1. Introduction
In Argentina, a general employment labour law, complemented by additional laws and the applicable collective bargaining agreement, governs employment conditions.
Labour laws are very comprehensive and rule almost every term of the employment relationship. Labour laws are public policy and therefore, are mandatory. Employer is obliged to grant employees at least what is provided by labour laws. Therefore, employer can grant employees benefits on top of what is provided by those laws but cannot agree with employees in detriment of what is provided by those laws, nor can employee waive any right included in those laws.
Allende & Brea has a highly specialised labour team, that works to prevent legal disputes by giving preventive advice and, where the dispute has already arisen, we work on the defence throughout all the administrative and court stages of the proceedings.
We provide comprehensive day to day labour advice, drafting employment contracts and benefit plans and policies, identifying labour liabilities and risks, compensation calculation and its tax treatment, individual and collective dismissals, collective bargaining agreements, staff reorganisation processes, labour M&A, labour due-diligence processes, compliance, data protection, immigration and labour litigation, among others.
2. Labour and Employment Law Requirements
a) Employer Policy Requirements
Companies that hire staff in Argentina must register those individuals as employees of a local company incorporated in Argentina. Labour laws require to register the employee in the company labour books and before the tax authorities, pay social security and taxes in respect to all salary payable to the employee, and prepare and deliver to the employee the correspondent salary slips.
Argentina labour laws set rules governing working conditions and working hours, providing for payment of salaries during illnesses and pregnancy, setting surcharges on salaries for overtime, establishing mandatory minimum annual paid vacations, and payment of severance compensation in the event of unfair dismissal (dismissal without justified cause). Employees are entitled to a 13th salary, payable in two semi-annual instalments, each instalment equal to 50% of the highest monthly salary accrued in the correspondent semester.
Employers must pay hire compulsory life insurance for all employees, as well as insurance that covers employee’s death, illness or disability in connection to work.
A minimum wage has been established and is adjusted at intervals. However, said minimum wage is generally exceeded by the basic salaries established in the collective bargaining agreements.
All employees are covered by a national retirement pension scheme funded through employee withholdings of their gross salary and employer contributions.
Companies operating in regulated sectors may be required to have additional policies in place. Irrespectively of this, a company may introduce policies that are advisable to mitigate labour exposure in respect to eventual future claims, such as:
- Bonus policy, explaining the terms and conditions for an employee to accrue bonus.
- Use of mobile phone and/or car provided by the company.
- Reimburse of travel and other business expenses policy.
- Use of internet, corporate emails and work computer, in order to clarify no expectancy of privacy.
- Anti-corruption policies.
- Anti-discrimination, anti-harassment policies and equality plans.
b) Employee Training Requirements
Depending on the activity, employers are required to provide training on health and safety at work.
c) Employment Agreements
As a general rule, written employment contracts are not required for permanent, full-time employment relationships, since labour laws rule almost every term of the employment relationship However, please note that teleworking employment agreements -in all cases- are required to be made in written. On the other hand, in case of casual or temporary contracts and/or fixed-term contracts, a written employment contract is required by law.
3. Corporate Law Requirements
a) Compliance for Incorporation
In order to conduct business in Argentina a foreign entity may do so either through a branch or a subsidiary. Normally we recommend our clients to create a local subsidiary since it limits the liability of the shareholders for any losses the local subsidiary may have. On the other hand, a branch does not limit the liability of the shareholders and creditors of the branch may seek to recover from the assets held abroad.
Under current regulations, most companies are organised as one of the following three types of entities: (i) a corporation (in Spanish, Sociedad Anonima); (ii) a Limited Liability Company (in Spanish, Sociedad de Responsabilidad Limitada); and (iii) a One Shareholder Stock Corporation (in Spanish Sociedad Anónima Unipersonal). All such types of companies are taxed equally in Argentina. Please verify in the country where the shareholders are located, whether there is any different tax treatment depending on the kind of Argentine subsidiary.
In any case, a foreign entity seeking to hold equity interests in local Argentine entities, it must be duly registered before the local Office of Companies. The Limited Liability Company and the Corporation require at least two shareholders. The One Shareholder Stock Corporation requires only one shareholder.
Registration of a foreign entity requires filing the following documents:
- Bylaws and articles of incorporation;
- Certificate of good standing;
- Latest audited financial statements; and
- Board resolution approving the registration and appointing a legal representative to act for the company in Argentina.
Registration of foreign entities takes between 1-2 months as from filing.
In order to incorporate a local entity, it is necessary to:
- Decide on a corporate name;
- Prepare the articles of incorporation or association;
- Determine the initial capital of the entity; all types of entities have regulatory minimums, but those minimums may be increased;
- Appoint a board of directors. The local subsidiary, regardless of the type of entity, must have at least one director. If there is a single director, it may have any nationality, but it must reside in Argentina. Should more than one director be appointed, then the majority must reside in Argentina; and
- Determine the registered office, which must be in Argentina and in the specific jurisdiction of incorporation.
Once the initial determinations are made, and the documents have been signed, the incorporation takes place by filing all documents with the office of companies. Registration is usually achieved within 2-3 weeks.
b) Post Incorporation Registrations
Immediately post incorporation, a local entity must obtain a tax ID from the Argentine tax authorities and register for national and local taxes (income tax, VAT and gross revenue among others), and also register as employer before local labour authorities.
Annually, local entities must file their tax returns a new board of directors.
Foreign entities registered in Argentina as shareholders of an Argentine company, must comply with annual reporting requirements, including updating the shareholding information and filing the latest annual financial statements.
4. Payroll and Benefits Providers
In Argentina, employers usually outsource payroll and benefit responsibilities to third party companies. We have worked with several payroll and benefit providers and would be happy to recommend the most suitable for your business.
