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02. Employment Contracts

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02. Employment Contracts

Minimum requirements

Written employment contracts are not required for permanent, full-time employment relationships, because labour laws are mandatory, very comprehensive and rule almost every term of the employment relationship. Labour laws only require the employer to register the employee in the company labour books and before the tax authorities, pay social security and taxes in respect to all salaries payable to the employee, and prepare and deliver to the employee the correspondent salary slips on a monthly basis. Employers must also provide for mandatory life insurance as well as working accident insurance for all employees.

Fixed-term/Open-ended Contracts

For a fixed-term contract:

  • a written employment contract must be executed;
  • it requires an extraordinary need that duly justifies executing a fixed term contract
  • there is a maximum term of 5 years;
  • the employer must serve prior notice of termination (no less than 1 month and no more than 2 months). Failure in serving such notice cannot be replaced by any compensation and will automatically transform the contract into an indefinite term contract;
  • in case the employer dismisses an employee without justified cause before the expiration of the agreed term, the employee is entitled to claim damages. Labour Courts have usually awarded pending wages until the original expiration of the agreed term;
  • once the agreed term ends, the employer must pay a severance compensation equivalent to 50% of a regular one; and
  • a fixed term contract has no trial period.

A temporary contract can be used when extraordinary and transitory production demands or requirements are foreseeable, although a specific term for the contract termination cannot be foreseen. The contract will also take place when the relationship begins and ends with the specific job execution or with the specific service for which the employee was hired to execute. The guidelines required by law are:

  • there is no obligation to give any notice of termination;
  • no severance payments or compensations are owed when the contract finishes;
  • a written contract is required by law;
  • the specific cause must be clearly described, as the employer must prove the temporary nature of the contract;
  • no trial period is applicable;
  • Law No. 24,013 caps the term of this contract to a maximum term of 6 months per year and up to 12 months over a 3 year period; and
  • it can be either provided directly by the employer or through an employment agency authorised by the Ministry of Labour. In this last case, the company is jointly and severally liable with the employment agency for any labour and social security debts in connection with the employee hired through an employment agency, including payment of severance compensation.

Trial Period

Trial periods can be up to 3 months for indefinite term contracts. Termination during the trial period can be decided without paying any compensation or severance payment liability to the employee (except that a prior notice of 15 days is required and the wages due).

Notice Period

Employers must give a prior written notice to the employee in the event of a termination of employment, absent a justified cause. Such prior notice must be given by the employer: (i) 15 days in advance, if the labour contract is under the trial period; (ii) 1 month in advance, if the employee has served for up to 5 years; and (iii) 2 months in advance, if the employee has served for more than 5 years. Employers have the option to not give such prior notice, in which case it must pay severance compensation in lieu of notice, equal to 15 days’ salary, plus one or two monthly salaries, depending on each case. It is customary that employers opt to pay this compensation instead of giving prior notice.

The employee must also give 15 days’ prior notice to the employer in the event that he plans to resign from his job, without detriment to his seniority. Decree 1043/2018, published on 13 November 2018, provides that until 31 March 2019, employers in Argentina must follow a procedure before dismissing, without just cause, an employee hired under an indefinite term employment contract. The employer must serve notice of that dismissal upon the Ministry of Production and Labour of Argentina, no less than 10 business days before the dismissal becomes effective.

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