1) Outsourcing of workers in Argentina

The outsourcing of workers in Argentina takes different forms and has different legal effects.

Through companies authorized to provide eventual services, generally for temporary and low-skilled positions.

Or by any company (hereinafter, the Contracting Company), that hires workers under its payroll and, afterward, said employees are inserted in an outside business organization for which they provide services (hereinafter, the User Company). The User Company is related to the Contracting Enterprise through a commercial.

The Contracting Company that has the workers under an employment contract is thus a mere intermediary that, in most cases, only pays the salary and has no contact with the workers (for example, in the IT industry this intermediation is frequent).

The outsourcing of workers in Argentina hired by companies not authorized to provide temporary services has caused heated controversy.

2) The outsourcing of workers in Argentina before the Ley Bases

The outsourcing of workers in Argentina is mainly regulated by Article 29 of the Labor Contract Law No. 20.744 (Ley de Contrato de Trabajo, hereinafter, the LCT).

Before the Ley Bases, the LCT considered outsourced workers as direct employees of the User Company that profited from their services.

In cases of conflict, the outsourced workers claimed to be employees of the User Company (they usually also sued the Contracting Company jointly and severally) and, consequently, incorrectly registered, with the substantial aggravation of the claim amounts due to the application of all the laws that penalized – with the so-called “fines” – unregistered or incorrectly registered work (Laws Nª 24,013, 25,323, 25,345, etc.). All these regulations were repealed by the Ley Bases).

Although much debate and controversy went on about the fines, the National Labor Courts decided in the Plenary Ruling “Vázquez v. Telefónica” that if the worker is considered to have been a direct employee of the User Company, the fines for unregistered employment under Law No. 24.013 were applicable, even if the employment contract had been registered by the Contracting Company.

Further, as the workers were judged to be employees of the User Company, the collective labor agreement of this User Company was also applied, which was normally more beneficial than that of the Contracting Company’s activity (which was commonly registered under the collective labor agreement of the trade activity, which functioned as a sort of default agreement), and thus significant salary differences could accrue. These salary differences could also simply be due to the hypothetical unequal treatment that the User Company gave to its employees compared to the workers outsourced by the Contracting Company.

3) The outsourcing of workers in Argentina after the Ley Bases

Article 90 of the Ley Bases, which replaces Article 29 of the LCT, has radically changed the regulation of the outsourcing of workers in Argentina: when a User Company contracts commercially with a Contracting Company, and the latter’s employees provide services for the benefit of the User Company, such workers will be considered employees of the Contracting Company, which is the one that registers the employment relationship.

Notwithstanding the foregoing, under the new regulation given by the Ley Bases, the User Company shall be jointly and severally liable with the Contracting Companies for the labor and social security obligations that the Contracting Companies have concerning their employees, but only for those accrued during the time of effective provision of services in favor of the User Company.

The workers hired by the Contracting Companies may request the User Company to withhold and pay the amounts owed by the Contracting Companies, including salaries, severance payments, or other rights that are appreciable in money arising from the employment relationship.

On the other hand, the User Company may deposit the amounts owed by the Contracting Companies to the social security agencies, and withhold them without prior notice from the amounts to be paid to the Contracting Companies for the contracted services, in the manner provided for in the regulations (Article 92 of the Ley Bases, which replaces Article 136 of the LCT).

The outsourcing of workers in Argentina, now regulated in a completely different way by the Ley Bases, is an important step in favor of business activity and organization of production in the manner deemed most convenient, seeking to provide legal certainty and avoid litigation.

Notwithstanding this, User Companies wishing to resort to outsourced employees should still take certain precautions in the commercial contracts they enter into with the Contracting Companies to minimize some contingencies that may still arise, all of which should be consulted with their trusted legal advisors.

4) Introduction to labor reform in Argentina. Regularization of labor relations and repeal of fines. Self-employed workers

If you are interested in an overview of the labor reform in Argentina introduced by the so-called Ley Bases, you can read the following article in our Legal Blog: Significant labor reform in Argentina: what can’t companies ignore about the Ley Bases?

If you want to know about the opportunity and benefits provided by the Bases Law to regularize labor relations and the repeal of the astronomical fines that weighed on companies, visit the following post of our Legal Blog: Regularization of labor relations in Argentina by the “Ley Bases”. Repeal of labor fines.

For the new possibility of having “independent workers”, see our report: Self-employed workers in the Ley Bases of Argentina: who is included, who is not, and which presumptions apply.

If you would like to have a complimentary full report on the labor reform in Argentina by the Ley Bases in PDF format specially prepared by our firm, please contact us upon request.

5) New investment promotion regime in Argentina: the so-called “RIGI”

For an introduction to the new investment promotion regime created by the Ley Bases, we invite you to read our article: New investments promotion in Argentina: the so-called “RIGI”.

If you wish to know who qualifies for the RIGI, you can read the following post of our Legal Blog: Who qualifies for the Large Investments Regime in Argentina?

If you would like to have a complimentary full report in PDF format specially prepared by our firm about the RIGI, please contact us.

Mario E. Castro Sammartino

For additional information on these or any other issues related to doing business in Argentina, please, sign up for our Legal Blog or contact us at any time. Our publications exclusively express the author´s opinion and do not purport to be legal counsel on any case. Should you need it, you must consult with your trusted lawyer.​

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