The Employment Law Review: Argentina
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 No. 24,557, No. 26,773 and No. 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 that are applicable to all employees in the industry or the company within the respective geographical area, not limited to 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 judges presiding) 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.
Year in review
The working world continues to be affected by the covid-19. At the beginning of 2020, legal provisions established (with some exceptions for 'essential personnel') a strict preventive and mandatory social isolation that exempted employees from attending their workplaces without affecting their right to collect their salaries. At the end of 2020, other regulations provided for social isolation to be extended exclusively to those jurisdictions that do not meet certain epidemiological and health parameters. During 2021, regulations have been oriented towards a return to normal activities, albeit with some advances and some retreats.
Resolution No. 60/2021 of the Ministry of Labour, dated 12 February 2021, provides that, from the beginning of the 2021 school year, absence from the workplace of a parent or responsible adult in charge, whose presence at home is essential for the care of children or adolescents, will be considered justified in the following situations: (1) on days when the minors do not attend on-site classes; and (2) on days when the minors attend on-site classes with reduced hours and the normal and usual school day of the corresponding educational establishment cannot be fulfilled. This Resolution clarifies that only one parent or person responsible for care, per house, may benefit from this justification.
Decree No. 125/2021, dated 27 February 2021, states that employees exempted from the duty to attend the workplace will receive a non-remunerative payment equivalent to their usual remuneration, net of contributions to the Social Security System. In that respect, employee and employer contributions must be made exclusively to health coverage and the National Institute of Social Services for Retirees and Pensioners.
Joint Resolution No. 4/2021 of the Ministry of Health and the Ministry of Labour, published on 9 April 2021, establishes that employers may request the return to on-site work of (1) employees, including those over 60 years of age, pregnant women and people belonging to risk groups, who have received at least the first dose of any covid-19 vaccine, 14 days after inoculation, and (2) health employees with a high risk of exposure, regardless of age and risk condition, 14 days after having completed the vaccination schedule. Certain people with immunodeficiencies, and cancer and transplant patients, are exempted. Likewise, the Joint Resolution establishes that employees who are eligible for vaccination and choose not to be vaccinated must act in good faith and do their best to alleviate the damage that their decision may cause to employers.
Decree No. 678/2021, published on 1 October 2021, at Section 6, updates the regulation on exemptions from the duty of attending the workplace, effective until 31 December 2021. Pursuant to this new regulation, only employees who have undergone transplant surgery or employees with oncological disorders, and for a period not exceeding 30 days, are exempted from attending the workplace. In short, all employees, whether included in groups considered to be 'at risk' or not, must return to carrying out face-to-face tasks if required by their employer, with no distinction between those who have and have not been vaccinated.
Since the beginning of the pandemic, the government has established different programmes to assist critically affected activities. One of the most important is the 'Repro' (the production recovery programme), whereby a fixed amount is payable on account by the government to employees whose employers are subject to the Repro programme. The fixed amount will depend on the activity of the employer.
Decree No. 493/2021, published on 6 August 2021, establishes that private sector employers that hire new employees who participate or have participated in educational training, professional training or labour intermediation programmes will have their employer contributions reduced in respect to each of the new hirings. The reduction applies to employer contributions to the Argentine Integrated Pension System (SIPA), the National Institute of Social Services for Retirees and Pensioners, the National Employment Fund and the Family Allowances Regime. To access the benefit, the hired employee must have participated for 12 months, or still be participating, in certain educational, training and employment and labour intermediation programmes or policies, and the new incorporation must create a net increase in the payroll of personnel with respect to the immediately preceding month. The benefit consists of a 95 per cent reduction of employer contributions during the first 12 months of a new employment relationship with a woman, transvestite, transsexual or transgender person, or a person with an accredited disability, and a 90 per cent reduction of employer contributions during the first 12 months of a new employment relationship with a man. With respect to part-time employees, the benefits are reduced by half. The financial aid provided for in these programmes and policies are considered as payment on account of salaries. This benefit does not apply to registered employees, except those on job placement programmes, or those who have been recorded in the Social Security Regime and are reinstated within 12 months of their employment having been terminated, whatever the reason for dismissal. The benefit also does not apply to the hirings made within 12 months of dismissal without fair cause or because of a lack or reduction of work, and force majeure. Employers who are registered with the Public Registry of Employers with Labour Sanctions (REPSAL), or who engage in abusive practices in the use of the benefit, will not be able to access the benefit. Exclusion will be automatic from the moment any of the aforementioned causes occur.
