Labour laws in Argentina include:
- general laws;
- statutes for specific activities;
- collective bargaining agreements (CBAs) for different activities, trades and companies; and
- individual agreements and employer practices.
The Labour Contract Act (Act No. 20,744, as amended) (LCA) regulates all aspects of the employment relationship, such as hiring the employee; the economic, organisational and disciplinary rights of the employer; working conditions; labour registrations; holidays and leave; and mandatory severance. There are other important labour laws that govern union associations (Act No. 23,551), working hours (Act No. 11,544), illness and labour-related accidents (Acts Nos. 24,557, 26,773 and 27,348, as amended) and immigration issues (Act No. 25,871).
There are also special statutes regulating certain industries, positions and regimes, including the construction industry (Act No. 22,250), travelling sales employees (Act No. 14,546), persons in charge of rental housing (Act No. 12,981), journalists and administrative employees of media companies (Act No. 12,908), the regime applicable to private household workers (Act No. 26,844) and the agrarian regime (Act No. 26,727). Labour rules are enacted by the Federal Congress.
In principle, a CBA should apply to the personnel and geographical area corresponding to the labour representation of the union that executed the CBA. However, the Ministry of Labour may extend the application of a CBA to a larger geographical area. To be enforceable, a CBA should be ratified by the Ministry of Labour, which determines whether it is in accordance with applicable law.
Through CBAs, the parties may establish labour conditions applicable to all the employees of the industry or of the company within the respective geographical area, not limited to the members of the union. CBAs or individual agreements cannot set forth terms less favourable for the employees than those established by the LCA or other relevant labour laws.
Individual agreements or employer practices may grant employees more rights than those set forth by the relevant labour laws or CBAs. Employees may not waive or forfeit rights established by labour laws. If there is any doubt regarding the existence of a labour relationship, the law favours the employee.
Labour disputes are conducted pursuant to the laws and codes of procedure of each jurisdiction (the city of Buenos Aires and the provinces). In some jurisdictions, including Buenos Aires, a mandatory conciliatory process must be completed before the initiation of a labour lawsuit.
If a conciliatory agreement is reached by the parties and approved by the relevant settlement service authority after determining whether it is in accordance with law, the agreement is deemed to be res judicata.
Most jurisdictions have courts of first instance (of one individual judge), courts of appeals (three-judge courts) and provincial supreme courts. Decisions taken by the courts of first instance may be appealed before the courts of appeals. There are also provinces – including Buenos Aires, which is the most important in the country – that have three-judge courts of original jurisdiction. In limited cases, decisions can be challenged before the provincial supreme courts. The national Supreme Court of Justice has final jurisdiction, although it is limited to specific cases and extraordinary appeals.
Labour claims may be raised in the jurisdiction where the employment relationship existed or where the employee lives. The employee can choose the jurisdiction in which to initiate the lawsuit.
II YEAR IN REVIEW
On April 2019, a draft bill was filed by a congressman of the same political party as the government on the regulation of unregistered employment, against evasion of social security and labour registration. This draft bill is similar to one of the chapters of the broad labour reform promoted by the government in 2016, which later failed as a result of the lack of union support. It contemplates the laundering of unregistered or improperly registered labour relations initiated prior to the Act. The registration implies the extinction of the criminal action and the release of the infractions, fines and sanctions of any nature corresponding to the regularization, as well as the registration of the employers with the Argentine labour sanctions registry (known as REPSAL).2 As regards social security contributions, regularisation within a calendar year, counted from the date of the regulation of the Act, will signify that 100 per cent of the debt is cancelled. The employees included in the regularisation will be able to count up to 60 months of services with contributions for pension purposes. Debts that are under discussion in administrative or judicial proceedings fall within the scope of application of the draft. If the existence of unreported or irregularly registered employment relationships is verified after the acceptance of the regularisation, the benefits granted will decline, with employers having to pay the proportion of the debt redeemed, plus interest and the corresponding penalties. Employers who adhere to the regularisation process will be exempt for two years after registration from contributions of the regularised amounts in respect of regularised employees. The chapter referring to the promotion of employment establishes that employers who, during the calendar year counted from the date of regulation of the Act, hire new people, will be exempt for two years from paying social security contributions. The draft modifies Sections 7, 8, 9, 10 and 15 of Act No. 24,013, considerably reducing the aggravated compensations contemplated by these provisions, establishing instead the payment of an aggravated compensation in favour of the employee of 25 per cent of the vital and mobile minimum wage for each unregistered or improperly registered monthly period. It also provides that the employer must deposit an equal amount in favour of social security. Finally, the draft simplifies the process for granting labour certificates. Owing to the 2019 presidential elections and the lack of necessary congressional support, the government decided not to force the enactment of the bill during 2019.
Resolution No. 346/2019 of the Ministry of Production and Labour was issued in June 2019, making it possible for employers to issue salary receipts in both paper and digital formats. This Resolution establishes that employers may choose to issue salary receipts in either paper or digital format. Whichever format is chosen, the employer must comply with the respective labour regulations. If opting for digital receipts, these must be signed digitally, and the employee may sign in disagreement. The system should allow employees to save their digital receipts and keep a copy of them.
Emergency Decree No. 665/2019, which was issued in September 2019 with the purpose of 'maintaining the purchasing power of salaries', established a non-remunerative payment – not subject to contributions to the social security system – equivalent to 5,000 Argentine pesos for all private sector employees. Employees within the national, provincial and municipal public sector are excluded, as are those who work in the agrarian sector and private homes. This non-remunerative payment was due to be made either in October 2019 or in accordance with the terms and conditions drawn up by the signatory parties to a CBA. If the services are rendered for less than the legal or conventional working day, employees will receive a proportionate amount of the non-remunerative payment. The Emergency Decree also provides that the non-remunerative payment will be offset in the next salary revisions and that employers who have granted, unilaterally or by extraordinary agreement, other increases as of 12 August 2019, may offset them up to the amount of the non-remunerative payment.
