Argentina

Sources of regulation

Argentina’s extensive labour protections are rooted in its Constitution. Article 14 guarantees every inhabitant shall enjoy a basic right to work.  It also enumerates a number of specific workers’ rights including protection from arbitrary dismissal and security in public employment.

Legislative sources of labour rights in Argentina law derive from the 1976 Labor Contract Law (Ley de Contrato de Trabajo, or “LCT”),[1] which outlines the basic legal regime covering employment. While still technically in force today, the LCT has been substantially modified by a number of subsequent laws.  These include the National Employment Act (Ley Nacional de Empleo, or “LNE”)[2], passed in 1991 to establish promotion contracts to provide incentives in hiring certain classes of workers, Law 24465 in 1995, the Labor Reform Act in 1998 (Reforma Laboral or “Reforma”),[3] and the New Labor Law in 2000 (Nueva Ley de Empleo)[4]. These laws are supplemented by numerous presidential decrees and congressional resolutions modifying specific provisions and their application.  This has been particularly true in the aftermath of the nation’s 2001 financial crisis when the government tightened restrictions on employment termination in attempts to stave off unemployment.  In addition, Act No. 24467 of 25 March 1995 governs small and medium-sized businesses and introduces specific provisions on the termination of the employment relationship for these industries.

Professional rules and works rules, collective agreements or awards having the same force and effect (art. 1, LCT), international treaties and case law supplement this body of legislation.

Scope of legislation

The provisions of the LCT do not apply to persons employed by the national, provincial or municipal civil service (except where they are expressly included within its scope or within that of collective labour agreements), domestic servants and agricultural workers (art. 2, LCT).

Contracts of employment

In accordance with art. 21 of the LCT, there is deemed to be a contract of employment, regardless of its form or designation, whenever a physical person undertakes to perform actions, tasks or services for the account and under the authority of another person, for a specified or unspecified period and in return for remuneration. The clauses of such a contract, as regards the form of the work and the conditions in which it is to be performed, are subject to the mandatory provisions of the law, to the relevant regulations, collective agreements or awards having the same force and effect, and also to usage and custom.

Art. 22 of the LCT also establishes that employment relationships may exist where a person performs actions, tasks or services for the account and under the authority of another person, voluntarily and in return for remuneration, regardless of the formal basis of the relationship.

According to art. 23 of the LCT, an employment relationship may also in some instances be presumed to exist where services are performed, unless the circumstances, relationships or causes out of which it arose indicate the contrary. Such a presumption will stand even where non-labour terms are used to express the contract on condition that the circumstances are such that the person performing the services cannot be regarded as an employer.

Most labour contracts, whether written or presumed, are of unspecified duration or “indeterminate contracts” (LCT, art. 90). In fact, there exists a legal preference for this form of contract and where doubt exists as to the terms and conditions governing a contract of employment, it will be presumed to be an indeterminate contract (LNE, art. 27). An indeterminate contract does not expire upon a particular date or event, but remains in force until the occurrence of some unscheduled event, such as retirement, death, or complete dissolution of the business (LCT, art. 91). The one exception to this is those indeterminate contracts entered for seasonal employment. Where the relationship between the parties, due to the character and normal operations of the business, is presumed to exist only for specific periods of time during the year, the contract is also presumed to exist only at these times and to be renewed each year (LCT, art. 96 and LNE, art. 66).

Fixed-term or “determinate contracts” are employment contracts for specified periods of time where the contract duration is expressly written into the contract or where the nature of the tasks or activities justifies its termination. Determinate contracts may not be concluded for periods of more than five years (LCT, arts. 90 and 93). There also exist casual work contracts, possible in the context of exceptional and temporary requirements whose duration cannot be foreseen at the time of concluding the contract (LCT, arts. 99 et seq., and LNE, arts. 68 et seq.).

A number of types of special contracts for employment were established under the National Employment Act, of 1991. These included fixed-term contracts for the launching of a new activity or for the rendering of services in a new establishment, or on a new production line in an existing establishment; contracts providing initial employment for youths; on-the-job training contracts; and fixed-term employment contracts for the promotion of employment of people registered as unemployed.[5] However, these types of contracts were abolished with the passage of the Labour Reform Act in 1998 (Law 25013).

Termination of employment

The LCT provides for a trial or probationary period, provided that the contract has been appropriately registered with the labour authorities. The trial period for indeterminate contracts is three months, although collective bargaining agreements can extend this period up to six months (Law 20.744, art. 92; Law 25.013, art. 3). During this time, either party may terminate the work contract without cause and without liability for indemnification. In small enterprises (i.e. enterprises that employ 40 workers or less, and whose billing does not exceed a prescribed ceiling as defined by Article 83 of Law No. 24.013, the probation period is six months, and it can be further extended by collective agreement, up to twelve months in respect to skilled workers.  However, an employer cannot contract the same worker, more than once, using a probationary period (Law No. 25250, art. 1). Nor may an employer abuse the probation period in attempts to circumvent laws protecting employee job security. 

