Argentina’s Labour Modernisation Bill: What Employers Need To Know

Argentina’s recently approved Labour Modernisation Bill significantly reshapes employment law in the country, from contract principles and compensation to terminations, unions and platform work. This overview highlights the key changes that employers need to know.

Argentina’s Labour Modernisation Bill (the ‘Bill’), recently passed by the National Chamber of Deputies and the National Chamber of Senators, introduces wide‑ranging amendments to Argentina’s Employment Contract Law (LCT) and other labour statutes. 

The reforms address contract scope, compensation, working time, terminations, litigation, collective bargaining, and the framework applicable to platform workers (among others). It reflects a move towards a more contractual approach, framing the employment relationship more explicitly as a mutual exchange of obligations between employer and employee. 

In this article, our Argentinian firm unpack the Bill’s main changes and their practical implications for employers. Due to the breadth of the reforms, they have not covered every change. If you have further questions on the Bill, you can find contact details for our relevant experts at the end of this article.

Scope of employment law and general principles

The Bill emphasises that employment relationships exist within an economic, ‘exchange-based’ framework, and adopts a more contractualist approach grounded in reciprocity of obligations.

Against this context, it narrows the scope of the LCT by excluding workers engaged through technological platforms. They are now covered under a separate framework (see below).

The Bill also reshapes interpretative principles. For example, it requires the “most favourable rule” principle, under which a judge or employer must apply the rule that most benefits the employee when several legal rules could apply, to be interpreted strictly as a matter of law, rather than through factual presumptions. In addition, the Bill establishes the “comparison by institutions” principle as the main method for determining which legal framework is more favourable to the employee. This approach requires whole legal regimes to be compared in their entirety.

The Bill further allows certain modifications to custom and individual contractual clauses to fall outside of the principle of ‘non‑waivability’. Employees would therefore be permitted to waive certain statutory rights in defined circumstances.

The Bill also narrows the presumption of employment under section 23 of the LCT. While this section normally presumes that an individual who provides services personally and regularly is an employee unless proven otherwise, the Bill limits this presumption to situations where the services are performed under ‘actual dependency’. In a related clarification, the Bill excludes the ‘execution of works’ from the definition of an employment relationship and confirms that a genuine employment relationship requires continuity over time when services are provided.

Working arrangements, compensation and benefits

The Bill revises several types of contractual working arrangements, including fixed‑term and casual working. It removes the ability for employees to claim damages or a loss of profits if an employer ends a fixed‑term contract early, and it brings early termination of fixed‑term contracts under the general dismissal regime. It also clarifies that the defining feature of a casual or temporary employment contract is that it centres on the achievement of specific results.

Regarding compensation, the Bill expressly excludes several items from the definition of ‘remuneration’, including:

• tips;
• profit‑sharing or gain-distribution schemes;
• stock option plans;
• dividend collection rights;
• the sale of employer‑granted securities or shares; and 
• reimbursed expenses for commuting (including vehicle expenses), telecommunications and work‑related internet use. 

The Bill allows wage payments in foreign currency and also permits additional dynamic, temporary or variable components above and beyond mandatory salaries and/or payment items to be agreed through collective bargaining, individual agreement or unilateral employer decision. These must be based on merit and organisational needs.

The Bill also modernises rules on payment and documentation. Employers must deposit wages into payroll accounts; and employers may retain employment documentation digitally, subject to defined labour and social security retention periods. 

Working time and leave

The Bill introduces greater flexibility to annual leave. The standard holiday period (1 October to 30 April) is maintained, but parties can now agree leave outside this period under the Bill. Notice for leave is reduced to 30 days, leave may be split into periods of at least seven days (by agreement), and employees must enjoy summer holidays at least once every three years where vacations are not granted collectively. The Bill also clarifies how illness during holidays affects the rescheduling of unused days. 

Overtime flexibility is increased through agreed hour banks and compensatory rest, while the scope for reduced working hours (as may be permitted by law or collective bargaining agreements) is expanded. Finally, the exclusion of managerial and supervisory staff from working time limits is reaffirmed under the Bill, reversing the narrower interpretation introduced in 2010.

Digitalisation

Digitalisation is a core theme in the Bill. Key changes include:

• Registration with Argentina’s Customs Collection and Control Agency (Agencia de Recaudación y Control Aduanero, or ARCA) is established as the legally valid record for employment purposes.
• Litigation presumptions are adjusted to focus on ARCA registration rather than paper records. This means that in court disputes about employment, courts will look first at what the employer has recorded with ARCA.
• The obligation to issue duplicate pay stubs (one for the employee and one for the employer) is removed.
• Section 80 certificates (i.e. proof of employment, service time, and social‑security contributions) may now be issued digitally, rather than on paper, and within a 45‑business‑day period.