On 27 October 2019, a new government was elected, made up of members of a different political party from the ruling one. Since the term of office started on 10 December 2019, only a few measures relating to employment matters have been taken by the new government, although it has been made clear that one of its priniciple aims is the protection of employment.
The new government also expressed the intention of having a social agreement, in the context of which salary increases shall be set by the Executive Branch instead of by means of collective agreements.
In this context, on 13 December 2019, Emergency and Urgency Decree No. 34/2019 was published in the Official Gazette. This Decreee, by invoking the need to address the current situation of the least protected sectors and avoid the lack of protection afforded to formal employees, established a Public Emergency in Occupational Matters for 180 consecutive days. Although the projected term of validity is until 11 June 2020, an extension of the measure could be expected. The Decree provides, in Section 2, that 'in the case of dismissal without cause during the term of this Decree, the worker shall have the right to receive twice the corresponding severance in accordance with current legislation'. Section 3 of the Decree establishes that 'the duplication provided for in the preceding Section includes all compensatory items arising from the termination without cause of the employment contract'. In accordance with this Decree, in the case of dismissal without fair cause of an employee in a 'normal' situation (that is, not included in a special protection such as those corresponding to cases of recent or forthcoming marriage, or pregnancy or maternity in the case of female personnel, or medical sick leave, etc.), the 'duplication' would include:
- compensation for seniority;
- compensation for the lack of notice of termination, at the rate of the 13th month's salary;
- integration of the month of dismissal with the rate of the 13th month's salary.
Although it is expected that there may be disputes about this ruling, duplication would not apply in respect of the special compensation due to those employees who are dismissed because of their marriage or pregnancy, since the regulations that require the double payment of severance are in respect of 'normal' circumstances; that is to say, what an employee usually receives as compensation for being dismissed (disregarding those special cases such as maternity and marriage, since they are subject to exceptions) is dealt with differently.
Section 4 of Decree No. 34/2019 provides that it is not applicable to new hiring, neither does it apply to cases of dismissal with fair cause or based on a lack of work not attributable to the employer. If it is determined that the cause invoked is insufficient (such as arises in the case of indirect dismissals), the employee would be entitled to duplication of compensation. Conclusions of labour relations by mutual consent of the parties are also outside the scope of the Decree.
On 20 December 2019, the National Congress approved the Social Aid and Productive Reactivation Act No. 27,541, published in the Official Gazette on 23 December 2019, which declared a public emergency in respect of economic, financial, fiscal, administrative, social security, tariff, energy, health and social matters and delegated certain legislative powers to the Executive Branch. Among others, regarding labour issues, Act No. 27,541 establishes that the Executive Branch is empowered to:
- mandatorily require that private sector employers pay their employees the minimum salary increases;
- temporarily exempt employers from the obligation to pay social security contributions with respect to salary increases resulting from the power set out in point (a); and
- make reductions to the social security contributions limited to jurisdictions and specific activities or in critical situations.
In the context of the aforementioned public emergency in labour matters provided for by Emergency and Urgency Decree No. 34/2019 and within the framework of the Social Aid and Productive Reactivation Act, on 4 January 2020, Decree No. 14/2020 was published in the Official Gazette. This Decree has the stated purpose of 'maintaining the purchasing standards of remunerations' and established a minimum and uniform salary increase for all employees in the private sector. According to the text of the Decree No. 14/2020, it is applicable to 'all employees in an employment relationship in the private sector'; therefore, the salary increase thereby established must be paid to all employees, whether or not that employee is subject to a CBA. The Decree is not applicable to employees within the public sector or those working in the agrarian sector and private homes. The amount of the increase shall be 3,000 Argentine pesos that must be paid with the January 2020 salary, with a further 1,000 Argentine pesos that must be paid with the February 2020 salary. Since the increase if of a remunerative nature, social security contributions must be made. All micro, small and medium-sized companies that have a MiPyME certificate in force will be exempted from payment of employer contributions to the Argentine pension system in relation to the salary increase for three months, or a shorter term if the increase is to be compensated by future salary negotiations. All micro, small and medium-sized companies that do not have a MiPyME certificate in force will be subject to the exemption described above if they obtain a certificate within 60 days of the effective date of Decree No. 14/2020. It is further established that the salary increase 'shall be compensated by future salary negotiations'. The Decree also provides that the increase shall not be used as a basis for the calculation of any additional salary item, such as a bonus for perfect attendance. Nevertheless, as the increase is of a remunerative nature, it shall be taken into consideration when calculating the mid-year 13th month salary as well as holidays. It must be recorded on the salary receipt as a separate entry, as a 'social aid increase'. Although not expressly stated in Decree No. 14/2020, we understand that this requirement applies to employees whether or not they are subject to a CBA.
Those employees who work for less than the legal or conventional working day will receive a proportionate amount of the increase. Although not expressly stated in Decree No. 14/2020, considering that the salary increases for employees who are subject to CBAs will be compensated with future salary negotiations, it is reasonable to understand that salary increases for employees who are outside the scope of a company's CBA shall also be compensated with future increases granted by the company. Taking into account that by application of Section 15 of Act No. 26,427 relating to the Educational Internship System, interns are paid a non-remunerative sum as an incentive that is based on the basic salary under the company's CBA, the increase established by Decree No. 14/2020 shall apply to the amount paid as an incentive to interns.
