{"id":12256,"date":"2026-03-10T13:30:23","date_gmt":"2026-03-10T16:30:23","guid":{"rendered":"https:\/\/wsclegal.com\/?p=12256"},"modified":"2026-05-07T09:54:37","modified_gmt":"2026-05-07T12:54:37","slug":"labor-modernization-law-in-argentina-takeaways-for-employers","status":"publish","type":"post","link":"https:\/\/wsclegal.com\/en\/labor-modernization-law-in-argentina-takeaways-for-employers\/","title":{"rendered":"Labor Modernization Law: Takeaways for Employers"},"content":{"rendered":"

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Check out the latest <\/span>news on laws and <\/span>regulations.<\/span><\/p>\n

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[\/vc_column_text][\/vc_column][\/vc_row][vc_row full_width=”stretch_row_content_no_spaces” conditional_render=”%5B%7B%22value_role%22%3A%22administrator%22%7D%5D” el_class=”sec-top” css=”.vc_custom_1675395705007{margin-top: 0px !important;margin-bottom: 0px !important;padding-top: 0px !important;padding-right: 10% !important;padding-bottom: 0px !important;padding-left: 10% !important;}”][vc_column][vc_single_image image=”12355″ img_size=”” alignment=”center” css=”.vc_custom_1774011111313{margin-top: 0px !important;margin-bottom: 0px !important;padding-top: 0px !important;padding-bottom: 0px !important;}”][\/vc_column][\/vc_row][vc_row conditional_render=”%5B%7B%22value_role%22%3A%22administrator%22%7D%5D” el_class=”internapost margenmob” css=”.vc_custom_1674404868551{padding-top: 50px !important;}”][vc_column width=”4\/5″][vc_column_text css=””]<\/p>\n

Labor Modernization Law in Argentina: Takeaways for Employers<\/span><\/h1>\n

On Friday, March 6, the Argentine Congress enacted the Labor Modernization Law, confirming nearly all of the terms we had predicted in last month\u2019s publication and making us look marvelously prescient. You can find that publication here<\/a>. While the Modernization Law will reduce certain employer costs and increase scheduling flexibility, it does not structurally alter Argentine labor law, but is a solid first step forward deregulating the workplace. For now at least, Argentina\u2019s workplace rules will continue to reflect a competing tension between protectionism and the government\u2019s desire to promote formal work without strangling the private sector.<\/em>
\nIn this installment, we summarize the law\u2019s final form, adding context where useful to highlight not only what was enacted but also what was omitted.<\/em>[\/vc_column_text][vc_custom_heading text=”1. Statutory Severance: Narrowing the Definition of Compensation” use_theme_fonts=”yes” css=”” skin=”primary” show_border=”yes” border_skin=”primary” border_size=”xs”][vc_column_text css=””]The Modernization Law adopted the draft bill as written to clarify what goes into the compensation basket to calculate statutory severance. Importantly, this provision reverses a judicial trend that has expanded the definition for decades.<\/p>\n

To be clear, the Modernization Law does not<\/em> change the underlying legal framework governing termination of employment. Employers may still terminate employment without cause, and the obligation to pay statutory severance remains unchanged. The new law does, however, add greater certainty to the payouts and reduces them to a potentially significant degree.[\/vc_column_text][vc_custom_heading text=”2. Creation of the Fondo de Asistencia Laboral (FAL)” use_theme_fonts=”yes” css=”” skin=”primary” show_border=”yes” border_skin=”primary” border_size=”xs”][vc_column_text css=””]While the Modernization Law does not change a terminated employee\u2019s entitlement to severance, the new law does make it easier for employers to pay that severance in two ways.<\/p>\n

First, the law introduces an Employment Assistance Fund or \u201cFAL,\u201d thereby introducing a mandatory funding mechanism to fund statutory termination payments. The Modernization Law maintains the structure described in the original bill with only a minor adjustment in the employer contribution rates: 1% of gross payroll for large companies \u00a0and 2.5% of gross payroll for small and medium-sized enterprises (PyMES). The implementation of the FAL is scheduled for June 1, though the Executive Branch may postpone its entry into force for up to six months.<\/p>\n

The FAL does not alter an employer\u2019s obligation to pay statutory severance, but it does redirect a portion of the employer\u2019s social security contributions to fund those payments in the future. In addition, the FAL will boost local financial markets by placing those monies in the hands of institutional fund managers authorized to invest in securities.<\/p>\n

