Argentina: Labour Reforms

On 8 July 2024, Law 27,742, which provides several labour reforms was enacted.

1. Regularization of defective employment. Employers may regularize the labour relationships that are not registered or that were registered in a deficient manner. The government will define the effects of this regularization, which will include: (i) the extinction of the criminal action and the remission of fines or sanctions; (ii) the remission of debts for social security obligations of no less than 70%. Workers that are regularized within this law will be entitled to compute, for the purposes of the payment of the mandatory pension plan and for unemployment benefit, up to 60 months of services with contributions, calculated on the amount of the minimum, vital and mobile salary.
2. 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, 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.
3. Simplification of the registration of the employment relationship. The registration of employees is simplified by acknowledging electronic pay slips and authorizing receipts and proof of payments in digital format, with the same effect as in paper format.
4. 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 the employment relationship to be defective, on the understanding that the actual employer was the company that used those employees.
5. Probationary period. The trial period is extended from 3 to 6 months and can be extended up to 8 months through collective bargaining agreements (as well as up to 12 months for companies with up to 5 employees).
6. 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.
7. Blockade of plants. Participation in blockades or plant takeovers is considered just cause for dismissal.
8. 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.
9. 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 be null, the reinstatement of the employee and the payment of pending salaries after dismissal.
10. Self-employed independent worker. The figure of the independent worker is set forth, who, 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.

 

This report should not be considered as legal or any other type of advice by Allende & Brea.