A significant and noticeable growth of work using digital platforms continues to attract the attention of labour attorneys, who are analysing the impact of this new method of working in light of the current labour legislation, and are suggesting ways to make this form of business compatible with individuals' labour rights. Therefore this issue has been the subject of several publications, which have offered different and contrary views. It was also one of the main topics at the XI Congress of Labour Law and Working Relations held in Mar del Plata.
A particular concern for employers during 2019 was the high number of labour lawsuits. Special attention was given to the significant amounts of money claimed in connection with illnesses and labour-related accidents, and to the non-registration or undue registration of labour relations.
There were also many union conflicts during 2019. Most of the unions and employers have agreed on increases and revisions in salaries through collective agreements.
III SIGNIFICANT CASES
On 7 February 2019, in Paganini Nicolás Ariel v. Cargill SACI in re dismissal, Court V of the Labour Court of Appeals accepted the complaint raised by the plaintiff, who claimed to have been the victim of a discriminatory action by the defendant employer, who dismissed plaintiff without cause immediately after he returned from medical leave taken because of a serious problem relating to the use of drugs. The Labour Court of Appeals considered that since the plaintiff alleged to have been the victim of a discriminatory act and provided reasonable grounds to state his case, the burden of proof – pursuant to which the party that alleges a fact should prove that fact – shall be inverted, and consequently it was the defendant who should have evidenced that the dismissal was not based on the employee's illness. According to the Court, the employer did not provide sufficient grounds to eliminate the presumption that the dismissal was based on the drug issue and granted the plaintiff moral damages.
On 13 February 2019, in Ceballos Diego Alberto v. Cibie Argentina in re summary procedure, Court VII of the Labour Court of Appeals accepted the complaint raised by the plaintiff, who claimed to have been the victim of a discriminatory action based on his alleged union activity. The employer had dismissed the plaintiff without cause. The Labour Court of Appeals considered that since the plaintiff alleged to have been the victim of a discriminatory act and provided reasonable grounds to state his case, it was the defendant who should have evidenced that the dismissal was not based on the employee's union activity. According to the Court, the employer did not provide sufficient grounds to eliminate the presumption that the dismissal was based on the plaintiff's union activity. In this case, the plaintiff had requested reinstatement to his former position; however, the Court rejected this claim on the ground that it impossible to maintain an employment relationship that one of the parties considers unbearable. Instead, the Court granted the plaintiff moral damages.
On 12 March 2019, the Supreme Court of Justice of Argentina (the national Supreme Court) issued a decision in Martín Alejandro Ceferino v. Argenova SA in re dismissal, whereby it partially left without effect a court decision issued by the Labour Court of Appeals, which had held that the employer and the Risk Insurance Company should pay the plaintiff 1.8 million Argentine pesos, in acknowledgement of physiological damages suffered by the plaintiff as a consequence of a shipwreck. With respect to the amount granted to the plaintiff, the national Supreme Court considered that the Labour Court of Appeals had set the amount of the award without providing any supporting reasons. In reaching its decision, the Supreme Court especially took into consideration the fact that the amount of the award was five times higher than the amount granted by the court of first instance and seven times higher than the amount sought by the plaintiff.
On 16 April 2019, the national Supreme Court issued a decision in Pastore Adrián v. Sociedad Italiana de Beneficencia en Buenos Aires in re dismissal, whereby it left without effect a court decision issued by the Labour Court of Appeals, which had decided that the relationship of 33 years between a medical doctor and the defendant was an employment relationship, granting the plaintiff very significant labour compensations. The Sociedad Italiana de Beneficencia en Buenos Aires filed an extraordinary appeal with the national Supreme Court, arguing that its relationship with the plaintiff was not an employment relationship. In reaching its decision, the Supreme Court took into consideration that the plaintiff:
- charged fees when rendering services rather than receiving a regular salary;
- assumed the risk of the business because he was paid only when the healthcare entities collected the amount due for the services rendered;
- carried out services for different healthcare entities; and
- was not subject to a disciplinary regime similar to those applicable to employees.
As a consequence, the national Supreme Court confirmed the decision of the court of first instance that had decided to reject the original lawsuit.
On 22 October 2019, the national Supreme Court issued a decision in Morón Humberto José v. Grupo Asegurador la Segunda and others, whereby it left without effect a court decision issued by the Supreme Court of the province of Mendoza, which had decided that the relationship of 40 years between an insurance producer and the defendant was an employment relationship, granting the plaintiff very significant labour compensations. Grupo Asegurador la Segunda filed an extraordinary appeal with the national Supreme Court, arguing that the relationship between the plaintiff and the defendant was not an employment relationship. In reaching its decision, the national Supreme Court took into consideration that:
- the activity of insurance providers does not imply subordination or an employment relationship;
- the plaintiff was a business owner of an important organisation with material and human resources and was registered as such with the tax administrator;
- the plaintiff assumed the risk of the business because he was paid the corresponding commissions only when the insurance companies were paid by their clients;
- the fact that the plaintiff had to follow certain directives does not imply per se the existence of an employment relationship; and
- after the relationship with the defendant had ended, the plaintiff continued to render essentially the same services to a different insurance group.
As a consequence, the national Supreme Court ordered the issuance of a new court decision, taking account of the above-mentioned guidelines.
On 5 November 2019, the national Supreme Court issued a decision in Zechner Evelina Margarita v. Centro de Educación Médica e Investigaciones Clínicas Norberto Quirno (CEMIC) and others, whereby it left without effect a court decision issued by the Labour Court of Appeals, which had decided that the relationship of 23 years between a medical doctor and the defendant was an employment relationship, granting the plaintiff very significant labour compensations. CEMIC filed an extraordinary appeal before the national Supreme Court, arguing that its relationship with the plaintiff was not an employment relationship. In reaching its decision, the national Supreme Court took into consideration that:
- the plaintiff issued non-correlative invoices;
- her activities were not carried out exclusively for the defendant;
- the plaintiff carried out her activities for a significant number of years without raising any claim; and
- the plaintiff had to pay the rent for offices and operating theatres at the CEMIC premises, circumstances that evidence the existence of an autonomous activity.
