Argentina’s Chamber of Deputies has passed a sweeping labour reform bill, sending the legislation to the Senate for consideration. The bill, championed by President Javier Milei, aims to significantly reshape the country’s employment laws, impacting everything from contract types and compensation to union powers and the burgeoning platform work sector.
The legislation, formally known as the Labour Modernisation Bill, seeks to move Argentina’s labour relations towards a more contractual framework, emphasizing a reciprocal exchange of obligations between employers and employees. A key change is the exclusion of workers engaged through technological platforms – such as ride-sharing or delivery services – from the protections afforded under the existing Employment Contract Law (LCT), instead establishing a separate regulatory framework for these workers. This move, according to proponents, will foster innovation and create more flexible work opportunities.
The bill alters established interpretative principles within the legal system. The “most favourable rule” principle, traditionally used to benefit employees when legal ambiguities arise, will now be interpreted more strictly as a matter of law, rather than relying on factual presumptions. The “comparison by institutions” principle will become the primary method for determining which legal framework is more advantageous to the employee, requiring a comprehensive comparison of entire legal regimes.
Changes to working arrangements include revisions to fixed-term and casual contracts. Employers will no longer face damages claims for early termination of fixed-term contracts, which will instead fall under the general dismissal regime. The definition of casual employment will focus on the achievement of specific results. Regarding compensation, the bill clarifies what constitutes “remuneration,” explicitly excluding profit-sharing schemes, dividend rights, the sale of employer-granted securities and commuting expenses from the calculation. Wage payments in foreign currency are now permitted, and employers can introduce merit-based or needs-based variable compensation components through collective bargaining or individual agreements.
The bill also introduces greater flexibility regarding working time and leave. While the standard holiday period remains from October 1st to April 30th, agreements allowing leave outside this period are now permissible. Notice periods for leave have been reduced to 30 days, and vacations can be split into periods of at least seven days by mutual agreement. Overtime flexibility is increased through agreed-upon hour banks and compensatory rest, and the exemption for managerial and supervisory staff from working time limits has been reaffirmed.
Digitalisation is a central theme of the reforms. The bill establishes registration with Argentina’s Customs Collection and Control Agency (ARCA) as the legally valid record for employment purposes, shifting away from reliance on paper documentation. Litigation presumptions will now prioritize ARCA registration, and the requirement to issue duplicate pay stubs has been eliminated. Proof of employment and social security contributions (Section 80 certificates) can now be issued digitally within 45 business days.
Termination procedures are also modified. The obligation to provide notice during the probationary period is removed, and resignations can be submitted digitally. Severance indemnity calculations under Section 245 of the LCT have been updated, confirming that severance is the sole remedy for dismissal without cause (excluding criminal cases). The monthly pay figure used for severance calculations must be accrued and paid, excluding supplementary annual salary, vacation pay, or non-monthly bonuses. Variable compensation will be based on the average of the last six or twelve months, whichever benefits the employee more.
The bill establishes a mandatory Labour Assistance Fund (FAL), funded by employer contributions (1% for large employers and 2.5% for SMEs). This fund is intended to cover LCT payments related to termination, including notice, seniority indemnity, and other dismissal-related costs.
Collective bargaining rules are significantly altered. The bill limits the “ultra-activity” of collective bargaining agreements, meaning that only clauses related to working conditions and employee benefits will remain in force after the agreement expires; other clauses will lapse. Enterprise-level agreements are strengthened, allowing them to supersede industry-wide agreements. The bill also caps employer contributions to business chambers and limits solidarity contributions paid by employees under collective bargaining agreements.
Union representation rules are also amended, recognizing “simply registered unions” – those with formal registration but without full collective bargaining status – as able to represent employees within the scope of their registration. The bill allows authorities to grant full collective bargaining status to enterprise-level unions, even if a higher-level union already holds such status in the same industry. Restrictions are placed on union leave, workplace assemblies, and disruptive industrial actions, with certain actions classified as unfair labour practices.
Platform workers, excluded from the LCT, will be regulated under a separate framework recognizing them as independent contractors with the freedom to accept or reject orders. They will be entitled to explanations for suspensions and access to accident insurance, with the National Civil and Commercial Code serving as a backup legal regime.
The bill now advances to the Senate, where it faces potential opposition and further debate. The outcome of the Senate vote will determine the future of labour relations in Argentina, and its impact on businesses and workers remains to be seen.
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