Argentine labor reform 101: what happens now and all you need to know

Argentina’s Congress has just passed a labor reform bill that changes several aspects of employment regulation, what employers can demand from their employees, and how workers’ rights are protected. The bill has been approved by both senators and deputies, although it needs to go back to the upper house for a final green-light before it becomes law. Here’s what you need to know about the new bill. What is the labor reform? The bill, called “labor modernization law,” is a 100-page, 218-article text that modifies existing laws that regulate salaries, shifts, severance pay, trial periods and other aspects of work-life balance and workers’ rights. It also grants fiscal benefits for employers who register their employees. The government has said that its main goal is to encourage employers to formally register their employees, lowering informal work, and ending what they call the “labor trial industry.” According to the Javier Milei administration, many people falsely sue past employers over alleged bad work conditions. When will the bill start being enforced? On February 27, the senate is expected to vote to greenlight the removal of an article made by deputies to the version that was originally approved by senators. Even if they reject that change, the bill will still become law. After that happens, the executive power has to enact the law via a decree, and later issue the regulations that will allow it to formally enter into force. There is no scheduled time for this to happen. The government is interested in implementing the law as soon as possible, so it is likely to happen in upcoming weeks. President Javier Milei aims for the bill to be approved before March 1, when he will give a speech to kickstart the ordinary sessions period in Congress. There, he is expected to celebrate the feat. Who will it affect? The bill applies to all registered workers, and potentially those who are currently under informal conditions but could be formally registered as part of the plan to benefit employers who do so. It affects all those who were hired under the conditions of the Labor Contract Law, which the reform modified. This means that it not only affects workers from the private sector, but also public employees who work for state organizations or companies that also use that regulation. What are the main changes? Severance pay: amount calculated for employees fired without cause will exclude any extra income, like bonuses, paid vacation, and the thirteenth salary (known as aguinaldo). The base number for calculation cannot surpass three times the average salary for the position. Currently, calculations are based on the employees best monthly payment. The final amount, which has no maximum limit, includes all additional sources of income of any type — including those made off the books.  “Hours bank:” the maximum shift length in Argentina is currently 8 hours per day, or 48 hours per week. The reform opens the door to changes, as employees could “voluntarily” agree to work extra hours in exchange for docking those house off future shifts. They would not receive overtime pay. Workers could work up to 12-hour shifts under that system, but would still be required to keep a minimum 12-hour rest period between shifts (the latter is a norm already in place). Labor negotiations: the law would allow companies to conduct labor and wage negotiations directly with their workers overriding general sector agreements. Unions in Argentina traditionally represent all workers from any given sector, allowing them to grant the same rights and benefits to their affiliates all across the country. Dynamic salary: employers can opt to pay their employees’ salaries according to productivity or merit. They can also choose to do so in foreign currency or payment in kind. Union activities: workers will have to request permission to carry out union assemblies at the work place. Affecting the activities of employees who are not taking part in the assembly will be considered a sanctionable offense. Several sectors, including telecommunications, hospitals, waste collection, education, aviation, and port workers are now considered essential, which means they have to guarantee at least a 75% operation at all times. This means most workers won’t be able to join strikes, greatly affecting union protests. Vacations: employers can now fraction their employees’ paid vacation in 7-day segments, instead of the full two weeks they currently get. They could also decide to make employees take their vacations during summer at least every three years. Professional statutes: the bill establishes the elimination of labor statutes of certain sectors, including hair stylists, drivers, and journalists, six months after the law enters into force. The 1946 Journalist Statute protects the rights of press workers and press freedom. The sector will have 180 days to incorporate the elements included in the statute into a labor agreement, known as convenio colectivo de trabajo. Labor trials: labor-specific courts at a national level will be eliminated. What do defenders of the bill say? The president’s office issued a statement celebrating the approval of the law, saying it will “promote an environment that makes the hiring process easier, boosts investment and allow registered work to expand in all sectors of the economy.” This, they said, will create “more and better” job opportunities. During the debate, Unión Cívica Radical deputy Lisandro Nieri said the bill allowed to “leave behind the statu quo that accepts informality and low productivity as the norm.” What do critics say? Opposition deputies harshly criticized the bill during the debate. During the session, Peronist Horacio Pietragalla — former human rights secretary — even said it brought Argentina back to the times of slavery. Maximiliano Ferraro, from center party Coalición Cívica, said that the bill “will further incentivize workers leaving the formal system, rather than creating more jobs.” Democracia para Siempre deputy Pablo Juliano added that it will not modernize the labor system but rather make labor conditions more precarious and workers will be “more scared of losing their jobs.” Argentina’s largest union federation, the General Confederation of Labor (CGT, by its Spanish initials) have deemed the law unconstitutional because it undermines workers and unions’ rights. What will the opposition do now? Opposition politicians and the CGT have said that, since the bill has been approved by Congress, the next step is to take it to court. Their goal is for the judiciary to declare it unconstitutional or annul it over clashes with existing laws. Other government-backed bills have followed a similar path in the past, such as Milei’s widespread economic reform known as “bases law.” A labor segment of that law, including very similar reforms as the bill Congress is debating now, was overturned by the judiciary after receiving dozens of complaints from unions and NGOs about how it negatively affected workers’ rights.