As a consequence, the National Supreme Court ordered the issuance of a new court decision, taking account of the above-mentioned guidelines.
IV BASICS OF ENTERING INTO AN EMPLOYMENT RELATIONSHIP
i Employment relationship
Written employment contracts are not required by law, with the exception of fixed-term employment contracts and employment agreements for crew members (employees who render services on vessels). Since every aspect of an employment relationship is regulated in detail by the applicable labour laws, there is no need to execute a written employment contract. However, written contracts are implemented by employers in the case of high-ranking employees or when the parties want to regulate aspects of the employment relationship, such as bonuses, golden parachutes, retention plans, or confidentiality or non-compete clauses. It is understood that as employees usually cover the permanent needs of the employer, labour hiring is on permanent basis. However, it is accepted that fixed-term employment contracts meet temporary requirements.
The LCA establishes that an employment contract for a fixed term should include the term of its duration and should evidence that 'the features of the work or of the activity, reasonably evaluated, justify that type of contract'. If the employment relationship does not have a ground that justifies (as the law requires) a fixed-term contract, it will become an indefinite-term employment contract. Labour courts seldom find the existence of a cause that justifies a fixed-term contract. Court decisions have invalidated fixed-term employment contracts where the fixed-term clause is very broad, without specific reference to the particular temporary circumstances that justify the contract.
In the event of dismissal without cause prior to expiry of the term of the contract, the employer should pay damages in addition to the severance due as a result of the termination. Generally, case law has determined that the damages should be equivalent to the salary for the agreed term. However, the employee is not entitled to severance pay if the contract was terminated because its term expired and the employee has been employed less than a year. If employed for a year or more, the employee is entitled to half the compensation based on seniority (one month's salary per year of service or a further month's salary for any part of a year that exceeds three months (see Section XIII.i, 'Compensation based on seniority')). A fixed-term contract should not last more than five years.
There are other non-permanent contracts, such as temporary contracts for accomplishing specific goals of the employer relating to extraordinary services and when it is not possible to foresee the term of the contract.
The employer can make changes to employment conditions (ius variandi), provided that they do not result in moral or material harm to the employee. The validity of the ius variandi is a matter of fact that is subject to the functional needs of the company and the personal situation of the employee involved. The employee affected by an illegitimate change to working conditions has the right to file a claim for constructive dismissal or to seek restoration of the altered conditions, until a final judgment is issued.
The parties to a labour contract may, by mutual consent, modify with effect in the future, the conditions initially established in the employment contract (objective novation), provided that they maintain the minimum standards guaranteed by the labour laws, the applicable CBA, and the terms and conditions of the individual employment contract. Agreements that only reduce labour conditions without any consideration for the employee are not admissible.
ii Probationary periods
During the first three months of an employment relationship, indefinite-term contracts are subject to a probationary period, which means that the employer or the employee may decide to terminate the contract without cause and the employer has no obligation to pay severance. The only obligation is to give notice of termination 15 days in advance. If notice is not given, the other party is entitled to compensation.
iii Establishing a presence
The legal system is based on the principle of 'territorialism' and, thus, it does not contemplate the possibility of applying foreign laws to relationships performed in the country (regardless of whether they were entered into abroad), as well as applying Argentine law in a reverse situation (relationships negotiated in Argentina and performed abroad). Hence, services rendered under an employment contract within Argentina are mandatory subject to domestic regulations, which includes labour and social security laws. Pursuant to these regulations, employees rendering services in Argentina should be registered in the labour records of an Argentine entity. Both employers and employees should pay social security contributions to the Retirement and Pension System, the National Institute of Social Services for Retirees and Pensioners, the Family Allowances System, the National Employment Fund and to healthcare providers. The social security contributions are taken as a percentage of the employee's salary.
The Social Aid and Productive Reactivation Act No. 27,541, establishes a contribution of 20.4 per cent by employers whose activity is the rendering of services and commerce, provided that the total annual sales are higher than certain thresholds. All other employers shall pay a contribution of 18 per cent. In addition, all employers should pay a contribution of 6 per cent to healthcare providers. In turn, employees' contributions amount to 17 per cent; note that part of employees' salary is exempted from the payment of contributions. Also, no employee contributions should be made with respect to salaries higher than a certain amount, currently 159,028.80 Argentine pesos.3
A foreign company may not hire an employee in Argentina unless it does so through a branch or a subsidiary in the country. While the hiring of an independent contractor is admissible, there is always the risk that the relationship will be deemed a de facto labour relationship. Under the LCA, the provision of services by an individual contractor gives rise to the presumption of an existing underlying employment contract, unless there is evidence to the contrary. To establish whether there is an employment relationship or an independent contract, the following circumstances, among others, should be taken into account:
- whether the person is involved in a third party's business, or his or her own business;
- whether the person performs services on an exclusive basis or for different clients;
- whether the person runs his or her own business organised as a company or as an individual;
- whether the business has its own address, which is different from the personal address of the owner;
- whether the business has its own employees; and
- whether the individual assumes the risks associated with the business.
The rendering of services by an independent contractor in Argentina may establish the existence of a permanent business. The lack of registration of a permanent business may create contingencies in relation to the local tax authorities regarding taxes, interest and penalties.
