Employment Law Overview Argentina

Introduction

Argentina’s labour laws are remarkably comprehensive and regulate virtually all the terms and conditions of the employment relationship. Labour laws are public policy and are therefore mandatory. The employer is obligated to grant employees at least what is afforded to them under labour legislation. Hence, an employer can extend benefits on top of the standard provisions, but cannot agree to terms that are less favourable or otherwise detrimental to an employee, nor can an employee waive any known right or privilege established for his/her protection or benefit under the law.

Key Points

• Argentina’s labour laws are pro-employee and have been designed to safeguard the rights of employees and workers, by instituting rules governing working conditions and working hours, providing for payment of salaries during illnesses, setting surcharges on salaries for overtime, establishing annual vacations and requiring the payment of severance compensation in the event of unfair dismissal (dismissal without justified cause).
• Labour law in Argentina is comprised of public order provisions and thus cannot be ruled out, or waived by any agreement, applicable law or jurisdictional clauses subsequently included in any agreements. Accordingly, Argentina’s labour laws will apply – and the labour courts will have jurisdiction – with respect to any eventual labour claim filed with the courts related to work performed in Argentina.
• Employees are entitled to a 13th salary or statutory annual bonus, called “aguinaldo” or “sueldo annual complementario/SAC”, which is payable in two semi-annual installments, to be paid on 30 June and 18 December. Each installment is equal to 50% of the highest monthly salary accrued during the corresponding semester.
• Employers must pay a compulsory life insurance for all employees.
• The employer can only change the terms and conditions of employment, provided that those changes are not unreasonable and do not either:
  • modify the essential terms of the employment contract; or
  • cause moral or material damage to the employee.

Legal framework

• As labour laws are federal laws, the terms and conditions are standardised nationally.
• Labour Contract Law 20,744 (the “LCL”), together with any other complimentary legislation and applicable collective bargaining agreements, tailor the general provisions that govern the conditions of employment.
• Law No. 23,660, the Health Insurance Act, sets forth the measures necessary to establish appropriate health and medical care services to employees and their families.
• Argentina’s Employees’ Pension and Retirement Act (Law No. 24,241) secures access to public funds for employees and independent workers who are eligible to apply for retirement or a pension plan, a disability retirement annuity as well as pension coverage in case of death.
• Law No. 19,587 on Occupational Hygiene and Safety lays down the standards and procedures applicable to all workplace establishments, regardless of the nature of their economic activity.
• The Working Hours Act (Law No. 11.544/1929) regulates working hours.
• Law No. 24,013 regulates temporary personnel service companies.

New Developments

On July 8, 2024, the Law 27,742 that provides several labour reforms was enacted. Please find below the modifications introduced by it on labour legislation:

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 in 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 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.

3)            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.

4)            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.

5)            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 (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 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.

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 the regulations.