Employment and Labor matters - General Guidelines
Labor contracts executed in the Argentine territory are ruled by local labor laws, regardless of parties´ nationalities, place of contract execution, etc.
Argentine labor regulations are mandatory and operate mostly as minimum conditions that can be modified only in favor of employee.
Main employer´s duty is the payment of agreed remuneration, which cannot be lower than the minimum wage set forth by the Government. All employers must also pay a 13th monthly salary called “Sueldo Anual Complementario”, in two installments in the months of June and December each year.
Employees and employers have to pay withholdings and contributions respectively, to statutory pension scheme and social security.
Employment agreements are meant to be for an indefinite period of time. Fixed -term employment agreements are an exception.
Terminations at will of labor contracts encompass the payment of severance and other mandatory disbursements upon termination.
Undue registration of labor relationships comprises a risk of high fines for employers and social security and tax contingencies.
2. Legal Framework
Employment carried out in Argentina is governed by Local Argentine labor law. Most relevant legislation is Law 20.744 (Labor Contract Law) (LCL), Law 23.551 (Trade Union Law), Law 14.250 (Collective Bargaining Agreements) and Law 24.557 (Labor Risk Law) (LRL).
Legal and collective bargaining agreement conditions are mandatory for the parties. They may only be amended in favor of the employee. Any other amendment or waive shall be considered null and void.
Some specific activities in Argentina have special regimes. This is the case of traveling salesmen, rural workers, state workers and professional journalists.
Except for particular cases, labor contracts are for an indefinite term and encompass a three month trial period. Within this trial period, relationship can be terminated within a 15 day prior written notice and no duty to pay severance compensations.
Indefinite term labor contracts do not need to be in writing. Written contracts, although not compulsory, are generally used for hierarchical or high level positions where additional benefits are granted.
Fixed term contracts need to be agreed in writing. Employees can only be hired under fixed term contracts in specific cases. There must be a legal cause authorizing such an exception to general indefinite term contract principle (e.g. replacement of an employee on a sickness leave of absence). Five years is the maximum term for these contracts.
Companies must register themselves at the RENURE (National Single Registry for Foreigners) to hire foreigners.
The registration is free of charge and the number granted by the National Migration Bureau in Buenos Aires (NMB, Dirección Nacional de Migraciones) should be used in future filings.
The documentation required for the registration comprises: bylaws, evidence of registration with the Public Registry of Commerce, minutes evidencing the last appointment of authorities, taxpayer’s identification number.
Foreign employees intending to work in Argentina must obtain a work residence directly at the NMB. Nationals of the MERCOSUR or its associated countries (Uruguay, Brazil, Paraguay, Chile, Colombia, Peru, Bolivia, Venezuela, and Ecuador) could obtain a residence based on his nationality and do not need a calling entity to process the work visa.
The formalities are conducted on a strictly individual basis and all the applicants shall appear personally at the NMB.
Main documents to be filed are passport, domicile certificate in Argentina, criminal records in Argentina, certificate of criminal records for individuals over 16 years old, issued by the countries in which the foreigner has resided over the last three years before arriving Argentina and evidence of registration of the calling entity with RENURE. The criminal records from abroad must be previously legalized by the Argentine Consulate with jurisdiction over the place of issuance or by means of the “Apostille” (The Hague Convention of 1961, which overrules the mandatory legalization of public instruments). The documents in a foreign language should be translated into Spanish by a public translator and legalized.
A Provisional Residence Certificate (Precaria) will be delivered to the applicant the day of the meeting at NMB that will allow him to obtain a social security ID number (CUIL) and immediately start working. Also, the Precaria will authorize the employee to leave and re-enter the country.
The Temporary Residence will be granted together with the DNI (National ID) about 90 days thereafter.
If the employee will travel with his family members, he must also bring personal documentation from partner and children, and marriage and birth certificates (originals with the apostille or legalization).
For foreign employees traveling for a short term assignments (3, 6 months) there is an alternative to obtain a work permit.
Businessmen should apply for a business visa to visit Argentina and attend meetings. There are visa waiver agreements with certain countries (US, UK, Brazil, Australia, France, etc.).
US, Canadian and Australian nationals must pay a reciprocity fee previous to its travel to Argentina.