A company hiring employees must do the following:
- register as an employer with the tax administrator;
- register the mandatory labour records with the local labour authority;
- register each employee in the labour registries;
- report the hiring of the respective employee to the tax administrator;
- secure an insurance policy from a risk insurance company to cover the risks of illness and labour-related accidents;
- request that the employee chooses a healthcare provider and register him or her with that healthcare provider, and report the registration to the tax administrator; and
- request information regarding the employee's pension system status.
V RESTRICTIVE COVENANTS
Pursuant to the law, employees cannot engage in competing activities with the employer while the employment relationship is in force. Case law establishes that if an employee carries out activities (in his or her own name or on behalf of others) that (1) are similar to the employer's business activities and (2) may potentially affect the interests of the employer, the employee will be in violation of his or her duty not to compete (unless the employer has given consent for the competing activities). If these duties are violated, the employer will be entitled to terminate the labour relationship with cause and may also bring a claim against the employee to recover losses resulting from the violation. The duties of the employee cease after the termination of the labour relationship.
While post-employment non-compete agreements are neither prohibited nor expressly regulated under Argentine law, the enforceability of such agreements may be questionable in light of the constitutional right to work, as contemplated by Section 14 of the Constitution. Based on case law, to be enforceable, a post-employment non-compete agreement should be justified by the position of the employee (e.g., chief financial officer, chief executive officer), be limited to specific activities and territory, have a time limit4 and be subject to reasonable consideration.
i Working time
Working hours must not exceed eight hours per day and 48 hours per week, and night shifts (9pm to 6am) must not exceed seven hours. Working hours in unhealthy places (e.g., where the employee may be exposed to hazardous substances or a higher risk of injury) should not exceed six hours per day or 36 hours per week. Regarding rotating shifts or teams, the duration of the working hours may be extended beyond eight hours per day or 48 hours per week, but under no circumstances may they exceed 144 hours every three weeks. These rules apply uniformly throughout the country.
The distribution of working hours is an exclusive right of the employer and no administrative authorisation is required to establish labour schedules.
Overtime is work rendered in excess of the standard working hours. Employees who work overtime receive an additional payment of 50 per cent of their salary on weekdays, and double their salary on Saturday afternoons, Sundays and holidays. Case law has determined that services rendered in excess of the working hours agreed by the parties, but not beyond the working hours established by law, do not give rise to payment as overtime.5
VII FOREIGN WORKERS
Foreign nationals are protected by the same local employment laws as Argentine nationals.
There is neither an obligation for employers to keep a registry of foreign employees nor a limit on the number of foreigners in the workplace or company.
To be entitled to hire foreign individuals, the employer should be registered with the National Registry of Foreign Applicants. The requirements for hiring foreign employees depend on whether the individual comes from a country that is a member or associate member of Mercosur (Argentina, Brazil, Paraguay, Uruguay, Venezuela, Bolivia, Chile, Colombia, Ecuador, Guyana, Peru and Surinam) or from any other country. Foreign employees from Mercosur countries only need a visa evidencing their nationality. However, foreign employees coming from other countries need to have an employment contract with an Argentine entity and to obtain a work permit granted by the National Immigration Office.
Work permits are granted for 12 months and can be renewed three times until the foreign national is entitled to apply for a permanent visa. Foreign nationals performing scientific, technical or consulting activities, and executives, technicians and administrative personnel who have been moved from foreign countries to fill positions within their companies, receiving a fee or salary in Argentina, may also obtain a residential permit for up to three years. Sportsmen, artists and academics may also obtain temporary authorisations to render remunerated services in Argentina. In turn, crew members of international transport, seasonal workers, academics and technicians may obtain transitory permits of 30 days, which can be renewed.
Employers should comply with the same rules as with respect to locals. In the field of social security regulations, the only exception are services rendered by individuals protected by an international reciprocity agreement, who are, in general, exempt from paying social security contributions for up to two years. Professionals, researchers, scientists and technicians temporarily residing in the country, for a maximum of two years, may also be exempt from paying social security contributions.
VIII GLOBAL POLICIES
There are no labour regulations requiring employers to have internal disciplinary rules. Internal rules do not need to be approved by either a government authority or a representative body. As every aspect of the employment relationship is regulated in detail by the applicable labour laws (with the exception of large or international companies), the practice of issuing internal policies is still not prevalent.
In most cases, these rules pertain to the issuance of computers, phones, tablets and electronic devices, and the correct use of email accounts and internet browsing. Based on court precedents, employers usually state in their respective policies that these devices are granted exclusively for labour purposes, that the employee cannot have an expectation of privacy regarding their use, and that the employer may control, monitor, audit, intercept and make public all documents and messages stored, sent or received on them.
In spite of the fact that discrimination, sexual harassment and corruption are all issues expressly regulated by statutory provisions, disciplinary rules may also address manners to deal with them. However, internal policies cannot affect the rights granted to employees by applicable laws and CBAs.
Even though it is not mandatory, it is highly advisable that these types of rules are written in Spanish, or at least that a Spanish version of them be made available.
As a version of the rules posted on the company intranet may not constitute reliable evidence, it is also recommended that a signed copy of them is held on the personal file of employees. Otherwise, if the rules are challenged, the employer may be obliged to appoint a computer expert witness, which may generate unnecessary additional expenses (a percentage of the amount claimed in the lawsuit).
