Argentina´s new Labor Reform has been enacted

On February 27, 2027, the Argentine Congress approved a new labor law reform.

The new law provides several significant reforms, including, among others, the following amendments to the labor laws:

1. Flexible Vacations. Employees and employers may agree to split the vacation period into segments of no less than one week, which may be taken at any time during the year. Before this new law was enacted, employees were obliged to take vacations in one single period and only between October and May each year.
2. Restrictions on Payments Included in Severance Compensation Calculations. Payments not made monthly -such as the 13th salary, vacation pay- will be excluded from severance compensation calculations. For variable compensation, the average salary earned over the last 6 months will be considered to calculate severance. Only payments accrued for at least 6 months during the last year will be included.
3. Inclusion of New Non-Taxable/Non-Salary Benefits. Meal allowances, medical coverage, car allowances, mobile phone expenses, and internet expenses will not be considered salary. Therefore, they will not be subject to payroll taxes nor considered in the calculation of the 13th salary, vacations, or severance compensation.
4. Salary Payable in Foreign Currency. Employers may pay employees’ salaries in foreign currency.
5. Greater Flexibility for Part-Time Contracts. Employees and employers may agree to part-time contracts without time restrictions. Before this new law was enacted, part-time work was limited to up to two-thirds of the regular working hours of a full-time employee.
6. Limits on Joint and Several Liability of Related Companies Within Economic Groups. Companies belonging to the same economic group will only be held jointly and severally liable in cases of fraud.
7. Limits to Joint and Several Liability in Subcontracting. If companies verify subcontractors’ compliance with labor and social security obligations, they will not be held jointly and severally liable with the subcontractors.
8. Elimination of Damages Awarded to Fixed-Term Employees. Fixed-term employees dismissed before the expiration of their contract will not be entitled to damages. Before this new law was enacted, they were entitled to damages equal to the monthly salaries remaining until the end of the agreed term, in addition to severance compensation.
9. Mandatory Severance Fund. Employers must contribute to a mandatory severance fund between 1% and 2.5% of salaries, which they may use at the time of termination of employment. This mechanism does not replace the severance obligation but may be used to cover part of the severance cost.
10. Gig Workers are not Considered Employees. Labor laws will not apply to gig workers. However, the company must provide training, and parties must agree to the provision of accident insurance.
11. Limitation on the Right to Strike. Unions must comply with a mandatory procedure before going on strike. In essential industries, a minimum level of service -between 50% and 75% of the workforce- must be guaranteed.
12. Elimination of Remote Work Law. Obligations such as covering internet and electricity costs as well as providing work tools will be eliminated as of January 1, 2027.
13. Elimination of prior notice of dismissal during probationary period. Employers will no longer have to give 15-day prior notice of dismissal to employees on probationary period.
14. Hour bank and compensation schemes. Employer and Employee may agree to replace payment of overtime with other compensation (bank of hours, time off, etc.).