Background checks are carried out in Argentina, subject to some restrictions.
Employer´s main duty is the payment of employee´s agreed salary. Salary cannot be lower than the minimum wage set forth and updated by the Government. It cannot be lower than those foreseen for each labor category in applicable collective bargaining agreements.
Depending on the kind of work, employees can be paid on a monthly, daily or hourly basis.
There is a thirteenth salary in Argentina called “Sueldo Anual Complementario” that has to be paid in two installments in the months of June and December. These installments are each equal to 50% of the employee´s highest salary of each semester.
Salaries have to be paid at least 80% in cash. Consequently, employers can only pay in kind up to a 20% of the employees’ total salary.
Payment of bonuses has become a common practice in Argentina in the last years. There are different time schedules (eg. Annual or quarter payments) and different ways to calculate amounts to be paid for such bonuses (e.g. based on performance, etc).
Bonuses paid repeatedly become acquired rights and can be claimed by employees if not paid in the future.
There have been employees´ claims in recent years related to salary differences, severance pay, 13th month payments, holiday pay, social security taxes and acquired rights. It is most advisable to have clear written policies - dully notified to employees - regarding any bonuses payment. This will help to have clear rules for the bonus payment and grounding to evidence employers´ position before a labor court in case of employee´s claim.
Withholdings and Contributions
Employees performing works in Argentina, regardless of their nationality, are subject to social security withholdings. For such works as well, employers have to pay contributions.
Currently, employees´ withholdings amount a 17% of their gross salary. Employers´ contributions are 27% of the employee´s gross salary for employers whose principal activity is provision of services or commercial activities (with some exceptions) and anytime their sales do not exceed the amount set forth by the government as updated from to time to time. For the rest of the employers, contributions amount 23% of employee´s gross salary. Although these percentages are applied to the gross salary, there is monthly taxable cap (updated in March and September each year). This means that the salary exceeding this taxable cap, is not subject to these social security contributions.
Special book / Receipts
Employers are compelled to have a special labor book foreseen in the LCL and where all relevant data regarding the labor relationship is documented.
Besides, employers have to provide employees with salary payment receipts containing mainly details regarding salary, social security contributions, hire date, payment date and employee´s identification number.
Working week is 48 hours and daily working time is 8 hours. Hours exceeding this working time have to be paid as overtime.
Overtime worked in normal week days have to be paid at a 150% rate and those worked at national holidays, Saturday afternoon and Sundays, at a 200% rate (in both cases compared to normal hour and daily rates).
Temporary and Agency Employees
As indicated above, general rule is indefinite term contracts, hired directly by employer where services will be rendered.
In certain specific cases, labor law authorizes employer to contract an employee through a time limited contract (e.g. to replace an employee under a leave of absence, etc.). These contracts must be in writing, they are an exception to the rule and must be based on specific and restricted causes set forth in the labor law.
For exceptional cases, employer can hire agency employment companies dully registered and authorized to work as such. Special regulation limits the situations in which an agency employee can be hired and the length of such a contract (Law 24.013).
Employees hired through an employment agency or hired for a fixed term, have the same rights than those rendering services for an indefinite period.
Employees are entitled to the following paid leaves:
- Annual holidays: range from 14 to 35 calendar days depending on the employee´s seniority.
- Birth of child: two consecutive days (paternity leave).
- Marriage leave: 10 calendar days.
- Partner, parents or child death: 3 calendar days.
- Brother/sister death: 1 day.
- Studying examinations: 2 calendar days for each examination with a 10 day annual cap.
- Maternity leave: 45 days before and 45 days after child birth.
- Non-work related accidents or illnesses: range from 3 to 12 months depending on seniority and family responsibilities (e.g. child in charge of employee).
- There are other special leaves foreseen in the different collective bargaining agreements.
Work Risk Insurance
According to the LRL, employers must either self-insure or hire a private and authorized Work Risk Insurer (locally known as “Aseguradoras de Riesgos de Trabajo” or “ART”) to cover labor diseases and accidents. ARTs have a prevention role to try to reduce labor accidents and a compensation role whenever an accident occurs or regarding working illnesses by indemnifying the victim and providing medical and pharmaceutical assistance.