On 1 October 2018, the Anti-Corruption Office approved Resolution No. 27/2018, which requires that companies abide by the guidelines set forth in the Criminal Liability Act (Act No. 27,401) regarding the liability of legal entities for crimes against the public administration, and bribery. Resolution No. 27/2018 sets forth the guidelines for 'integrity' programmes that prevent, detect and correct irregularities and unlawful acts as established by the Criminal Liability Act. This Resolution provides that companies should have integrity programmes involving a code of ethics or conduct that includes policies and procedures applicable to all directors, administrators and employees, to prevent the commission of the crimes contemplated by the Criminal Liability Act. It also requires there to be internal channels for reporting irregularities, protection policies against reprisals and an internal manager in charge of the issues relating to this law. Although integrity programmes are not mandatory, they can be advantageous as any company that self-reports an irregularity or unlawful act and reimburses the benefits obtained from the irregularity or unlawful act, may be exempted from criminal liability, or potential criminal sanctions may be reduced. Even though this is not an employment law regulation, it is important that the Criminal Liability Act and Resolution No. 27/2018 be understood because integrity programmes would generally be handled by human resources departments with the assistance of labour law attorneys. As a result, companies interacting with the public sector will have to carefully consider the implementation of integrity programmes.
IX PARENTAL LEAVE
Women are entitled to an unpaid maternity leave for a total of 90 calendar days – 45 calendar days before the delivery and 45 calendar days after the delivery date.
Male employees are not entitled to paternity leave. In spite of the fact that employers are under no legal obligation, some companies are granting rights to male employees associated with paternity. It has also been noted that there are some projects seeking to grant male employees paternity rights. The exercise of these rights is not subject to seniority requirements (for female employees). During the period of unpaid maternity leave, the social security department pays female employees a maternity allowance that is equivalent to 100 per cent of the usual salary.
There are no prohibitions against the employer dismissing a pregnant employee. However, if the employer dismisses a pregnant employee during the protection period, the employee is entitled, in addition to the regular severance payments, to a special compensation of one year's salary. The law provides for a protection period of 7.5 months before delivery and 7.5 months after delivery.
Since the official language of Argentina is Spanish, all public documents and records should be drawn up in Spanish. This means that any document that may need to be filed with a labour or public authority (e.g., labour and immigration registries), or courts, will necessarily be in Spanish. If it is necessary to file documents in other languages with the labour or public authorities or courts, these documents will have to be translated into Spanish by a public translator. If issued abroad, the signatures of the documents must be certified by a notary public. The documents must then be legalised following the procedure established by the Hague Convention of 1961, or at the Argentine embassy if the country in which the document is granted has not ratified this Convention.
No law provides that offer letters, employment contracts, confidentiality agreements, restrictive covenants, proprietary information, assignment agreements, bonus or other incentive compensation plans, employee handbooks or other policies need to be in Spanish. However, it is best practice to have them translated into Spanish or at least to have a version in Spanish available. Otherwise, in the event of a claim, the employer may be obliged to require the appointment of a public translator, which may generate significant costs (a percentage of the amount claimed in the lawsuit). There is also always the risk that the employee may claim that he or she did not fully understand the document, creating doubt that may be resolved in favour of the employee.
XI EMPLOYEE REPRESENTATION
Union associations have been characterised as those set up as permanent entities to defend the professional interests of employees.
There is a very important distinction between employee associations with union status representation (see below) and registered unions without union status representation: by law, only the former have union status representation rights. Employee associations with union status representation are entitled to enter into CBAs and to participate in collective negotiations, to manage their own healthcare providers, to defend and represent the individual and collective rights of the employees, and to monitor the enforcement of labour legislation and social security provisions. Employers should act as withholding agents regarding the fees owed by union members to unions with union representation status. As mentioned above, registered employee associations do not have union status representation rights, which means they do not have bargaining and collective union rights.
The Argentine union system is based on the existence of only one employee association with union status representation per occupation or activity. To have union status representation, the employee association must be considered the most representative, which means it must be registered with the labour authority, have been operative for at least six months and represent more than 20 per cent of the employees of the activity.
In spite of the foregoing, the national Supreme Court has issued decisions declaring the unconstitutionality of certain provisions of Act No. 23,551 that require representatives and members of union boards to be members of a union with union status representation,6 grant union protection only to these unions,7 and prevent registered unions from representation of collective interests in a judicial action.8 Courts of lower rank must follow the decisions of the national Supreme Court.
According to Act No. 23,551, representatives of employees whose term of employment with a company shall not exceed two years should be members of the union with union status representation and be elected for that purpose. A company must have the following number of employee representatives depending on its size: one representative for 10 to 50 employees; two representatives for 51 to 100 employees; and, for more than 101 employees, an additional representative for every 100 employees. Employees appointed to elective or representative positions in legally recognised unions or in entities that require union representation, or employees holding public office, and representatives in the company and candidates, are granted union protection. These employees cannot be suspended or dismissed, and the conditions of their employment cannot be altered without a previous judicial order lifting the union protection by means of an extraordinary summary proceeding. If the employer breaches that union protection, the employee may request his or her reinstatement by means of an extraordinary summary lawsuit, plus the payment of unpaid salary; or to put himself or herself in a situation of constructive dismissal (termination of labour relationship), being entitled to dismissal compensation and an additional amount equivalent to his or her annual salary, plus an additional year. A labour representative may be suspended at the employer's request if he or she endangers the safety of personnel or harms the employer's property.
XII DATA PROTECTION
i Requirements for registration
Pursuant to the Data Protection Act (Act No. 25,326), its complementary regulations and the interpretation of these regulations by the Data Protection Agency, all databases must be registered with the Agency, with the exception of those maintained for personal rather than business reasons.
Even though not expressly established in the relevant regulations, the Data Protection Agency recommends that employers register the database containing their employees' information with the Agency. To register a database, a company must complete a form, stipulating, among other things, the number of employees and the personal information to be provided. As employers are required by law to collect and store personal as well as sensitive data, no notification or consent is necessary.