Joint Resolution No. 9/2021 by the Ministry of Labour and the Ministry of Productive Development, published on 15 September 2021, complements Decree No. 493/2021, clarifying that the benefit provided by the Decree will be applicable with respect to the following types of labour hiring: (1) employment contracts for an indefinite term (Section 90, LCA and its amendments); (2) part-time employment contracts (Section 92 ter, LCA and its amendments); (3) permanent agricultural employment contracts (Sections 16 and 18 of the regime provided for in Act No. 26,727 and its amendments); and (4) employment contracts included in the regime provided for in Act No. 22,250 and its amendments (construction industry).
Resolution No. 606/2021 by the Ministry of Labour, published on 1 October 2021, also complements Decree No. 493/2021. The Resolution states that employers who start their economic activities after the fiscal period of August 2021 and those who hire employees under the scope of the regime provided for in Act No. 22,250 and its amendments, will not be able to enjoy the benefits established in the Decree for more than 20 employees.
Decree No. 438/2021, dated 7 July 2021, establishes that employees who start a new employment relationship must remain for one year with the relevant healthcare provider corresponding to their employer's activity before being allowed to exercise the exchange option (to a different healthcare provider). Regarding employees under the scope of a CBA, the exchange option can only be exercised in respect of another 'union' healthcare provider; they may not opt for a 'management' healthcare provider. Conversely, higher-ranking employees can only opt for another 'management' healthcare provider. The exchange option may be exercised only once a year. Before the issuance of the Decree, employees were entitled to opt for another healthcare provider from the beginning of a new employment relationship.
Decree No. 27/2021, published on 20 January 2021, partially regulates Act No. 27,555 on Teleworking (the Regulation and the Act, respectively), enacted on 14 August 2020. According to the Regulation, the Act will apply to all cases of remote working, even those who work remotely only part of the time. The Regulation also establishes that only work that is carried out in the establishments of clients to whom the employer provides services continuously or regularly, and work provided sporadically and occasionally at the home of the person carrying out the work, at that person's request or under certain exceptional circumstances, will be outside the scope of the Act. Section 5 of the Act provides that teleworkers have the right not to be contacted and to disconnect outside their working hours and during periods of leave. However, the Regulation provides for certain special circumstances – namely when the activity is carried out in a different time zone or when it is essential for some objective reason – the employer can send communications to the employee outside working hours. Nevertheless, the teleworker is not obliged to respond until the beginning of his or her working day, except in cases of danger, force majeure or accident, or for exceptional demands of the national economy or of the company. Additionally, the Regulation prohibits incentives conditional to the non-exercise of the right to disconnect.
The Regulation establishes that employees who exercise the right to interrupt their work to take care of children under 13 years old, persons with disabilities or elderly persons who live with the employee and who require specific assistance, must communicate precisely the moment when inactivity begins and ends. If the assistance does not allow the employee to comply with the current legal or conventional working day, the reduction of working hours may be agreed according to the conditions established in the applicable CBA. The Regulation prohibits incentives that are conditional on not exercising this right. The Regulation also establishes that the right to reverse a decision must be exercised in good faith and subject to collaboration and solidarity between employer and employee. Furthermore, the Regulation provides that a teleworker's request must be reasonable and be for an unexpected reason, and that the employer must comply with the request in the shortest period possible in the circumstances, which in no case may exceed 30 days. The Regulation clarifies that to evaluate whether it is not possible for the employer to comply with this obligation, the time that has elapsed since the change from on-site working to teleworking will be taken into consideration. Finally, the Regulation reaffirms that those who have agreed to teleworking from the beginning of the employment relationship cannot revoke their consent or exercise the right to be granted on-site tasks, except as provided in CBAs or individual contracts.
