The Employment Law Review: Argentina

Introduction

Labour laws in Argentina include:

  1. general laws;
  2. statutes for specific activities;
  3. collective bargaining agreements (CBAs) for different activities, trades and companies; and
  4. 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 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 year was seriously affected by the outbreak of covid-19. Many different provisions were issued, several of them relating to labour. Specifically, Decree No. 297/2020, published in the Official Gazette on 20 March 2020 then repeatedly extended through many further decrees, establishes the preventive and mandatory social isolation that allows only minimum and essential travel to stock up on cleaning supplies, medicines and food.

Prior to Decree No. 297/2020, the Ministry of Labour had issued many resolutions affecting labour matters:

  1. Resolution No. 178/2020 of 6 March 2020, establishing an exceptional paid leave for employees who return to Argentina from a foreign country affected by the coronavirus (China, South Korea, Japan, Iran, Italy, Spain, France and Germany);
  2. Resolution No. 184/2020 of 10 March 2020, extending the exceptional paid leave established under Resolution No. 178/2020 to all employees who, by recommendations of the Ministry of Health or other authorities or by medical recommendation, must remain isolated;
  3. Resolution No. 202/2020 of 14 March 2020, leaving without effect Resolutions No. 178/2020 and 184/2020 and establishing the suspension of the duty to attend to the workplace, with full enjoyment of salary, of all employees who may be considered 'suspected cases' (with a fever or respiratory symptoms), with a history of travel to 'affected areas' or in contact with confirmed or probable cases of covid-19, confirmed patients, close contacts with the aforementioned, who arrive in the country having travelled through affected areas;
  4. Resolution No. 207/2020 of 17 March 2020, which broadens the groups of people affected by the suspension of the duty to attend their workplace based on their personal circumstances and seeks to reduce the numbers of people on public transport and in the workplace, including those over 60 years of age, unless they are considered 'essential personnel for the proper functioning of the establishment', pregnant women, risk groups defined by the national health authority (those with chronic respiratory diseases, heart diseases, immunodeficiencies and diabetics, or kidney failure), which also recommends that employers reduce the presence of employees in the establishment to those people who are essential for the proper functioning of the company, adopting the necessary measures for the implementation of remote working; and
  5. Resolution No. 21/2020 of 17 March 2020, which provides that employers who enable their employees to carry out their work from their home must report this circumstance to the respective risk insurance company and provide the address from where the tasks are being carried out and their frequency.

In the labour sector, the main regulations are set out in Resolution No. 279/2020 of the Ministry of Labour of 1 April 2020, which established that employees affected by the aforementioned preventive and compulsory social isolation are exempted from attending their workplaces and are obliged to comply with the aforementioned isolation, without affecting their right to collect their salaries. This rule provides that when employees' usual duties or other similar tasks can be performed from a place of isolation, they must, within the framework of good faith, establish with their employer the conditions under which the work will be performed. Employees who perform tasks in activities exempted from preventive and compulsory social isolation will be considered 'essential personnel'.2 Resolution No. 207/2020 provides that any reorganisation of the working day to guarantee the continuity of essential activities shall be considered a reasonable exercise of the powers of the employer.

The number of activities and areas of the country exempted from preventive and compulsory social isolation increased during the course of the pandemic. Decree No. 875/2020 dated 7 November 2020 established the extension of isolation exclusively with respect to people who reside or are in urban agglomerates or departments that do not meet certain epidemiological and health parameters. The Decree also established the social, preventive and mandatory distancing for people who are in urban agglomerates, parties and departments that positively comply with such epidemiological and health parameters. At present, only a few jurisdictions continue to be affected by isolation.

People who reside or are in the places where 'distancing' operates may carry out economic, industrial, commercial or service activities, as long as they have an operating protocol approved by the local health authority that includes all the recommendations and instructions of the national health authority and restrict the use of closed areas allowing a maximum of 50 per cent of their capacity.

While in isolation, individuals cannot leave their place of isolation or carry out activities. However, if permitted within the rules on distancing, individuals can leave their place of isolation and employees can perform tasks, unless specific rules expressly prevent them from doing so.

Decrees No. 300/2020 published on 20 March 2020, No. 545/2020 published on 19 June 2020 and No. 695/2020 published on 25 August 2020 established a 95 per cent reduction in employer contributions with respect to employers within services, establishments and institutions associated with health.

Decree No. 367/2020 published on 14 April 2020 established that covid-19 will presumptively be considered an occupational disease with respect to employees excluded from the social, preventive and mandatory isolation for activities declared to be essential. Risk insurance companies cannot refuse to provide cover. In respect of health employees, covid-19 will be considered to be a cause directly and immediately related to their work, unless proven otherwise. The aforementioned presumptions shall be in force until 60 days after the end of the health emergency ends.

