FRAMEWORK LAW. LABOR REFORMS.
On Thursday, June 28, the Chamber of Deputies completed the approval of the Law on Foundations and Starting Points for the Freedom of Argentines, ratifying the text that had already been preliminarily approved by the Senate.
With regard to labor matters, the amendments provided for by the law are as follows:
- Promotion of Registered Employment.-
Private-sector employers may regularize employment relationships—in whole or in part—that are currently in effect and were established prior to the date of enactment of the law, without having to register them.
The National Executive Branch shall issue regulations governing the effects of the regularization of the aforementioned labor relations; notwithstanding the foregoing, such effects may include the following: a) The dismissal of criminal proceedings and the waiver of violations, fines, and penalties; b) Removal from the Registry of Employers with Labor Sanctions; c) Waiver of no less than seventy percent (70%) of debts arising from nonpayment of contributions and premiums.
Workers covered by the planned regularization will be entitled to count up to sixty (60) months of service with contributions, calculated based on a monthly amount equivalent to the minimum living wage, solely for the purpose of meeting the years of service required to qualify for the universal basic benefit and the unemployment benefit.
Debts that are the subject of disputes in administrative, administrative-litigation, or judicial proceedings may be included under this regime, provided that the employer unconditionally accepts the decision and, where applicable, withdraws and waives all claims and rights—including the right to seek reimbursement—and agrees to pay the court costs and legal fees.
The law stipulates that the regularization of employment relationships must be completed within ninety (90) calendar days from the effective date of its implementing regulations.
- Labor Market Reform.-
- Unregistered employment relationships.
The fines set forth in Laws 24,013 and 25,323 for failure to register or for improper registration of the relationship are hereby repealed.
In the event of a final court ruling establishing the existence of an unregistered employment relationship, the tax collection agency will be responsible for collecting the outstanding social security contributions and recognizing the years of service.
If, pursuant to a final court ruling, the employment relationship is found to have been erroneously classified as a contract for specific work or services, the amounts already paid under the applicable tax regime shall be deducted from the tax liability determined by the tax collection agency.
- Waiver of fines for failure to submit employment certificates and proof of contribution payments.
With the repeal of Articles 43 through 48 of Law 25,345, the fines for failure to provide certificates of services and compensation (Article 80 of the Labor Contract Law (“LCT”)) and for failure to remit contributions withheld from employees (Article 132 bis of the LCT) are eliminated.
- Presumption of the Existence of an Employment Contract.
When the relationship involves contracts for construction work or the provision of professional or trade services, and receipts or invoices are issued for such contracts, the relationship shall not be presumed to be an employment relationship.
- Mediation and Intermediation. Solidarity.
The hiring of workers by a contractor shall be fully valid, regardless of whether they are provided to third-party companies or whether such companies utilize their services. The user company shall be jointly and severally liable for the labor and social security obligations with respect to the workers provided, exclusively for those obligations accrued during the period in which the workers actually provided services to the user company.
Therefore, the registration of the employment relationship shall be considered fully effective when it has been carried out by any of the parties—whether individuals or legal entities—involved in the relationship.
- Trial period.
The probationary period shall be at least six (6) months. Collective bargaining agreements may extend this probationary period:
- a) up to eight (8) months, in companies with six (6) through one hundred (100) employees; and
- b) up to one (1) year in companies with up to five (5) employees. Either party may terminate the employment relationship during that period without cause, and neither party is entitled to severance pay upon termination.
- Accidents or Illnesses Not Due to Fault:
In the event of an accident or illness through no fault of the employee, the employee shall be entitled to the corresponding benefits only until the end of the probationary period if the employer terminates the employment contract during that time.
- Maternity Leave:
The prohibition on pregnant women working during the forty-five (45) days before and after childbirth remains in effect; however, under the reform, they are granted the option to reduce their pre-childbirth leave to ten (10) days and add the remaining time to their post-childbirth leave.
In the event of a preterm birth, any maternity leave not taken prior to delivery will be added to the subsequent period of leave, so as to bring the total to ninety (90) days.
- Active participation in blockades or the occupation of a workplace. Just cause.
Active participation in blockades or workplace occupations may constitute serious misconduct that justifies dismissal for cause.
Serious injury is presumed to have occurred when, during a direct action:
- a) the freedom to work of those who do not participate in the strike is infringed upon through acts, actions, intimidation, or threats;
- b) the entry or exit of people and/or goods to or from the establishment is wholly or partially prevented or obstructed;
- c) damage is caused to persons or to property belonging to the company or to third parties located on the premises (facilities, merchandise, supplies and raw materials, tools, etc.), or such property is improperly withheld. Only in this case is the employer exempt from the obligation to first warn the employee to cease such conduct.
- Aggravating factor in compensation for discriminatory termination.
In cases where the employer’s termination is based on discriminatory grounds, the employer shall be required to pay special enhanced severance pay equal to fifty percent (50%) of the severance pay based on length of service; judges may increase this amount up to one hundred percent (100%), depending on the severity of the circumstances.
In this case, the burden of proof lies with the employee who alleges discrimination.
The severance pay provided for in this article may not be combined with any other special regime that provides for higher severance pay, and the employee may not request reinstatement, since the dismissal provided for herein will result in the permanent termination of the employment relationship.
- Severance fund.
Collective bargaining agreements may replace severance pay based on length of service with a “termination fund or system” in accordance with the parameters established by the national executive branch in the regulations implementing this law.
Employers may choose to purchase a private insurance plan or self-insure in order to cover the severance pay or the amount freely agreed upon by the parties in the event of termination by mutual agreement.
- Self-employed individuals with employees.
Self-employed individuals may employ up to three (3) other self-employed individuals or collaborators under a special regime to be regulated by the Executive Branch, provided that the characteristics typical of an employment relationship are not present. This will be an independent relationship, without a relationship of subordination. To this end, regulations will be established for an individual monthly contribution covering pension, health insurance, and occupational risk coverage.
- Failure to pay severance pay for unjustified termination within the prescribed time limit.
The presumption of reckless and malicious conduct set forth in Article 275 of the Labor Code (LCT) is eliminated in cases where the employer fails to pay, within the prescribed time limit and without just cause, severance pay for unjustified termination or a court-approved termination agreement. Law 25,323, which imposed a fine for failure to pay severance pay for dismissal without cause, is also repealed.
- Agricultural Work.
The ban on temporary staffing firms, employment agencies, or any other company providing workers is lifted. In addition, the probationary period is extended for the agricultural sector.
- Domestic Workers.
The special penalty for failure to register and/or incomplete registration is eliminated.
As always, we are available to our colleagues and clients to address any questions or concerns they may have.
