Argentina’s labor reform bill proposes an amnesty period of 360 calendar days during which private sector employers that regularize non-registered or wrongfully registered employment relationships under the National Program for Employment Regularization will not be fined. This will include, in particular, “contractors” who are in reality working as employees.
As long as employers correct the registrations, pay workers any compensation to which they would have otherwise been entitled, and recognize employees’ real starting dates, they may:
- have any criminal action under the criminal tax law terminated and a release from convictions, fines, and sanctions of any nature corresponding to the fiscal procedure law;
- be removed from the Register of Employers with Labor Sanctions (Registro de Empleadores con Sanciones Laborales, or REPSAL) when employers regularize the labor situations of all the employees for whom they are registered on the REPSAL, and pay, if applicable, the applicable fine; and
- receive forgiveness of debt for capital and interest based on the lack of withholdings and contribution payments to the social security system, on the following basis:
- 100 percent forgiveness if regularization takes place within the first 180 days of the enforcement date of the law; or
- 70 percent forgiveness if the registration occurs after that period.
There are also other areas the government proposes to address in the bill:
The government proposes the creation of a Training Practices System for students and graduates older than 18 years of age. These internships will provide up to 30 hours of work per week for up to 12 months and apply to both companies and other public and private institutions.
Creation of the Evaluation of Technologies Agency (Agencia de Evaluación de Tecnologías, or AGNET)
This new agency would collaborate with medical care organizations on the improvement of medical treatment and procedures, with a view toward rehabilitating employees with health conditions.
Amended severance payment calculation
The bill proposes to exclude the mandatory semiannual bonus, some other benefits, compensation, and bonus payments from the calculation of statutory severance payments, which would be to the detriment of employees.
The bill also proposes to replace severance compensation with a labor termination fund in which employers pay a monthly amount throughout the duration of the employment (agreed to by the business chambers and the relevant unions). This would bring certainty to the amount payable to an employee upon dismissal without cause, because a certain amount will have accrued in that employee’s fund. It also means the employer would not need to find the money at the time of dismissal, having already paid into the fund.
These reforms are aimed at creating a more friendly environment for employers and therefore foreign investors, while maintaining protection for employees.
Initially, the main unions were in support of the reform, but the difficult economic situation caused by Argentine peso’s devaluation has led to objections from both unions and political parties, in particular in relation to the reduced severance compensation.
This may result in the government dropping the provisions on severance pay but pursuing the other provisions.
Written by Mercedes Balado Bevilacqua and Cecilia Acosta of MBB Balado Bevilacqua Abogados and Roger James of Ogletree Deakins