Is labour reform still in Argentina’s sights?
Article 3 minute read

Is labour reform still in Argentina’s sights?

27 February 2018

As Argentina tries to enact labour reform, it looks to its neighbour. Searching for improved competitiveness in 2017, Brazil enacted bold changes in labour legislation, looking to increase the freedom to employ and be hired on a contract basis - and putting Argentine companies on alert.

Labour costs are a major issue in Argentina, leading to much informal employment and instability in the market. The OECD’s multi-dimensional economic survey, released in July 2017, praised Argentina for undertaking a bold turnaround in policies, helping to stabilise the economy and avoid another crisis. But it also urged the country to build on that progress to help lay the foundations for raising the material living standards and wellbeing of all Argentinians.

It was, however, interrupted by an election. Once the October elections were out of the way and a favourable outcome for the incumbent was secured, the government pressed on with its labour reform as 2017 came to a close.

Although Argentina’s reform goes nowhere near as far as Brazil’s, it still found significant objections from unions and some opposition members. Both parties argued that the approval of the reform under these conditions would imply the removal of rights and protection of Argentine workers, thus exacerbating labour relations, making terminations cheaper and generalising temporary employment.

On the other hand, local businessmen maintained that the proposed changes would facilitate an increase in formal employment. Moreover, they would also improve the sustainability of the system and the competitiveness of Argentine companies – all improvements which have been seen in Brazil.

Time for reform is still uncertain

In order to avoid increasing tension, the national government toned down its initial ambitions, changing several of the points contained in the initial version of the labour reform bill. It also decided to prioritise closing issues - obtaining a new retirement formula, the tax reform, the Federal Pact and the Budget, while postponing the labour reform for later in 2018. This leaves several aspects of potential labour reform to be determined, including:

  • An employment moratorium (in Spanish: blanqueo laboral) with an amnesty on fines and termination of criminal proceedings against employers who come clean with informal employment relationships
  • Non-application of sympathetic responsibility (responsabilidad solidaria) in the case of subcontracting of complementary activities, such as cleaning and security
  • Changing rules around severance compensation to exclude from the calculating base the proportional part of the annual supplementary salary (or 13th salary), bonuses paid without monthly periodicity based on a performance evaluation, and of any compensation and / or recognition of expenses that the employer effects in favour of the worker
  • Modifying the current internships system
  • Incorporating new leave types:
    • 15 days for paternity
    • 30 days without pay for personal reasons
    • 10 days for hearings prior to adoption procedures
    • 5 days for assisted reproduction treatments.

With a political outlook that’s not entirely clear, the Argentine Government is yet to define exactly when they'll start working on labour reform again - even though it had been scheduled to happen in current February.

For companies who are uncertain where this leaves their employment relations, it’s best to speak with a local expert. TMF Argentina has vast experience in salary settlement and personnel administration services, having always demonstrated rapid reactions in the adequacy of systems and staff training in light of regulatory changes, ensuring our clients maintain compliant permanently.

Interested in finding out more? Make an enquiry

Written by

Hernán Kogan

Director of Client Services, Argentina

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