Resolution No. 238/2020 of the Ministry of Labour, published on 18 March 2020, ordered the suspension of electoral processes, meetings and congresses that involve the mobilisation, transfer and agglomeration of people from all union associations. For its part, Resolution No. 259/2020 issued by the same Ministry on 15 April 2020, extended for 120 days the mandates of the members of the directing, deliberating, inspection and representative bodies of union associations, federations and confederations, whose terms expired between 16 March and 30 June 2020. Resolution No. 489/2020, issued by the Secretary of Labour on 5 May 2020, ordered the suspension until 30 September 2020 of all electoral processes, meetings and congresses, and any institutional act that involved mobilisation, transfer or agglomeration of people from union associations. Finally, Resolution No. 1199/2020 dated 24 September 2020 extended the suspension of electoral processes, meetings and congresses that involve the mobilisation, transfer and agglomeration of people from all union associations until 28 February 2021. The latter Resolution also provides for an extension of the mandates of the members of the directing, deliberating, inspection and representative bodies of union associations, federations and confederations, which would have expired after 16 March 2020 for 180 days from 28 February 2021.

Resolution No. 352/2020 of the Ministry of Labour, dated 27 April 2020, suspended for 180 calendar days the effects and periods of permanence of the employers included in the Public Registry of Employers with Labour Sanctions, and their inclusion on that registry. The purpose was to allow them to obtain the assistance, subsidies, credits or benefits provided by the national government within the framework of the health emergency. For its part, Decree No. 845/2020 dated 5 November 2020 ordered the exemption of employers with labour sanctions from not being able to obtain the assistance, subsidies, credits or benefits provided by the national government in the framework of the health emergency.

Several Decrees – No. 329/2020 dated 31 March 12020, No. 487/2020 dated 19 May 2020, No. 624/2020 dated 29 July 2020, No. 761/2020 dated 24 September 2020 and No. 891/2020 dated 16 November 2020 – prohibited dismissals without cause or occasioned by a lack and reduction of work, and suspensions based on force majeure or a lack or reduction of work. Although the prohibition is in force until 29 January 2021, an extension should not be ruled out. The rule does not apply to hirings after 29 July 2020. 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 resignation 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.

Considering the serious situation being faced by companies, especially with respect to those employees who cannot provide services either in person or remotely, the implementation of agreed suspensions is allowed, in the terms of Section 223 bis of the LCA. Through such agreed suspensions, employees receive a non-remunerative allowance, with respect to which no social security contributions should be made, with the exception of health coverage and union dues. The Ministry of Labour issued a resolution stating that those agreements on suspensions that comply with, or exceed, the agreement between the Argentine Industrial Union and the General Labour Confederation dated 28 April 2020, then extended, will be approved. Among other aspects, this agreement established that the amount of the non-remunerative benefit cannot be less than 75 per cent of the employee's net salary, that on the amounts agreed, contributions to health coverage and union dues must be made and that employers must keep their workforce unchanged for a period equal to the term of the suspensions.

Likewise, Decrees No. 34/2019 dated 13 December 2019, No. 528/2020 dated 10 June 2020 and No. 961/2020 dated 30 November 2020 established the duplication of workers' compensation until 25 January 2021. This doubling of compensation does not apply to hirings after 13 December 2019.

Decree No. 332/2020 dated 1 April 2020 established the Emergency Assistance Programme for Work and Production (ATP), applicable to companies seriously affected by the health emergency, which includes (1) the payment of part of the salary by the national government with respect to employees in the private sector, (2) the postponement or reduction of employer contributions to the Argentine Integrated Social Security System, (3) the granting of credit at zero or a subsidised rate and (4) unemployment benefits. The ATP is currently in its eighth edition and has been subject to multiple modifications and regulations, being at present especially focused on critically affected companies.

Provision No. 5/2020 dated 28 March 2020 and Provision No. 16/2020 dated 11 August 2020 issued by the Superintendency of Labour Risks provide for hygiene and safety measures. Provision No. 5/2020 establishes special recommendations for employers and employees and regarding travel to and from work, an obligation to grant personal protection, and correct placement and removal of respiratory protection.

Provision No. 16/2020 issued by the Superintendence of Labour Risks establishes a general protocol for the prevention of covid-19 and a guide for returning to work. It includes recommendations regarding the adoption of measures according to the features of each workplace and activity, the constant availability of liquid soap, hand towels and disinfectant, continuous ventilation of closed rooms, air exchange by opening doors and windows, cleaning surfaces and work tools, employee attendance that is strictly necessary and that allows adequate distancing between employees within the workplace.

