Labor reforms in Argentina
For a general introduction to the new legal and business environment of Argentina, please, see our post: https://cspabogados.com.ar/en/new-legal-and-business-environment-in-argentina/.
As far as labor reforms are concerned, although some injunctive relieves against the Emergency Decree N° 70/2023 (hereinafter, the Decree) have been judicially granted, and therefore the Decree is momentarily suspended, it is worth reviewing the huge labor reforms it introduces because they sign the orientation the new federal government wants to imprint to the labor laws and the economy in general.
The Decree abrogates and modifies many legal provisions, with significant impact on the labor market. We will briefly comment on some of them:
a) Independent contractors
The Decree amends Section 2 of the Contract of Employment Law N° 20,744 (Ley de Contrato de Trabajo, hereinafter the LCT), excluding from labor law, the contracts of work, services, agencies, and all those agreements governed by the Civil and Commercial Code of the Nation (hereinafter, the CCCN).
Accordingly, Section 23 of the LCT is also amended to state that the presumption of the existence of a labor relationship arising out of the rendering of services does not apply when it comes to contracts of work, professional services, or trades, and the corresponding receipts or invoices are issued in accordance with such forms of hiring.
b) Official approval of labor agreements
The Decree adds a new paragraph to Section 12 of the LCT, stating that when agreeing on changes to essential conditions of the labor relationship, the employer and the employee may request approval from the labor administrative authorities, even for the case of mutually agreed upon termination of the labor relationship.
The official approval of labor agreements (in Spanish homologación) precludes any possibility of a subsequent employee claim.
A game-changing modification has been introduced regarding services for third parties. Under Section 29 of the LCT, as amended by the Decree, workers will be considered direct employees of those who register the labor relationship, irrespective of having been hired to use their services for the benefit of or providing them to third parties. The third-party company shall be jointly and severally liable for the labor and social security obligations concerning the workers provided.
d) Simpler procedures to issue labor certificates. Elimination of penalties
Modifying Section 80 of the LCT, The Decree provides for the implementation of a virtual platform for the issuance of labor certificates. The obligation to deliver such certificates to the employees is deemed to be complied with the upload of such certificates to the platform, or when the information is updated and available to the worker through the Social Security agency’s website.
In line with the above-explained regulations, all penalties for failure to deliver such certificates have been repealed.
e) Trial period
The Decree reforms Section 92 bis of the LCT, extending the trial period to eight months.
f) Worker contributions to unions
Salary deductions on account of quotas, periodic dues, contributions to which the employees are obliged by legal regulations or collective bargaining agreements, or resulting from their membership of professional associations of workers with trade union status, or of mutual or cooperative associations, as well as for social services and other benefits granted by such entities, only will they be allowed if there is an explicit consent of the employee authorizing the same (Section 132, c) of the LCT, as amended by the Decree).
g) Maternity leave
Under Section 178 of the LCT, it is forbidden for pregnant women to work during the forty-five days before delivery, and up to forty-five days after delivery. However, the Decree allows now for the option of working up to ten days before the birth (rather than the thirty days originally established, accumulating the remaining period after the birth.
h) Termination of employment
(i) Dismissal with just cause
The Decree expressly adds to Section 242 of the LCT that participation in blockades or takeovers of establishments is a just cause for dismissal. It is presumed that there is a serious labor offense giving ground for dismissal for just cause when, during a direct action:
a.- The freedom to work of those who do not comply with the measure of force is impaired by means of acts, facts, intimidation or threats;
b.- The entry or exit of persons and/or things in the establishment is totally or partially prevented or obstructed;
c.- Persons or things belonging to the company or to third parties located in the establishment (installations, goods, auxiliary and raw materials, tools, etc.) are damaged or improperly withheld.
(ii) Dismissal without just cause
By amending Section 245 of the LCT, the Decree excludes from the basis to calculate severance payments those concepts of semi-annual or annual payment, as well as the yearly thirteenth salary (in Spanish, aguinaldo). When it comes to commissions or variable payments, the average of the previous six months or year (the most beneficial for the employee) must be used.
(iii) Substitution of the indemnification system
The Decree allows, through collective bargaining agreements, the setting up of a severance fund instead of the indemnity system. The employer should cover the fund’s expenses, with a maximum monthly contribution of 8% of the payroll. Employers may also choose to contract a private capitalization system at their own cost, to cover severance payments.
(iv) Discriminatory dismissal
The Decree adds to Section 245 of the LCT an increase in the severance compensation of between 50% and 100%, to be defined by the labor judge, in cases where the worker judicially proves that the dismissal was motivated by reasons of ethnicity, race, nationality, sex, gender identity, sexual orientation, religion, ideology or political or trade union opinion.
i) Reinstatement of employees
The Decree modifies Section 255 of the LCT, establishing that when an employee returns to work for the same employer, the amounts previously paid on the occasion of the termination may be deducted, but now updated by the Consumer Price Index, plus a pure interest rate of 3% per annum.
j) Monetary update of labor credits
The amended Section 276 of the LCT establishes that credits arising from individual employment relationships will be monetary updated and/or accrue interest. However, the amount resulting from such updating and/or interest accrual may not exceed the amount resulting from the calculation of the historical principal updated by the Consumer Price Index (CPI) plus a pure interest rate of 3% per annum.
k) Payment in installments of court judgments
In the event of an adverse sentence, small and medium-sized companies may pay the monetary sentence in up to twelve consecutive monthly installments (Section 277 of the LCT, as amended by the Decree).
l) Abrogation of special compensations for unregistered or deficiently registered labor relationships and late payments
The Decree repealed Law 24,013 and Law 25,323. These laws to punish non-registered or incorrectly registered labor relationships have proved to be ineffective in eliminating the informal labor market, and only have they produced an exorbitant increase in the severance payments when the employer had not registered or had deficiently registered the employment relationship. The special compensations have also been done away with for domestic services.
Further, the Decree also annulled the increase of 50% of the compensation, when the employee has been forced to file legal action to collect the payment of his severance compensation.
m) Ultra activity of collective bargaining agreements
The Decree also reforms Law N° 14,250 regulating the effects of expired collective bargaining agreements.
Section 6, as amended, states that once the term has expired, collective bargaining agreements will continue to be in force only as far as working conditions are concerned (e.g., professional categories, working hours, additional remuneration, safety and hygiene conditions, etc.). The remaining clauses (that is to say those establishing contributions to labor unions, mutual benefit associations, etc.), may remain in force only by agreement of the parties or by the specific extension ordered by the National Executive Power.
Certain regulations of the Teleworking Law N° 27,555 are also modified by the Decree.
The teleworker may not require on-premises tasks by himself. When asked for, reversibility will only operate by mutual agreement of the parties and as long as there are facilities in the company for this purpose.
Besides, depending on the needs of each job position, the teleworking modality may be reverted to the face-to-face modality when the characteristics of the activity so require.
(ii) Care tasks
For the case of care tasks of children under thirteen years of age, people with disabilities, or elderly people who live with the working person and who require specific assistance, the employees shall have the right to coordinate with the employer, as long as it does not affect the requirements of their work, schedules compatible with the task of care in their charge, and / or the sporadic interruption of their working day, compensating such periods in accordance with the assigned tasks. This right shall not apply when the employer pays compensation for such tasks (e.g. daycare centers).
(iii) Transnational work
The law of the place where the teleworker carries out the tasks shall apply.
o) Traveling salesperson regime
The Decree repeals the specific traveling salesperson labor regime established by Law N° 15,546.
Mario E. Castro Sammartino
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