In the context of their activities, companies are entitled to disclose who their employees are as well as the necessary information, but must avoid disclosing information that is not necessary or is sensitive. In general terms, Act No. 25,326 establishes that companies should adequately protect information, but it does not specify the manner in which this protection should be granted. In 2018, the Data Protection Agency issued some non-mandatory technical recommendations regarding protection, for example only allowing certain authorised individuals in the company to access the database. In the event of a breach, companies who have followed these recommendations are likely to be treated more favourably by the Agency.
ii Cross-border data transfers
No regulation requires the registration of transfers of data.
Transfers of personal data (any kind of information, including full name, address, identification number) to countries or international organisations that afford adequate levels of protection does not require notification or consent. The transfer of an employee's personal data to other countries or international organisations that do not afford adequate levels of protection is, in principle, prohibited, unless the employee consents to the transfer or the employer and the foreign third party agree, in writing, with terms and conditions for the transfer set forth by the Data Protection Agency. Also, if a company follows the Guidelines for Binding Corporate Rules issued by the Data Protection Agency, international transfers of personal data to companies of the same economic group in countries that do not afford adequate levels of protection are allowed.
iii Sensitive data
Sensitive data can only be collected when there are reasons of general interest provided by law; however, no person is obliged to provide this type of information. Sensitive data is, among other things, personal data relating to an individual's ethnic or racial origin, political opinions, religious, philosophical or moral beliefs, trade union registrations, sexuality, and health or medical background. This data cannot be transferred, even with the consent of the employee.
iv Background checks
It is not unlawful to conduct background, credit or criminal record checks. However, the prospective employer should carry out these checks discreetly, out of respect for the candidate, and in a non-discriminatory manner. Employers are prohibited from making enquiries about a candidate's religious or political beliefs, union membership, or information relating to his or her private life.
Resolution 11-E of the Ministry of Labour states that 'job offers should not contain restrictions for reasons such as race, ethnicity, religion, nationality, ideology, political or union opinion, sex, gender, economic position, social status, physical features, disability, residence, family responsibilities or criminal records of those who have served their entire sentence'. This provision applies exclusively with respect to applicants. The purpose of this rule is to avoid discrimination based on the existence of criminal records, 'especially' regarding those who have served the entire sentence.
XIII DISCONTINUING EMPLOYMENT
The labour system is one of 'improper permanency', meaning that, in principle, an employer may dismiss any number of employees at any time (other than union representatives). There is no legal obligation for an employer to notify the union of prospective dismissals.
Dismissals in Argentina are a delicate issue. If an employer decides to carry out mass dismissals, it may be subject to actions by the relevant authorities (labour and non-labour). If the number of dismissed employees is significant, the labour authority may decide to initiate the 'compulsory conciliatory procedure' applicable to collective conflicts, which may suspend or impede the dismissals. Additionally, some recent precedents issued by the Labour Court of Appeals ordered the reinstatement of employees dismissed without cause and without following the crisis procedure applicable in the case of dismissals for lack of work beyond the employer's control, which authorised payment of reduced severance, on the grounds that the employees were entitled to maintain their respective labour relationships.9
Dismissal without cause
In cases of dismissal without cause, employees are entitled to severance payments, as follows.
Compensation based on seniority
The employee is entitled to receive one month's salary for every year worked and a further month's salary for any part of a year that exceeds three months. For instance, if the employee rendered services for three years and four months, he or she will be entitled to compensation equivalent to four months' salary. This compensation is not subject to social security contributions, or income tax payments or withholdings. To calculate the compensation based on seniority, the basis shall be the best monthly, normal and regular salary received during the last year of service or during the time of rendering the service. This compensation is subject to a cap, depending on the applicable CBA, which cannot be lower than 67 per cent of the employee's monthly salary.
Compensation for lack of notice of termination
The employee is entitled to receive notice prior to the termination of the labour relationship. In the event that notice is not given, the employee is entitled to receive compensation amounting to: 15 days' salary if the period of employment is no more than three months; one month's salary if the period of employment is no more than five years; and two months' salary if the period of employment is more than five years. This compensation is not subject to a cap; however, it must reflect the normal income of the employee and be equivalent to the salary that the employee would have received during the period of the omitted notice. The compensation is not subject to social security contributions or withholdings, but is subject to income tax payable by the employee. In addition, the proportional part of the 13th salary must be calculated, which will be added to the compensation (see below).
Payment in full of the dismissal month
In the month of dismissal, the employee is entitled to receive the full salary regardless of the fact that he or she rendered services for a shorter period. This amount is not subject to a cap, or to social security contributions or withholdings, but is subject to income tax payable by the employee. The amount of the payment depends on the day of termination.
Compensation for unpaid holiday
The employee is entitled to receive compensation for unpaid holiday in an amount equivalent to the holiday to which the employee would have been entitled according to the period of the year worked. This amount is not subject to a cap and is not subject to social security contributions or withholdings, but it is subject to income tax payable by the employee. The amount of the payment depends on the number of days' holiday to which the employee was entitled.
Remuneration (salary and 13th month's salary)
The employee is also entitled to receive remuneration corresponding to the proportional part of the year worked. In this regard, the employee must receive a salary corresponding to the days effectively worked during the month of dismissal and the proportional part of the 13th salary corresponding to the part of the year worked. The amount of the salary depends on the day of termination.
Duplication pursuant to Emergency and Urgency Decree No. 34/2019
In the context of the Public Emergency in Occupational Matters, which is applicable for 180 consecutive days (effective from 13 December 2019), in the case of dismissal without cause, employees are entitled to twice the corresponding severance. The 'duplication' would include the following:
- compensation for seniority;
- compensation for the lack of notice of termination, at the rate of the 13th month's salary;
- integration of the month of dismissal with the rate of the 13th month's salary.