The Regulation also states that the provision of working tools or other items is not considered remunerative and, consequently they are not part of the salary base for the calculation of any item emerging from the employment contract, or union or social security contributions. The compensation of expenses, even without proof, is not considered part of the salary either. The Regulation provides that the inclusion of teleworkers for the purposes of electing and being elected, and to integrate union associations, will take place in the establishment where the employee previously provided on-site services. When teleworking has been the agreed mode of work from the beginning of the relationship, said inclusion must be carried out after consulting the union association. The Ministry of Labour may delegate to the local administrative authorities the registration of the mode of working and the payroll for teleworkers. The union must receive information corresponding to the payroll, registrations and cancellations. Resolution No. 54/2021 of the Ministry of Labour, published on 5 February 2021 established that the Act enters into force on 1 April 2021.
Act No. 27,580, published in the Official Gazette on 15 December 2020, ratified International Labour Organization (ILO) Convention No. 190 against violence and harassment at work. The ratification process culminated in the respective instrument being deposited with the Director General of the ILO Office on 22 February 2021. Convention No. 190 recognises the right to work in an environment free from violence and harassment, including gender-based violence and harassment. It also states that such behaviour may constitute a violation or abuse of human rights.
Several Decrees – No. 329/2020, dated 31 March 2020, No. 487/2020, dated 19 May 2020, No. 624/2020, dated 29 July 2020, No. 761/2020, dated 24 September 2020, No. 891/2020, dated 16 November 2020, No. 266/2021, dated 22 April 2021, No. 345/2021, dated 28 May 2021 and No. 413/2021 dated 28 June 2021 – prohibited dismissals until 31 December 2021 without cause or based on a lack and reduction of work, and suspensions based on force majeure or a lack or reduction of work. Dismissals and suspensions in violation of the prohibition will have no effect, and labour relations shall remain in force. Dismissals for cause, conclusions by mutual agreement, or resignations are not prohibited, nor are voluntary retirement plans. It is debatable whether the prohibition of dismissals is applicable in the event of an establishment shutting down. It should be noted in this regard that in the case of union representatives who enjoy the union protection that prevents their dismissal, this protection ceases in the event of dismissals that affect all employees because of a cessation of activities of an establishment. If union protection fails in the event of the cessation of activities of an establishment, the same reasoning could be applied in connection with the prohibition of dismissals established in the framework of the health emergency. In any case, considering that it is the first time in national history that dismissals have been prohibited, there is no information that can guide us on the criteria of the judges.
Likewise, Decrees No. 34/2019, dated 13 December 2019, No. 528/2020, dated 10 June 2020, No. 961/2020, dated 30 November 2020 and No. 39/2021, dated 23 January 2021, established the duplication of workers' compensation until 31 December 2021. This doubling of compensation does not apply to hirings effective after 13 December 2019. Decree No. 886/2021, issued on 23 December and published in the Official Gazette on 24 December 2021, extends the public emergency in occupational matters and establishes the progressive reduction of the increase in severance payments. In the event of dismissal, in addition to the corresponding severance in accordance with the applicable legislation, the affected employee will be entitled to (1) as of 1 January 2022 and until 28 February 2022, an increase of 75 per cent of the usual severance, (2) as of 1 March 2022 and until 30 April 2022, an increase of 50 per cent of the usual severance, and (3) as of 1 May 2022 and until 30 June 2022, an increase of 25 per cent of the usual severance. These percentages will be calculated considering all severance items arising from termination of the employment contract. In any case, the amount corresponding to the increase may not exceed 500,000 pesos.
A particular concern for employers during 2021 has been that they are banned from dismissing employees and obliged to pay double severance.