Second, the Modernization Law allows employers to pay any adverse judgments related to severance and other employment liabilities in installments. In the case of a large business, this means payment over six months, while PyMES can extend payments for up to 12 months.[\/vc_column_text][vc_custom_heading text=”3. Payment of Wages in Foreign Currency” use_theme_fonts=”yes” css=”” skin=”primary” show_border=”yes” border_skin=”primary” border_size=”xs”][vc_column_text css=””]As predicted, the Modernization Law now allows employers to pay wages in foreign currency (read, US dollars) without limitation. Prior law constrained payment in foreign currency to 20% of the employee\u2019s gross salary. With this change, Congress effectively formalized a practice that had already become widespread among multinationals and certain sectors of the economy.[\/vc_column_text][vc_custom_heading text=”4. Limiting Liability for Outsourced Services” use_theme_fonts=”yes” css=”” skin=”primary” show_border=”yes” border_skin=”primary” border_size=”xs”][vc_column_text css=””]The Modernization Law restricts the circumstances in which both the employer of record and the beneficiary of outsourced services are jointly and severally liable for employment claims.<\/p>\n

The change should significantly reduce litigation brought by employees of third-party contractors who seek to hold the outsourcing company jointly liable for labor obligations.[\/vc_column_text][vc_custom_heading text=”5. Simplifying Employer Recordkeeping” use_theme_fonts=”yes” css=”” skin=”primary” show_border=”yes” border_skin=”primary” border_size=”xs”][vc_column_text css=””]The Modernization Law eliminates several traditional recordkeeping requirements, including the mandatory payroll journal and the overtime registry.\u00a0 Employment records will be mostly streamlined through the online platforms maintained by the Federal Tax Authority (AFIP\/ARCA).\u00a0 By simplifying compliance, Congress aims to reduce employment claims based on formal defects.[\/vc_column_text][vc_custom_heading text=”6. Deregulating Vacation Scheduling” use_theme_fonts=”yes” css=”” skin=”primary” show_border=”yes” border_skin=”primary” border_size=”xs”][vc_column_text css=””]The Modernization Law enables greater flexibility in vacation scheduling. Employers and employees may now agree on the timing of vacation leave (no longer constrained to the high season) and may freely allocate holiday time in blocks of seven (or more) days. The new law largely formalizes a practice by many employers to meet workforce demands.[\/vc_column_text][vc_custom_heading text=”7. Greater Flexibility in Compensating Additional Working Time” use_theme_fonts=”yes” css=”” skin=”primary” show_border=”yes” border_skin=”primary” border_size=”xs”][vc_column_text css=””]Contrary to various declarations in the media, the Modernization Law does not introduce a new 12-hour workday. Labor laws have long allowed a 12-hour workday as long as the statutory weekly limit (48 hours) is not exceeded. Nor does the reform require employees to work beyond their regular schedule, which must still be agreed between employer and employee.<\/p>\n

Instead, the Modernization Law changes the rules on compensating shifts extending beyond the statutory workday. Under prior law, anything over nine hours required the employer to pay overtime. The new law allows employers and employees to agree on compensating time with additional time off instead of automatic overtime.[\/vc_column_text][vc_custom_heading text=”8. Tightening Rules on Medical Leave and Reinstatement” use_theme_fonts=”yes” css=”” skin=”primary” show_border=”yes” border_skin=”primary” border_size=”xs”][vc_column_text css=””]The Modernization Law introduces a clearer regulatory framework governing medical leave not based on work-related illness or injury. The new law invalidates sick-leave certificates given by practitioners who are not licensed physicians. It also enhances the employer\u2019s right to verify illness or injury underlying a claim for paid medical leave. Unlike prior iterations of the Modernization Law, Congress pulled back from reducing paid medical leave, and employees continue to qualify for 100% of wages during the statutory period for such leave.[\/vc_column_text][vc_custom_heading text=”9. The Unions” use_theme_fonts=”yes” css=”” skin=”primary” show_border=”yes” border_skin=”primary” border_size=”xs”][vc_column_text css=””]This Modernization Law did little to undermine the power of the unions. Specifically, the government stepped back from its initial push for greater oversight.\u00a0 \u00a0But there were a couple of significant changes achieved.<\/p>\n