. Employers may choose to hire a private capitalisation system at their own cost to pay the severance compensation and/or the sum payable in the event of termination by mutual agreement.
12) Discriminatory dismissal
In the case of discriminatory dismissal, the employee who claims discrimination has the burden of proof, modifying the opposite criterion that prevails in labour case law. In the event of a court judgement, the additional severance payable to the employee will range between 50% and 100% of the severance compensation, capping the amounts to be awarded, which labour courts have in some cases awarded up to 13 monthly salaries. In all cases, the discriminatory dismissal will not preclude the termination of the employment relationship. Thus, limiting the power of the labour courts to order that the dismissal was null, the reinstatement of the employee, and the payment of pending salaries after dismissal.
13) Re-entry of workers
In the case of employees who return to work for the same employer, the updating of interest on compensation paid to those employees in previous contracts for the same employer is allowed, a possibility that was previously expressly forbidden.
14) Interest rate applicable to labour claims
The interest rate applicable to labour claims may not be higher than the Consumer Price Index (CPI) plus 3% per year. This cap is considered a public order and must be applied by judges and authorities. Thus, the interest rate currently applied by the national labour courts of the City of Buenos Aires is reduced and capped.
15) Collective bargaining agreements
The collective bargaining agreement is only valid for the agreed-upon term. Once its term has expired, only those clauses referring to working conditions continue to be in force. Therefore, other clauses, such as, for example, trade union contributions, are not applicable until parties reach a new agreement.
16) Union protests
Trade unions are prohibited from carrying out protests that affect freedom of work, including causing a blockade or seizure of an establishment; preventing or obstructing all or part of the entry or exit of persons and/or things to the establishment; causing damage to persons or things belonging to the company or third parties located in the establishment (installations, goods, supplies, and raw materials, tools, etc.); or retaining them unduly.
17) Travelling salesperson
The travelling salesperson regulation is repealed, eliminating the compensation for clientele (equivalent to 25% of the compensation for dismissal without cause) as well as the obligation to pay a commission for sales and collections, among other terms and conditions.
18) Telework and caregivers
Teleworkers that can prove that they are in charge of the care of persons covered by the teleworking law must coordinate with the employer timetables compatible with the care task in their charge and/or the sporadic interruption of their working day, compensating for such periods of time. Such modifications to working hours shall not apply when the employer pays the employee compensation for care expenses.
19) Telework and reversibility
The consent given by the person working in a presential position to move to the telework modality can only be reversed, that is, to return to work in presential modality, by agreement between the worker and the employer, as long as the conditions exist in the company’s facilities for the person to be able to resume his or her work in presential modality. In this way, the employer’s obligation to provide presence work when the worker simply expresses his will to do so is repealed.
20) Telework and transnational benefits
In the case of transnational teleworking services, the law of the place of performance of the tasks by the worker shall apply to the respective contract. This eliminates the option recognised in favour of the worker to choose between the law of the place of work or the law of the employer’s domicile, whichever is more beneficial to the worker.
21) Self-employed independent worker
The figure of the independent worker is set forth, who, to carry out a productive undertaking, may hire up to FIVE (5) independent workers who shall not be considered under an employment relationship, subject to regulations.
22) Essential services
Collective conflicts that may affect the normal provision of essential services are subject to the minimum service provision guarantees, guaranteeing a service provision of between 50% and 75%.
This report should not be considered as legal or any other type of advice by Allende & Brea.