Termination, litigation and the Labour Assistance Fund

Termination rules are adjusted across several fronts. For example, the Bill removes the obligation to give notice during the probationary period and allows for resignations to be submitted digitally or before the administrative authority.

Section 245 LCT, which regulates severance indemnity for dismissal without cause, is also updated under the Bill. For example, the Bill confirms that severance under this section is the sole and exclusive remedy for any and all termination-related damages (except in criminal cases). Furthermore, the Bill establishes that the monthly pay figure used to calculate severance indemnity must have been both accrued and paid and does not include the supplementary annual salary, vacation pay, or bonuses that are not paid monthly. For variable compensation, the normal amount is deemed to be the average of the last six or 12 months, whichever is more favourable to the employee.

Regarding labour claims awarded in court, the Bill establishes a monetary adjustment tied primarily to CPI plus 3%, with specific rules for pending proceedings. The payment of court judgments in instalments is authorised, especially for non-large employers. Furthermore, the transfer of National Labour Courts to the jurisdiction of the Autonomous City of Buenos Aires is approved, and procedural rules are tightened, including the earlier submission of evidence.

The Bill also creates a mandatory Labour Assistance Fund (FAL), funded by a share of employer contributions (1% for large employers and 2.5% for SMEs, through reallocation of existing funds). Individual employer accounts are intended to cover LCT payments on termination (notice, integration of the dismissal month, seniority indemnity, disability, death and economic dismissals), as well as indemnities under professional statutes and agricultural rules.

Collective labour relations

The Bill significantly reshapes collective bargaining. It limits ultra‑activity – the rule that allows a collective bargaining agreement to continue applying after it expires. Under the Bill, only clauses dealing with working conditions and employee benefits continue in force after expiry; all other clauses lapse. The Bill also strengthens enterprise‑level agreements by allowing them to prevail over industry‑wide agreements. This means that a collective bargaining agreement negotiated at company level can override broader sector‑level terms. In addition, prior agreement terms do not create vested rights if a later agreement within the same scope modifies them. The Bill also caps employer contributions to business chambers and caps solidarity contributions that employees pay under collective bargaining agreement.

The Bill also amends union representation rules. It recognises ‘simply registered unions’, unions that have formal registration but do not hold the higher status of ‘personería gremial’, as able to represent employees for collective purposes within the scope of their registration. The Bill also allows authorities to grant ‘personería gremial’ (i.e. full collective bargaining status) to an enterprise‑level union, even when a higher‑level union already holds such status in the same industry. The Bill limits union leave, regulates workplace assemblies, and classifies certain forms of disruptive industrial action, such as blockades or actions that prevent work from continuing, as unfair labour practices that may result in sanctions.

Platform workers

Under the Bill, platform workers are explicitly excluded from the LCT and regulated under a separate framework. The Bill defines covered services, recognises providers as independent, affirms their freedom to connect and reject orders, and requires tax registration and a bank account.

Providers gain rights such as explanations for suspensions and access to accident insurance, with the National Civil and Commercial Code as the backup regime.

Takeaway for employers

The Labour Modernisation Bill represents a substantial reshaping of Argentina’s employment law framework, affecting contract formation, compensation rules, working time, digital record‑keeping, termination processes, collective labour relations and the regulation of platform work. As the Bill proceeds to the final stages of the legislative process, employers operating in Argentina should expect a more contractual, digitally administered system, with clearer definitions and new compliance requirements. Key practical steps include:

• Review workforce classifications and contractual documents – The Bill narrows the scope of the LCT, particularly for platform workers and certain categories of service providers. Employers may need to reassess which workers fall inside or outside the framework and ensure that written contracts accurately reflect the intended relationship.
• Update payroll, compensation structures and record‑keeping processes – Clarifications on what constitutes remuneration, the increased use of digital documentation, and reliance on ARCA records mean employers should ensure payroll items, pay stubs, and employment records comply with the updated definitions and digital requirements.
• Evaluate HR policies and collective bargaining strategies – Changes to working time rules, leave arrangements, union representation and the hierarchy between enterprise‑level and industry‑level agreements may require updates to policies, internal procedures and negotiation approaches. Reviewing existing agreements to identify provisions affected by the Bill will help employers prepare for implementation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.