What are the Labor Laws in Argentina?

The organization of labor laws in Argentina is wide and complex. Companies expanding into Argentina that need to hire locals or foreign nationals must understand and comply with all Argentine regulations to employ people.

We give a general overview of the most relevant issues for employing staff.

Overview: labor laws in Argentina

The Labor contract Law N° 20.744 regulates most of the labor relations in Argentina, which was implemented in 1974.

person holding labor contract and pen
Labor relations in Argentina are mainly regulated by the Labor Contract Law N° 20.744, which was enacted in 1974.

According to the labor contract law, an employment relationship can exist even without a written contract when:

  • a person voluntarily and personally performs tasks for another person, physical or legal (company),
  • When the person works under the dependency of the company receiving remuneration in exchange.

In summary, a contract exists when there is an employer-employee relationship, through which reciprocal benefits are executed.

The employment contract is concluded for an indefinite period unless the parties or the legislation expressly specify otherwise.

The labor contract law establishes the non-waivability of any convention made by parties that suppress or reduce the rights provided by law, professional statutes, collective agreements or individual employment contracts.

Trial period in Argentina‘s labor law

Argentine labor law establishes a 3-month ‘trial period‘ for the worker. During this period, the employer may terminate the relationship without obligation to compensate for the termination.

There are, however, certain limitations and assumptions for the employer in this matter, such as:

  1. The employer will not be able to hire the same worker more than once using the trial period mechanism.
  2. The employer must provide advance notice in case of deciding the termination of employment.
  3. During the trial period, the worker has both the rights and obligations of the employment relationship, including the contributions to Social Security made by the employer.

What are the required contributions when hiring in Argentina?

Every employer must pay certain extra contributions to the worker’s salary.

In addition to the gross salary, the employer must contribute 25-30% extra by way of employer contributions. These extra contributions are outlined in the AFIP (Federal Administration of Public Income), and may differ for each of your employees depending on their contract conditions.

Approximately 17% will be deducted from the employee’s monthly gross salary as part of these contributions.

The employer must automatically deposit the required contributions with the AFIP in the name of the corresponding employee.

What is the Supplemental Annual Salary (SAC)?

Argentine labor laws establish a Supplemental Annual Salary, or SAC that employers must be aware of. The supplemental annual salary is popularly known as ‘Aguinaldo’ and it was established by the labor law 23.041 in Argentina.

The SAC is the payment of an extra salary per year to each worker. This extra salary must be paid 50% in June and the other 50% in December of the current year.

To calculate the SAC, employers must calculate the highest monthly remuneration accrued for each semester. This includes the calculation of overtime and any other bonus that the employee may have received. Employers must create a special consideration if the worker doesn’t work an entire semester.

Solidarity of the contracting parties

Solidarity of contracting parties is a provision in Argentina’s labor laws regarding the need for companies to subcontract or outsource services. This provision establishes that employees providing a service on behalf of third parties are considered direct employees of the subcontracting company.

The third-party contractors and the company receiving services will be jointly and severally liable for all the obligations arising from the employment relationship and those derived from the Social Security Regime.

This clause extends employment obligations to the contracting company for the third-party employees. The impacts of this clause are:

  • Extensive protection to the employee
  • It motivates companies to undertake due diligence when hiring personnel or outsourcing services.

Severance pay without just cause

Two business people shaking hands
Labor laws in Argentina provide various methods to terminate the employment relationship.

Labor laws in Argentina provide various methods to terminate an employment relationship.

Depending on the type of termination, the employer may need to pay compensation to the worker. This will depend on the seniority of the employee and if the relationship is terminated without due cause.

Employee rights to severance pay

Under contract termination without due cause, the employee has the right to:

  • Prior notice: the employer must give a minimum of 1 month’s notice prior to dissolution.
  • The amount accrued from the salary up to the date of dismissal of the worker.
  • Integration of the compensation with the wages of the month of dismissal.
  • Seniority: the equivalent of 1 month’s salary for each year worked, or fraction greater than 3 months.
  • SAC (Annual Supplementary Salary) proportional.
  • Holidays not taken: the worker shall be entitled to a compensation equivalent to the salary corresponding to any holidays not taken.

Other compensation obligations may apply depending on the company and employment relationship. Each case must be analyzed to determine precisely the amount to be paid out in compensation.

Argentina is experiencing economic difficulties, which directly affecst employment in the private sector and the competitiveness of the industry. The creation of new jobs plays a crucial role in the growth of the economy, and in this aspect labor laws in Argentina are fundamental to protect the worker.

How can a Professional Employer Organization help?

An international Professional Employer Organization (PEO) supports companies to hire staff abroad and comply with all relevant labor legislation. Companies expanding to Argentina can engage with a PEO to hire their staff and meet all required obligations as an employer under Argentina’s labor laws.

Using a ‘co-employment model’, a PEO will help companies recruit, hire, and manage their staff in Argentina. They can complete all non revenue-generating paperwork for your staff, and manage payroll processes. This means that companies are free of administrative and regulatory burdens associated with employment relationships, and can focus on developing their business in Argentina.

Use PEO services to comply with labor laws in Argentina

It is essential to know the labor laws in force in Argentina when starting a business or hiring staff.  For this, Biz Latin Hub Argentina is here to advise you in this process. We have a team with the necessary knowledge and experience to help you in this process.

Get in touch with us now at [email protected] to continue your operations. 

Learn more about our team and expert authors.

Infographic: what is a Professional Employer Organization and how  can it help companies comply with labor laws in Argentina

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