Argentina: Labour Reforms

On 12 June 2024, the Senate of Argentina approved a bill that provides several labour reforms. The bill will be reviewed by the Chamber of Deputies. It includes significant amendments to the Argentine labour laws.

1. Elimination of numerous labour fines in favour of the employer. Eliminates multiple fines in favour of the employee for defective registration of the employment relationship or 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, acknowledging electronic pay slips and authorizes to keep receipts and proof of payments in digital format, with the same effect as in paper format.
3. Subcontracting. Employees hired to be used by third party companies will be considered direct employees of those companies that register the employment relationship, modifying the opinion of the national labour courts in the City of Buenos Aires that considered that alternative a defective registration of the employment relationship on the understanding that the actual employer was the company that used those employees.
4. Probationary period. The trial period is extended from 3 to 6 months and could also be extended up to 8 months through collective bargaining agreements.
5. 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.
6. Blockade of plants. Participation in blockades or plant takeovers is considered just cause for dismissal.
7. 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. 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.
8. Discriminatory dismissal. In the case of discriminatory dismissal, the employee that 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 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.
9. Self-employed independent worker. The figure of the independent worker is set forth to carry out a productive undertaking, may hire up to THREE (3) independent workers who shall not be considered under an employment relationship, subject to regulations.

It is expected that the bill will be passed in the next few weeks, and it will be a pro market reform.

This report cannot be considered as legal advice or advice of any other kind from Allende & Brea.