When can a person be considered a self-employed worker in Argentina? The new figures of the self-employed worker with collaborators 

by 17 Oct 2024Companies, Doing business in Argentina, Labor and social security, Labor and Social Security

1) The self-employed worker in Argentina

The question of when a person can be considered a self-employed worker in Argentina has been, and still is, the subject of intense debate.

The Employment Contract Law No. 20.744 (In Spanish Ley de Contrato de Trabajo, hereinafter, the LCT) does not define the characteristics of an employment relationship, making the dividing line between an employee and a self-employed worker difficult to draw on many occasions.

As commonplaces, scholars and caselaw have frequently resorted to the concepts of insertion in a third-party business organization or subordination (legal, technical, and economic) as delimiting facts between who is a dependent worker and who is not. There is abundant case law in this respect, which we will not review.

2) The self-employed worker in Argentina in the regulation of Law No. 27.742 and its regulatory decree

a) Law Nº 27.742

The Law of Bases and Starting Points for the Freedom of the Argentine People Nº 27.742 (In Spanish, Ley de Bases y Puntos de Partida para la Libertad de los Argentinos, hereinafter, the Bases Law) regulates in its Chapter IV, Article 97, the self-employed worker in Argentina and his or her collaborators.

Its main provisions are:

(i) It establishes that a self-employed worker can count on up to three other self-employed workers[1] to carry out a productive undertaking, but does not define the concepts;

(ii) It determines the total non-existence of labor relationships, neither between the self-employed worker and his / her collaborators nor with respect to the third parties that contract their services or works; and

(iii) The self-employed worker and his collaborators shall have to make an individual contribution of a monthly quota that includes the contribution to the Pension System, to the National System of Social Works and the National Health Insurance System, and to the Occupational Risks System, under the conditions and requirements established by the regulations;

(iv) The autonomy of the self-employed worker and his/her collaborators shall not exist when any of the typical characteristics of the employment relationship (technical, legal, or economic dependence) is absent, in accordance with the type of activity, trade, or profession in question.

The figure of the self-employed worker with collaborators has not been incorporated into the LCT, but it must be read in conjunction with two rules of the LCT that were modified by the Bases Law:

  • Article 2 of the LCT which, in its paragraph d) added by the Basic Law, excludes from the LCT ‘Contracts for work, services, agency and all those regulated in the Civil and Commercial Code of the Nation’; and
  • Article 23 of the LCT, which eliminates the presumption of the existence of an employment contract for the mere provision of services, ‘… when the relationship involves the contracting of works or professional or trade services and the receipts or invoices corresponding to such forms of contracting are issued or the payment is made in accordance with the banking systems determined by the corresponding regulations. This absence of presumption shall extend to all effects, including social security.

Regarding the self-employed worker in Argentina and their collaborators, the Bases Law has been regulated by Chapter IV of Annex II of Decree No. 847/2024 (hereinafter, the Regulatory Decree), which we shall now review.

b) The Regulatory Decree

Article 24 of the Regulatory Decree deals with self-employed workers in Argentina, and the possibility that they may also have independent collaborators, thus regulating Article 97 of the Basic Law.

Its main provisions are:

(i) Both the self-employed worker in Argentina and his collaborators must have the corresponding tax registrations (as Monotributista or Responsable Inscripto in VAT) and social security registrations (as self-employed in the case of being Responsable Inscripto in VAT);

(ii) All of them must provide a sworn statement to the Federal Administration of Public Revenues regarding the independent nature of the relationship;

(iii) They may have a system of personal accident coverage, by contracting the respective insurance with an insurance company. This provision contradicts the Basic Law, which establishes that self-employed workers and their collaborators shall be covered by a labour risk management company;

(iv) Contractual freedom for collaborators should not be restricted or limited, and they may:

  • Carry out activities simultaneously; and
  • Have the freedom to maintain simultaneous contracts of collaboration, work or provision of services with other contractors.

(v) The self-employed worker and any of his collaborators may terminate the collaboration relationship at any time. The need to give prior notice is not established, although as these are contracts outside labor law and fall within the contractual freedom of the National Civil and Commercial Code, nothing prevents a written contract from stipulating the obligation to give a certain amount of advance notice and the compensatory consequences of non-fulfillment; and

(vi) The autonomy of the self-employed worker and his collaborators will not be such when it is presumed that an employment relationship is substituted by a relationship between the parties with a different legal framework to enjoy the benefits of the autonomous figures. In other words, when there is labor fraud.

3) Final considerations

To the very brief development of the novel figure of the self-employed worker in Argentina with collaborators, we shall add:

  • As of the date of this article, the possibility of hiring self-employed workers in Argentina is not yet operational, as there are still aspects to be regulated (such as, for example, the sworn declaration before the AFIP mentioned in 2), b) (ii), or the payment by banking systems mentioned in 2) a) iv));
  • Simply classifying an employee and his collaborators as self-employed because a contract for work or services is made, or the human resources have their own tax registrations and issue invoices does not in itself exclude the existence of an employment relationship. The employment contract is governed by the principle of the primacy of reality: if, in the face of a dispute, the facts that qualify as an employment relationship are proven, the relationship will be considered to be an employment relationship, regardless of the non-employment contracts that have been entered into, the tax registrations of the human resources might have, and the invoices issued.
  • Although the penalties for failure to register an employee as self-employed when he/she was a dependent have been repealed by the Bases Law, the issue is still important because there are still contingencies for incorrect classification.
  • When a human resource of a company is classified as a self-employed worker in Argentina and, in the face of a conflict, is judged not to be so, there may be differences and salary debts in their favor, as well as social security and trade union debts, among other possible claims that could be filed.

As final considerations: the regulation of the self-employed worker in Argentina and his collaborators by the Bases Law and its Regulatory Decree is praiseworthy and timely, but its use must be careful and with a correct analysis and prior professional advice, as well as being instrumented in an adequate and well-drafted written contract, which precisely stipulates the nature and content of the relations with the self-employed worker and between him and his collaborators. There will always be a risk of committing labor fraud, a fact that many judges will surely find and that companies should strive to mitigate.

Mario E. Castro Sammartino

[1] This self-employed worker could have, apart from the three collaborators, workers under employment contracts. If this self-employed worker were an employer, this would reinforce the fact of the existence of his own business organization, which would clearly exclude any attempt to establish an employment relationship with the company that hires his/her services. The same would apply to the collaborators having workers under employment contracts.

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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