LRT regime sets forth a single payment compensation for damages. Such single payment is updated by an index called RIPTE (Remuneración Imponible Promedio de los Trabajadores Estables) published by the Ministry of Labor. The victim or interested party may receive such single payment or may try to obtain full damage reparation based on civil liability filing a claim before a Civil Court.
Several criteria of the system where challenged by workers in court, mainly regarding the labor nature of certain diseases (there is a pre-established list of occupational diseases set forth by the Government), compensation amounts and scope of liability.
In case of termination of indefinite term labor contracts for no cause, employers must grant a prior written notice and pay severance compensations for unjustified dismissal.
Prior written notice required ranges from 1 to 2 months depending on the employee´s seniority. Employers are entitled to replace such notice by paying the respective monthly amounts to the dismissed employee.
Compensations for dismissal are rated. According to LCL and applicable case law, employer has to pay a seniority severance compensation which has to be calculated by multiplying the highest monthly and normal remuneration of the employee of the last year, for his/her employment time in years (or fraction in excess of three months). The base salary used for this calculation is capped by LCL at an average amount resulting from compensations set forth in applicable collective bargaining agreements. National Supreme Court has ruled that such cap is unconstitutional anytime it encompasses more than a 33% reduction in the highest monthly salary to be used as base for this calculation. Consequently, it is a common practice to calculate this compensation using 67% of the employee´s highest monthly, normal and habitual remuneration, multiplied by the year of services.
In addition to the above mentioned compensations, if employee is dismissed for no cause in a day different from the month´s last day, employers must pay an amount equal to the salaries relating to the days missing until the last day of the month of dismissal.
Employees can be dismissed for cause, whenever a serious fault is committed which will not enable the relationship to continue. Labor courts are strict when analyzing such causes, which have to consist of a serious offense to employer and be duly expressed and explained to employee in writing at the time of the dismissal. If such cause is challenged in court by the employee, employer bears the burden of proof.
Parties are also entitled to terminate by mutual consent and in such case also only salaries owed to that date (including thirteenth salary as accrued to that date, proportional annual bonuses, etc.) and pending holidays (accrued and non-enjoyed vacations) have to be paid.
Employees are entitled to resign and must give a prior written notice of 15 days.
In all such three cases, that is, dismissal for cause, mutual consent termination and employee´s resignation, no severance compensations are due to employee. Employers must pay salaries owed to that date (including thirteenth salary as accrued to that date, proportional annual bonuses if applicable, etc.) and pending holidays (accrued and non-enjoyed vacations).
There is a special aggravated compensation of one year of their salary for cases of unjustified dismissal of pregnant women, new mothers and newly married employees.
Regarding union representatives, they have a special working stability and may not be dismissed for no cause. In case of dismissal for cause, employer must follow a special procedure before the labor courts. In case employer does not follow such procedure, union representative may request its reinstatement or a severance compensation comprising not only compensations for unjustified dismissal -or dismissal for no cause- but an additional one comprised of the total wages it would have received until the end of this representation period plus one year of salaries.
In case a dismissal is considered to be discriminatory (e.g. illness, religion, race, etc.), the affected employee is entitled to claim for his reinstatement (or other measures as to assured there is no discriminatory act towards it). Reinstated employees in this case are entitled to back wages.
In cases employers do not comply with their labor duties, employees are entitled to request for compliance and if the employer fails to do so consider themselves constructively dismissed. In any such cases, affected employees are entitled to claim for mandatory severance payments foreseen for dismissal for no cause or unjustified dismissals as indicated above.
Finally, for cases of undue registration of labor relationship, special laws foresee penalties that have to be paid to employees by infringing employers. In certain cases, these fines increase severance compensations considerably. Undue registration also comprises a contingency for employer from a social security and tax perspective.
In case of massive layoffs, local law foresees a special procedure before labor authorities and the trade union has to participate.
There is a reduced compensation (half of the one foreseen for seniority compensation in cases of dismissal for no cause) for the termination of fixed-term contracts whenever such contract is one year long or more and deemed fulfilled. If the termination occurs before the contract is deemed fulfilled, employee is additional entitled to claim full compensation (as foreseen for severance compensation for dismissal for no cause) and damages (salaries to be paid until the contract´s original term).