The significant and noticeable growth of work using digital platforms continues to attract the attention of labour attorneys, who are analysing the effects 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. There are a number of draft bills for the regulation of the activity of the individuals performing services through digital platforms. In that respect, the government is considering drafting a bill for the regulation of this activity, granting labour protection to these individuals, and protection in the event of labour-related accidents.
During 2021, there have not been key court decisions regarding labour issues. However, those discussed below are the most important to have been decided in the past year.
On 8 April 2021, in Fontana Edith Fabiana v. Cibie Argentina SA in re summary lawsuit, the Supreme Court of Justice of Argentina (the Supreme Court) revoked a court decision issued by the Labour Court of Appeals, which had considered that the plaintiff's dismissal had been discriminatory, leaving without effect the dismissal and ordering her reinstatement and the payment of moral damages. The Supreme Court deemed that the Labour Court of Appeals omitted the analysis of the very important argument invoked by the defendant employer that the dismissal was motivated by the defendant's significant economic problems, which is a serious and objective cause unrelated to discrimination.
On 16 June 2021, Court III of the Labour Court of Appeals issued a final decision in Gómez Leandro v. Microcentro de Contacto and Google in re dismissal, confirming the decision of Labour Court 36, which had rejected the plaintiff's claim on the grounds that the plaintiff provided call centre services to the co-defendant, Atento Argentina, and not to Google Argentina. A former employee of Atento Argentina (which provided call centre services to Google) raised a claim invoking that since he provided services to Google Argentina, he should have been considered a direct employee of Google Argentina and, therefore, be entitled not only to regular severance but also to the substantial compensations and penalties established by the labour laws in cases of non-registered employment. Court III considered that the fact that an entity provides call centre services for another company does not imply per se that the call centre's employees should be deemed employees of the company for which those services were provided. In addition, it considered that the plaintiff did not provide evidence that Atento Argentina provided only employees and did not provide the services using its own personnel and resources. The amount of the formal claim is nominal. However, this court decision is a very important precedent applicable to several claims based on the same grounds.
On 2 September 2021, in Pogonza Jonathan Jesús v. Galeno in re accident, the Supreme Court confirmed the decision issued by the Labour Court of Appeals, which had declared the lack of its jurisdictional competence to hear the case as the plaintiff had not fulfilled the mandatory administrative petition before the Medical Commissions, as required by Act No. 27,348. In order to decide, the Supreme Court stated that the constitutional validity of the attribution of jurisdictional powers to administrative bodies (the Medical Commissions) had been repeatedly recognised, as long as certain conditions were met. In that respect, the Court considered that the mandatory administrative petition before the Medical Commissions established by Act No. 27,348 complies with all the requirements established in the applicable case law. The Court also highlighted the legislative tradition in Argentina by virtue of which administrative bodies have been conferred powers to settle disputes between individuals on several issues.
On 21 October 2021, in Etcheverry Juan Bautista and others v. National Government, the Supreme Court confirmed the decision issued by the Federal Administrative Court of Appeals, which had obliged the National Executive Power to regulate, within 90 business days, Section 179 of the LCA, which provides that in establishments that have the required minimum number of employees as determined by the regulations, the employer must set up maternity wards and nurseries for children up to the age and under the conditions established. In reaching its decision, the Supreme Court considered that in the light of an unjustifiable omission to regulate a law that expressly imposes a duty, it is consistent to order the National Executive Power to remedy this omission within a reasonable period. The lack of regulation prevents employees from exercising this right, as there is no other way of obtaining it.
On 21 October 2021, in Caivalla Adriana Laura and others v. Vess Logística SRL and others in re accident-civil action, the Supreme Court left without effect the decision issued by the Labour Court of Appeals, which had held jointly and severally liable the defendant companies and the Risk Insurance Company to pay damages based on civil law, in the context of a lawsuit brought by the widow of a deceased individual who had an accident in Brazil while driving a truck belonging to one of the defendant companies. The Supreme Court considered that, although Section 4 of Act No. 24,557 requires that insurance companies should adopt the legally required measures to effectively prevent labour risks, it is clear that the Labour Court of Appeals could never (as it did) attribute responsibility to the Risk Insurance Company for not verifying whether the deceased individual knew how to drive the truck, or for not having checked whether the deceased individual had knowledge of international routes or how to drive a large vehicle, given that the job was clandestine and had not been notified to the insurance company.
