Labour law reforms

At a glance

• The recent Economic Reform Law includes several labour law reforms.
• Various contravention fines which could previously be imposed on employers are being removed.
• Duration of probationary periods is being increased to six months and up to eight in certain circumstances.
• Changes are also being made to the rules on employment status.

The Economic Reform Law, which was recently approved by the Argentinian legislature, contains several labour law reforms.  

General amendments to the individual work regime

• The registration of new employees is being simplified, to make it quicker and possible to carry out electronically. Companies with 12 or more employees will pay a single amount to cover legal labor relations and social security obligations. The collecting entity will distribute the relevant amount to the corresponding recipients (AFIP or ANSES).
• If a court decides that a labor relationship should in fact be classified as a work or service contract, any resulting financial obligation imposed on the employer will be reduced to take account of any contributions already paid to the relevant regime. For example, if the individual has paid social security obligations through monotributo - a tax category for independent workers - these contributions will be deducted from the social security obligations imposed on the employer.
• The single registration system is being modified. This change will mean that a worker will be able choose a provider from the national health system and not be compelled to use the one imposed by the employer.

Amendments to the Labour Contract Law

• These changes will not apply to employees working in public administration, on contracts for work, services, agencies, domestic workers, agricultural workers, or those regulated by the Civil and Commercial Code of the Nation.
• The amendment removes the presumption that there is an employment contract / relationship in cases of the provision of professional services or trades, where corresponding receipts or invoices are issued or payment is made through the banking system.
• A worker will be considered to be an employee of the business that registers the employment relationship, even if they were hired to provide services to third-party companies. These third parties will be jointly liable for labour and social security obligations in relation to the services provided, but only for those accrued during the actual provision of services to them.
• The upper limit for a probationary period is extended to six months, which can be extended to eight months by collective bargaining agreement for companies with six to 100 employees, and up to one year for companies with up to five employees. During this period, either party may terminate the employment relationship without any entitlement to severance pay. Addition points to note in relation to probationary periods are:
  • The same worker cannot be hired using a probationary period more than once.
  • Abusive use of a probationary period to avoid formalising a work relationship may be subject to penalties.
  • During a probationary period, both parties have the same rights and obligations as apply normally to an employment relationship, including recognition of the employee's union rights.
  • Both parties are obliged to make social security contributions.
  • The worker is entitled to benefits for work-related accidents or illnesses.
  • The probationary period counts for the purposes of length of service.
  • The employer must register the employee at the beginning of the relationship and not after the probationary period ends; otherwise, it will be deemed that the probationary period was waived.
• Workers hired by contractors or intermediaries may request that the company for which they provide services withhold amounts owed to them by the contractor or intermediary, such as remuneration, severance, or other rights arising from the employment relationship.
• Pregnant employees may work up until ten days before they are due to give birth with the remaining period (80 days) available after childbirth.
• The new law introduces participation in the blockade or takeover of an establishment as a fair cause for dismissal. This might constitute a labour offense justifying dismissal with no severance payment.
• Severance payments for dismissals motivated by discriminatory acts are increased. The increased severance payment can amount to up to 100% of the regular severance payment.
• Through a Collective Bargaining Agreement, parties may agree to replace severance payments with a termination fund or termination payment system. Employers may also choose to opt for a private system,  at their own cost,  to cover severance payments or agreed sums in case of mutual termination.
• Self-employed independent workers may hire up to 3 other independent workers to carry out their business. This relationship will be viewed as an autonomous relationship that does not create a relationship of dependency or an employment relationship between them.
• The Law repeals the system of labour fines, including those for incorrect worker registration, failure to deliver work certificates, etc.