Women have a 90 day paid maternity leave that has to be executed 45 days before and 45 days after the childbirth (or at women´s choice up to 30 days prior to childbirth and 60 days after childbirth).
Salary paid to newly mothers during paid leave is paid by the social security system as a family allowance.
After the paid leave period ends, newly mothers can choose to extend such leave for an un paid leave of 3 to 6 more months.
Breastfeeding mothers are also entitled to two daily breaks, of thirty minutes each, to breastfeed for a one year period after childbirth. In case of dismissal, employer bears the burden of proof regarding the lack of connection between the dismissal and employee´s pregnancy or maternity. Else, employer shall pay the dismissed employee, in addition to severance payments for dismissal as indicated above, the aggravated maternity severance pay (indemnity worth one year's salary).
Employees have the right to join trade union associations of their choice, without prior authorization. This right encompasses the right to join trade unions, not to join any trade union or to withdraw from a union.
Employees are entitled to set up unions of different levels (eg. Industry, branch, company level) and unions are entitled to set up federations and federations to set up confederations.
Despite the fact the right to set up and join unions is legally and constitutionally recognized, Argentina has been criticized as some understand that its union system does not fully respect freedom of association. In fact, only one trade union (in each branch or industry and geographical area) is granted formal certification or approval which is locally known as “Personería Gremial” (Union Personality) and is consequently the only union entitled to negotiate bargaining agreements. This means that in practice the country has a single-union structure, since a union that is merely registered does not enjoy collective representation rights. It is the Labor Ministry that grants a union the Union Personality. Its decisions may be challenged before the National Labor Court of Appeal.
Trade union leaders have a four year mandate (with re - election possibility) and must be appointed by direct and secret ballot of the rank and file. As indicated in the termination section above, union representatives have a special working stability and may not be dismissed for no cause. In case employer does not follow established procedure for dismissal for cause, union representative may request its reinstatement or a severance compensation (for unjustified dismissal) plus the total wages it would have received until the end of this representation period, plus one year of salaries.
Collective Bargaining Agreements
Collective bargaining may be held at a national, provincial, local, industry or branch wide or at a company level. However, due to local system as indicated in the previous section, most workers are covered by national and industry-wide collective agreements signed by employers´ chambers on the one hand and employees´ federations on the other hand.
Collective agreements which have been approved by the Ministry of Labor are legally binding to all employers and employees in the industry or branch comprised in that territorial scope. Conditions there in agreed cannot be worse for employee in individual labor contracts falling under its scope.
Employees' representation at the enterprise level is held by employees' delegates. These delegates have to be union members with at least a year of seniority for such employer before the election takes place.
These representatives are protected as from the moment they are candidates and up to twelve months after the end of their mandates. Protection includes the impossibility to change their labor conditions, to suspend or transfer them or to dismiss such employee for no cause.
Private Data Protection Act (PDPA, Law 25.326) protects personal data of individuals, including employees. PDPA defines two main data categories: Personal Data and Sensitive Data. While the treatment, storage and processing of Personal Data is carefully regulated throughout the statute, no person may be forced to provide Sensitive Data and Sensitive Data may only be collected and treated when so authorized by law.
Data Owner may request a Database to rectify and update Personal Data and if applicable to delete or place under confidentiality Personal Data. Database Owner or Data User shall have 5 days to proceed as requested. If no action is taken, Data Owner will have the right to judicially request its relief. Deletion shall not be allowed when third parties may be harmed or when a legal obligation to keep data exists.
Moreover, formation of Databases revealing sensitive data is forbidden, being the exceptions: the Catholic Church, and other religious and political associations, and unions that may solely keep records of its members.
Criminal records may only be treated by public authorities.
International transfer of Personal Data is forbidden save for to those countries having equivalent level of data protection.
The Data Protection Law also contains provisions on the protection or rectification of data, and administrative and criminal penalties for breach of the PDPA.
Statute of Limitations
Statute of limitations for labor and employment claims is two years.
Pablo Calaza (Calaza@rctzz.com.ar)
Barbara Arrieta (Arrieta@rctzz.com.ar)
Ezequiel Peña (Pena@rctzz.com.ar)