The duplication does not apply to cases of dismissal with fair cause or based on lack of work not attributable to the employer. If it is determined that the cause invoked is insufficient – as can arise with indirect dismissals – the employee would be entitled to the duplication of compensation. Conclusions of labour relations by mutual consent of the parties are outside the scope of Decree No. 34/2019.
Dismissal for cause
In the event of dismissal for cause, the employee is not entitled to mandatory severance. If the employee challenges the dismissal and a court considers that the cause for the dismissal is not sufficiently significant to be deemed a breach of the main obligations of the employment contract, the court may award the employee mandatory severance.
In addition, if based on the employer's rejection of the claim by the employee, the employee is forced to raise a claim against the employer through administrative or judicial means, the court may grant the employee the aggravated compensation set forth by Section 2 of Act No. 25,323 (equivalent to 50 per cent of the mandatory severance).
The employer may be obliged to pay higher severance in respect of dismissals of women who are pregnant or have recently given birth, women who have just got married or are soon to be married, and dismissals during sick leave.
As Argentina has become a controversial jurisdiction in terms of employment relationships, it may be prudent to execute a conciliatory agreement before the labour authority that includes a general release. If the conciliatory agreement is approved by the relevant settlement service authority after determining whether it is in accordance with applicable law, the agreement is deemed to be res judicata.
The law also provides that employers may dismiss employees invoking objective reasons – lack of work beyond the employer's responsibility, force majeure or technological causes – in which case the employer is obliged to pay half the compensation based on seniority (half of one month's salary per year of service or a further month's salary for any part of a year that exceeds three months) instead of paying the full compensation based on seniority.
The crisis procedure must be followed where dismissals for objective reasons affect more than 15 per cent of the payroll if the company employs fewer than 400 employees, 10 per cent of the payroll if the company employs between 400 and 1,000 employees, and 5 per cent of the payroll if the company employs more than 1,000 employees. The purpose of the crisis procedure, which should be carried out before the labour authority, is to prevent and mitigate the adverse consequences that may affect employment by promoting direct negotiations between the employer and the union. During the crisis procedure, the employer cannot carry out any dismissals, and the employees cannot carry out industrial action.
If the dismissals based on objective reasons affect fewer employees than the aforementioned minimum percentages, the employer must give notice of the decision to the labour authority 10 days before the dismissals and provide the relevant union with a copy of the notice.
Even though contemplated by the law, owing to the reduced redundancy payments, courts have been very sceptical with regard to objective reasons for dismissals.
XIV TRANSFER OF BUSINESS
For a transfer of business, there must be a change of employer, credit and debt relating to the activity of the business. This includes the sale, assignment, donation, transfer of goodwill, temporary lease or transfer of the facilities, succession mortis causa and merger of companies.
In the event of a transfer of business by any title, all labour obligations of the transferor with its employees at the time of the transfer will pass to the successor or acquirer, even those arising from the transfer. Regarding existing obligations at the time of transfer, the previous employer and the purchaser are jointly and severally liable. Regarding future obligations, the new employer is exclusively liable.
Where there has been a transfer of business, the employment contract will continue with the successor or acquirer, and the employee will keep the seniority acquired with the transferor and the rights derived therefrom. In other words, all the obligations arising from the individual employment contracts in force at the time of the change of owner are transferred to the new owner. The acquirer of a business is also liable for the obligations arising from labour relationships terminated prior to the transfer.10 The basis of the law is to protect employees against possible fraudulent manoeuvres, for example the transfer of the business to an insolvent acquirer.
The sole transfer of the business does not entitle an employee to consider himself or herself dismissed. The employee may put himself or herself in a situation of constructive dismissal only if, as a result of the transfer, he or she suffers significant damage (e.g., because the company has changed its core business, or a change in position or the size of the company results in a reduction of the employer's patrimonial liability).
In respect of the assignment of an employment contract, without including the business, the express and written acceptance of the employee is required. Once the assignment has been executed, the assignor and the assignee are jointly and severally liable for all the obligations resulting from the assigned relationship. Joint and several liability is limited to the debts accrued at the time of the transfer, and does not apply to those arising thereafter.
The measures already taken by the new government that took office on 10 December 2019 (as discussed in Section II ) have been for the purpose of protecting employment.
The new president has said he will not go ahead with the labour reform promoted by the outgoing government and that during his administration there will be no general rules of flexibility. He affirmed that although labour reforms are needed, they must be achieved by each sector through the modernisation of CBAs and without introducing changes to the labour laws, which imply a loss of rights or salary reductions. He also maintained that he will approve any dealings between companies and unions that propose such a concept.
It would not be surprising if the new government decides to take measures regarding work via digital platforms, granting more protection and rights to the individuals affected by this method of working.
It is expected that there will be a similar trend to that seen during 2019 with regard to litigation and union conflicts.
1 Enrique Alfredo Betemps is a partner at Pérez Alati, Grondona, Benites & Arntsen (PAGBAM).
2 Registro Público de Empleadores con Sanciones Laborales (REPSAL).
3 At the time of writing, roughly equivalent to US$2,525.
4 In LEML v. Nidera SA and other in re nullity claim (Labour Court of Appeals, 2006), a non-compete agreement of 10 years was upheld.
5 D'Aloi v. Selsa SA, plenary decision 226 (Labour Court of Appeals, 2006).
6 Association of Employees of the Public Sector v. Ministry of Labour in re Unions Association Act, 2008.
7 Rossi Adriana María v. National Government – Argentine Navy, 2009.
8 Association of Employees of the Public Sector in re unconstitutionality action, 2013.
9 For example, Gómez Leandro Javier and others v. Pepsico de Argentina SRL in re request of precatory measure, 2017.
10 Baglieri Osvaldo v. Nemec Francisco y Cia, plenary decision 289, Labour Court of Appeals, 1997.