On 21 October 2021, in Romero Jonathan Ivan v. Ministerio de Educación y Deportes de la Nación in re summary lawsuit, the Supreme Court revoked the decision issued by the Labour Court of Appeals, which had upheld the reinstatement of the plaintiff in his position in a ministry, plus the payment of lost wages and moral damages, on the basis that his appointment as union counsellor implies union protection (see Section XI regarding union protection). The Supreme Court considered that the hiring was temporary and for a determined time, which implies that employment ends automatically on expiry of the agreed term, without the need for any administrative action. The Court also considered that it is not sufficient that there has been trade union involvement to consider as proven that the termination of the relationship is for discriminatory reasons, but that it is also necessary to assess whether the activity is prima facie the reason why the relationship was terminated.
On 2 November 2021, Court II of the Social Security Court of Appeals issued a final decision in Sociedad Italiana de Beneficencia en Buenos Aires v. Ministry of Production and Labour in re debt challenge. The Ministry of Production and Labour had imposed a fine against Sociedad Italiana de Beneficencia en Buenos Aires (Hospital Italiano) on the grounds that the entity had not made the mandatory social security contributions with respect to a number of resident doctors who, according to the authority, should have been registered as employees under an employment agreement. To impose the fine, the Ministry of Production and Labour considered that the resident doctors had to be registered as employees and the lack of registration made Hospital Italiano liable. The Social Security Court of Appeals considered that the services rendered by the resident doctors should not be deemed of a 'work' nature, being under the scope of Act No. 26,427, which regulates internship relationships. As a result, the Court admitted Hospital Italiano's claim, leaving without effect the fine imposed by the Ministry of Production and Labour to Hospital Italiano. The decision of the Social Security Court of Appeals can only be questioned by an extraordinary appeal. The amount of the fine is nominal. However, this court decision is a very important precedent applicable to several claims based on the same grounds. The decision sends a clear message to all prospective claimants invoking that the relationships between resident doctors and medical institutions are of a 'work' nature.
Basics of entering 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 work aboard vessels). Since every aspect of an employment relationship is regulated in detail by the applicable labour laws, there is no need to issue 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 state 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 in which 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 a 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 for 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 include 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 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 a 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 252,462.50 Argentine pesos.2
A foreign company may not hire an employee in Argentina unless it does so through a branch or a subsidiary in the country. Although 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:
- the person is involved in a third party's business, or his or her own business;
- the person performs services on an exclusive basis or for different clients;
- the person runs his or her own business organised as a company or as an individual;
- the business has its own address (i.e., 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 each 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 each 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.
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.
Although 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 limit3 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 places deemed to be unhealthy (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 payment for overtime is not applicable to services rendered in excess of the working hours agreed by the parties but not beyond the working hours established by law.4
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, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Surinam, Uruguay, Venezuela) 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, after which 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 local entities. In the field of social security regulations, the only exceptions 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.
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 measures 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 is 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 files of employees. Otherwise, if the rules are challenged, the employer may be obliged to appoint a computer expert witness, which may generate unnecessary additional expense (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 consider carefully the implementation of integrity programmes.
Women are entitled to 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 grant 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 a 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, the law provides for a protection period of 7.5 months before delivery and 7.5 months after delivery. If an employer dismisses a pregnant employee during the protection period, the employee is entitled to a special compensation of one year's salary in addition to the standard severance payments.
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 on 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, bonuses 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.
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 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 employees carrying out the particular occupation or 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,5 grant union protection only to these unions6 and prevent registered unions from representation of collective interests in a judicial action.7 Courts of lower rank must follow the decisions of the national Supreme Court.