Following the probationary period, the contract for employment may be terminated, other than at the initiative of the employer (LCT, articles 242-255):

• upon the resignation of the employee;
• where there is mutual agreement of the parties;
• for reasons of force majeure;
• on the death of the worker or employer;
• on expiry of the agreed term, on account of bankruptcy or liquidation of the employer, and
• on the worker’s retirement.

Dismissal

In Argentina, employment contracts may be terminated at the initiative of the employer where the employer can prove “just cause” or in the case of force majeure.

Either of the parties may terminate the contract of employment if the other fails to discharge his or her obligations under the contract to an extent such that the relationship can no longer continue (Law No. 20744, art. 242). Argentinean employment law, unlike others in the region, opts for an open definition of termination for “good cause,” without indicating specifically the conduct or acts that will be considered sufficient to terminate employment. Where a challenge to a dismissal arises, determination of “good cause” will be determined judicially. Presiding judges take into consideration the nature of the relationships established by an employment contract as provided by article 242 of the LCT. When an employer decides to dismiss a worker for good cause, notice of the fact must be given in writing with a sufficiently clear indication of the grounds invoked for the termination of the contract. Where the other party challenges the termination, no changes in the grounds indicated in the notice are permitted (LCT, art. 243).

A worker’s abandonment of his or her work may be regarded as constituting a failure to discharge his or her duties only if he or she is found to be absent after formal notice has been served on the worker instructing him or her to resume work within a period appropriate to the circumstances of the case (LCT, art. 244).

Where a dismissal is ordered for reasons of force majeure or on account of a shortage or reduction of work that is duly proved to be beyond the employer’s control, the worker is entitled to receive compensation. In such cases the first workers to be dismissed will be those with the shortest length of service (LCT, art. 247).

Argentine law provides special protection from employment termination to some specific classes of workers, including: women, trade union representatives and members, injured workers, workers on the verge of retirement, and those serving in the military.  

Under the provisions of the LCT, no woman is allowed to work for the 45 days before and 45 days after giving birth. A woman worker must notify her employer of her pregnancy and provide a medical certificate stating that her confinement will probably take place within the period indicated. She is to retain her employment during the period indicated and is entitled to the allowances granted by the social security schemes. She must also be guaranteed stability of employment, which will constitute an acquired right from the date on which she notifies her employer of the fact that she is pregnant (LCT, art. 177).

It is presumed, in the absence of proof to the contrary, that dismissal of a female worker is carried out on the grounds of maternity or pregnancy if it took place within seven and a half months before or after confinement, if and when the woman has fulfilled her obligation to notify and prove, through certification, the fact that she is pregnant and, if applicable, the birth of the child. Under such circumstances, she should be paid compensation equivalent to one year’s wages in addition to any other compensation required by law (LCT, arts. 177 and 182).

The LCT also provides for employment stability in the event of marriage, considering null and void any dismissal that takes place within three months before or six months after a worker’s marriage, on condition that the employer has been duly notified of it in the prescribed form. Where an employer fails to comply with this prohibition, he or she must pay compensation equal to one year’s remuneration in addition to any other remuneration prescribed by law (LCT, arts. 180, 181 and 182).

A worker belonging to a board of management or holding representative office in an occupational association with trade status, in bodies which require trade union representation, or holding political office in the Government, is entitled to automatic leave without pay, and the employer must keep his or her job open and reinstate him or her when he or she ceases to perform his or her duties. The worker is to enjoy security of employment throughout the term of office and for one year thereafter, unless there is good cause for dismissal (Act No. 23551 of 14 Apr. 1988 on trade unions, art. 48).

Trade union representatives in an enterprise may not be suspended, have their working conditions changed, or be dismissed throughout their terms of office and for one year thereafter, unless there is good cause for doing so. Security of employment for a trade union representative begins from the time of his or her candidature for a representative office in a trade union is submitted, and he or she may not be dismissed or suspended without good cause, nor may his or her conditions of work be modified for a period of six months (Act No. 23551, arts. 48 and 50).

Where, on expiry of the periods for which work may be interrupted on account of a bona fide accident or illness, a worker is unable to return to work, the employer should keep his or her post open for one year, counting from the expiry of such periods (LCT, art. 211).