On 14 August 2020, Act No. 27,555 on teleworking was published in the Official Gazette, which takes effect 90 days after the end of isolation. This Act is subject to the regulation of a future special law and of the respective CBA. It provides that the platforms and software required for teleworking should not be connected outside the requisite working hours. It establishes the right to digital disconnection, which means that the teleworker will have the right not to be contacted and to disconnect from digital and technological devices outside their working hours and during licence periods, and cannot be penalised for making use of this right. It recognises those who are in charge of the care of children under 13 years of age, people with disabilities or older adults who live with the employee and who require specific assistance, and the establishment of working schedules compatible with tasks relating to the care of those in their charge or that interrupt the normal working day. It establishes the right to reversibility, which means that the consent given by an employee who works in a face-to-face position to switch to teleworking may be revoked by the employee at any time during the relationship, in which case the employer must grant him or her tasks in the establishment in which they had previously been provided, or failing that, in the one closest to the employee's domicile. The employer must provide the equipment (hardware and software), the work tools and the necessary support for the performance of the tasks, and assume the costs of installation, maintenance and repair thereof, or compensation for the use by the employee of their own tools. A person who is a teleworker will have the right to compensation for the higher expenses incurred for connectivity and consumption of services. Chambers representing different sectors are taking proposals in relation to the regulation of the Act, requiring, among other aspects:

  1. that only those who predominantly work remotely (two-thirds of the working day) be considered teleworkers;
  2. the establishment of flexible hours, not running hours as in the case of face-to-face work;
  3. the establishment of communication guidelines with teleworkers;
  4. the establishment of limits and conditions to reversibility (notice, that reversibility does not apply when the employee is at distances greater than certain limits from the place of the on-site activity); and
  5. that the expenses the employer must face for telework are non-remunerative concepts.

A particular concern for employers during 2020 has been that, as a result of covid-19, they have had and, at the time of writing, have to pay salaries to a significant number of employees who are not performing services. Another concern is 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.

Significant cases

On 12 February 2020, Court VI of the Labour Court of Appeals issued a decision in Sánchez, Jorge José v. Ge Oil and Gas Products and Services Argentina S.A. and other in re dismissal, approving a settlement concluded in US dollars. The judge of first instance had refused to approve the settlement, in which the payment of US dollars was agreed, considering that 'it is not the legal tender', citing regulations of the Central Bank that restrict access to the exchange market (Communication 'A' 6770, BCRA). After appeals filed by both parties, the Labour Court of Appeals annulled the first instance resolution and approved the agreement on the grounds that 'the agreed conditions are reasonable, without any violation of the rules of public order'.

On 26 February 2020, Court I of the Labour Court of Appeals issued a decision in Guixa Rodger, Sofia v. Sociedad Italiana de Beneficencia en Buenos Aires in re compensation due to death, whereby it left without effect a court decision issued by the court of first instance, which had decided that the relationship of 42 years between a medical doctor (the father of the plaintiff) and the defendant was an employment relationship, granting the plaintiff very significant labour compensations. The Sociedad Italiana de Beneficencia en Buenos Aires filed an appeal, arguing that the relationship with the medical doctor was not an employment relationship. In reaching its decision, the Labour Court of Appeals took into consideration:

  1. that the medical doctors in the gynaecological service within the defendant's business were organised as a de facto entity assuming the economic risks of their activity;
  2. fees were distributed among the several members of that medical service pursuant to the agreement entered into by its members and subject to the fact that the healthcare entities collected the amount due for the services rendered;
  3. the medical doctor had another doctor's office, was registered as an employer, had his own secretary and had his specific patients;
  4. the medical doctor issued non-correlative invoices and paid social security contributions as an autonomous employee;
  5. the medical doctor had to pay for the expenses of his activity;
  6. the medical doctor did not have to comply with specific working hours and did not have statutory leave and paid holidays; and
  7. the medical doctor carried out his activities for a significant number of years without raising any claim.

On 8 July 2020, Court VI of the Labour Court of Appeals issued a final decision in Pérez Palyzchin Marise Jhoan v. Atento Argentina and Google in re dismissal, confirming the decision of Labour Court 72 that had rejected the plaintiff's claim on the grounds that Atento Argentina is a real company that provides services to third parties and not an entity that only provides personnel. A former employee of Atento Argentina (an entity that provided telemarketing services to Google) raised a claim invoking that since she provided services to Google Argentina, she should have been considered a direct employee of Google Argentina and, therefore, be entitled not only to regular severance but also to the very cumbersome compensations and penalties established by the labour laws in cases of non-registered employment. Court VI took into consideration witness evidence that labour instructions were given by employees of Atento and that Atento paid the corresponding salaries as well as social security contributions.