Pursuant 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 a certain number of employee representatives depending on its size: one representative for 10 to 50 employees; two representatives for 51 to 100 employees; and, where there are more than 101 employees, two representatives plus 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 all 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 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.
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.
Employers must register the database containing information about their employees 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 and sensitive data, express consent is not strictly necessary, although it is recommended.
In the context of their activities, companies are entitled to disclose who their employees are and 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 that 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 and identification number) to countries or international organisations that afford adequate levels of protection does not require notification or the specific consent for the transfer (other than the regular consent that may be required for the processing itself). 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 be collected only 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.
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.
As stated in Section II, Decrees No. 329/2020, No. 487/2020, No. 624/2020, No. 761/2020, No. 891/2020, No. 266/2021, No. 345/2021 and No. 413/2021, enacted in the context of the health emergency caused by covid-19, prohibited dismissals until 31 December 2021 without cause or because of a lack and reduction of work, and suspensions based on force majeure or a lack or reduction of work.
Despite these emergency regulations, 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 matter. 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, a number of 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.8
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 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.
Aggravated severance pursuant to Emergency and Urgency Decrees No. 34/2019, No. 528/2020, No. 961/2020, No. 39/2021 and No. 886/2021
As stated in Section II, in the context of the Public Emergency in Occupational Matters, in the case of dismissal without cause, in addition to the corresponding severance in accordance with the applicable legislation, affected employees will be entitled to (1) as of 1 January 2022 and until 28 February 2022, an increase of 75 per cent of the usual severance, (2) as of 1 March 2022 and until 30 April 2022, an increase of 50 per cent of the usual severance, and (3) as of 1 May 2022 and until 30 June 2022, an increase of 25 per cent of the usual severance.
The aforementioned percentages will be calculated, taking into consideration all severance items arising from the termination of the employment contract. In any case, the amount corresponding to the increase may not exceed 500,000 pesos.
The aggravated severance would include the following:
- compensation for seniority;
- compensation for the lack of notice of termination, at the rate of the 13th month's salary; and
- integration of the month of dismissal with the rate of the 13th month's salary.
Aggravated severance does not apply to cases of dismissal with fair cause or based on a lack of work that is 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 aggravated severance compensation. Conclusions of labour relationships by mutual consent of the parties are outside the scope of the respective Decrees.
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 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 employee's claim, 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 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 if 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.
Transfer of business
For a transfer of business, there must be a change of employer, credit and debt relating to the business activity. This includes the sale, assignment, donation, transfer of goodwill, temporary lease or transfer of 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.
If there has been a transfer of business, employment contracts will continue with the successor or acquirer, and the employee will keep the seniority acquired with the transferor and the rights derived from it. 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.9 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 a 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.
Assuming that covid-19 is under control, the challenge for the national government will be the deactivation of some of the labour measures taken during the health emergency, especially those relating to the prohibition of dismissals, the doubling of severance payments and the programmes to help critically affected activities.
By and large, the government will need to find ways to reactivate the affected labour market.
It is also likely that the government will issue a draft regulation regarding the activities of individuals performing services for digital platforms, granting protection and rights to the individuals affected by this method of working.
1 Enrique Alfredo Betemps is a partner at Pérez Alati, Grondona, Benites & Arntsen (PAGBAM).
2 At the time of writing, roughly equivalent to US$2,524.
3 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.
4 D'Aloi v. Selsa SA, plenary decision 226 (Labour Court of Appeals, 2006).
5 Association of Employees of the Public Sector v. Ministry of Labour in re Unions Association Act, 2008.
6 Rossi Adriana María v. National Government – Argentine Navy, 2009.
7 Association of Employees of the Public Sector in re unconstitutionality action, 2013.
8 For example, Gómez Leandro Javier and others v. Pepsico de Argentina SRL in re request of precatory measure, 2017.
9 Baglieri Osvaldo v. Nemec Francisco y Cia, plenary decision 289, Labour Court of Appeals, 1997.