On 31 August 2020, in Marquez Hugo Roberto v. Schmith International Inc SA in re dismissal, Court VI of the Labour Court of Appeals rejected the claim raised by the plaintiff who put himself in a situation of constructive dismissal on the grounds that his labour relationship was unduly registered. The Labour Court of Appeals considered that since the plaintiff was the president of the board of directors of the defendant and he did not provide evidence that this appointment was either a mere formality or had been imposed by Schmith International, and that he had consented to this registration for a significant number of years, he could not invoke such circumstances to consider himself dismissed. To decide in this manner, the Labour Court of Appeals also stated that the plaintiff in his capacity as president was directly responsible for his registration and, therefore, was not entitled to claim against the defendant based on those arguments.

On 10 September 2020, in Ocampo, Alessio Matias Yair v. BGH SA in re dismissal, the Supreme Court of Justice of Argentina (the national supreme court) ruled in favour of the validity of a court decision issued by the Labour Court of Appeals, which had granted severance to an employee after a labour relationship had ended, implemented by mutual consent of the employee and the employer before a notary public. The Labour Court of Appeals had decided that even though there was no evidence that the will of the plaintiff was influenced, the termination by mutual consent should be declared without effect owing to the fact that it was neither implemented before a judicial or administrative authority nor ratified in a manner that demonstrated that it was a fair reflection of the rights and interests of the parties. The Supreme Court deemed that the decision of the Labour Court of Appeals did not constitute a reasonable derivation of applicable law since Section 241 of the LCA (which regulates the termination of a labour relationship by mutual consent) does not require ratification by a judicial or administrative authority.

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 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 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 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 198,435.52 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. 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:

  1. the person is involved in a third party's business, or his or her own business;
  2. the person performs services on an exclusive basis or for different clients;
  3. the person runs his or her own business organised as a company or as an individual;
  4. the business has its own address (i.e., different from the personal address of the owner);
  5. whether the business has its own employees; and
  6. 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:

  1. register as an employer with the tax administrator;
  2. register the mandatory labour records with the local labour authority;
  3. register each employee in the labour registries;
  4. report the hiring of each employee to the tax administrator;
  5. secure an insurance policy from a risk insurance company to cover the risks of illness and labour-related accidents;
  6. 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
  7. request information regarding the employee's pension system status.

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.

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 limit4 and be subject to reasonable consideration.

Wages

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.

ii Overtime

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

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, 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 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 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.

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 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 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 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 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 consider carefully the implementation of integrity programmes.

Parental leave

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, if the employer dismisses a pregnant employee during the protection period (see below), 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.

Translation

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.

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 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 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 unions7 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.

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.

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 and sensitive data, no notification or consent is necessary.

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 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 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. 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.

Discontinuing employment

i Dismissal

As stated in Section II, Decrees No. 329/2020, No. 487/2020, No. 624/2020, No. 761/2020 and No. 891/2020, enacted in the context of the health emergency caused by covid-19, prohibited dismissals without cause or because of a lack and reduction of work, and suspensions based on force majeure or a lack or reduction of work. Although the prohibition is in force until 29 January 2021, an extension should not be ruled out.

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.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 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 Decrees No. 34/2019, No. 528/2020 and No. 961/2020

In the context of the Public Emergency in Occupational Matters, until 25 January 2021, in the case of dismissal without cause, employees are entitled to twice the corresponding severance. The duplication of compensation does not apply to hirings made after 13 December 2019.

The 'duplication' would include the following:

  1. compensation for seniority;
  2. compensation for the lack of notice of termination, at the rate of the 13th month's salary;
  3. integration of the month of dismissal with the rate of the 13th month's salary.

Duplication does not 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 – as can arise with indirect dismissals – the employee would be entitled to double compensation. Conclusions of labour relations 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.

ii Redundancies

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 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 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.

Outlook

The perspectives for 2021 will depend on the evolution of the health emergency caused by the coronavirus.

Assuming that covid-19 is brought under control, even if only partially, 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 benefits granted in the context of the ATP.

Further, it is expected that the national government will regulate Act No. 27,555 on teleworking.

It is also likely that the national government will issue a draft regulation regarding the activity of individuals performing services for digital platforms, granting protection and rights to the individuals affected by this method of working.

Footnotes

1 Enrique Alfredo Betemps is a partner at Pérez Alati, Grondona, Benites & Arntsen (PAGBAM).

2 Regarding 'essential personnel', see the aforementioned Resolution No. 207/2020.

3 At the time of writing, roughly equivalent to US$2,450.

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.

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