Where a worker fulfils the qualifying conditions for retirement pensions and begins the necessary formalities, the employer must maintain the employment relationship until the appropriate fund grants the benefit, for a maximum of one year (LCT, art. 252).

An employer must keep a worker’s post open if the latter is obliged to perform compulsory military service because of an ordinary call-up, mobilization or special call-up, and must continue to do so from the date of the call-up and until 30 days after the completion of the service (LCT, art. 214).

Notice and prior procedural safeguards

Neither party to a labour contract may terminate the contract without prior warning (Law No. 20.744, art. 231, text ordered by executive decree 390/70, at 1198).  A party failing to provide sufficient warning will be liable for a payment of indemnification pursuant to LCT Article 245. Under the original Labour Contract Law, if an employee wished to unilaterally terminate the contract, he or she was required to provide the employer with thirty days notice.  The employer, on the other hand, was required to give employees with less than five years of service to the company thirty days notice before termination and those with more than five years two months notice. Further, the employer is required to grant such a dismissed employee two hours of leave a day to seek alternative employment (Law No. 20.744, art. 237). The Labour Reform Act revised these time periods (See Law No. 25.013, art. 6).  Employees are now only required to provide employers with fifteen days notice.  Employers are required to give fifteen days notice for all employees with less than three months of service to the company.  For those employees with more than three months and less than five years the required notice remains one month and for those with over five years the period remains two months.  If either party terminated the contract with less than the required notice, and without just cause, that party would be subject required to make indemnification payments to the other party.

The LCT required terminating party to compensate the other the amount of wages that would have been paid during the remainder of the notification period (Law No. 20.744, art. 231).  This formula has been altered slightly by the Labour Reform Act, which now calculates indemnification as one-twelfth of the discharged employee’s monthly base salary for each year of service (Law No. 25.013, art. 7).  In an effort to avoid massive layoffs during the 2001 financial crisis, indemnification payments were doubled in a declaration a public emergency.[6]   However, they have now been lowered to 50% of the base salary.[7]

Where a worker terminates his or her contract on the ground of the employer’s fault (constructive or indirect dismissal), he or she is entitled to the compensation provided for in the LCT (art. 246).

The only procedural requirement for dismissal with good cause is the submission of written notice of the fact of dismissal with a clear indication of the grounds invoked for the termination of the contract. There is no legally prescribed time limit for the submission of this notice (LCT, art. 243).

Prior to the notification of dismissals or suspensions on the grounds of force majeure, or for economic or technological reasons, the prescribed crisis prevention procedure (as stated in

LNE, arts. 98 et seq.) must be initiated. If no agreement is reached, or if the agreement is not officially approved, the employer must give ordinary notice in accordance with the terms prescribed by the LCT for dismissal without good cause (see above).

Supplementing the provisions of the LNE, Decree No. 2072/94 (plan for enterprises in crisis) of 25 November 1994 states that when the procedure for crisis prevention is initiated at the instance of the employer and affects enterprises employing more than 50 workers, the initial application must, as a minimum, clearly state the measures the enterprise proposes to overcome the crisis or to minimize its effects. In particular, the employer must indicate the measures he or she proposes in each of the following cases:

• effects of the crisis on the job and proposals for preserving the job;
• functional schedule and wage mobility;
• investments, technological innovation, production adjustment and organizational changes;
• retraining and skills upgrading for the workforce;
• internal and external reassignment of excess workers and the assistance scheme for reassignment;
• reformulation of operational conditions, concepts and remunerative structures and content of posts and functions;
• agreed contributions to the integral system of retirement and pension benefits; and
• assistance in the creation of productive ventures for excess workers.

Similarly, if the proposal made by the employer to overcome the crisis includes staff reductions, the submission must indicate the number and category of workers to be made redundant and quantify the compensation packages offered to each worker concerned (Decree No. 2072/94, art. 1).

There are also provisions which state that when the termination of a contract results from an agreement reached between the employer and the trade union representing the workers, the Ministry of Labour and Social Security, at the time of approval, should grant increases in the unemployment benefits, in the amounts fixed by regulation, and within the budget resources available (Decree No. 2072/94, art. 4).

The termination of employment at the expiry of the agreed term of fixed-term contracts requires between one and two months’ notice if the contract had been concluded for more than one month. Contrary to that which occurs in other situations, failure to give notice may not be covered by compensation in lieu of notice, but will incur the consequence of transformation of the contract into a contract for an unspecified period (LCT, art. 94).

The employer is not required to give prior notice of termination of contracts for casual work (LNE, art. 73).

Severance pay

In the absence of notice, or if insufficient notice is given, the employer must pay the worker compensation equivalent to the remuneration corresponding to the periods of notice prescribed by law (see prior procedural requirements, dismissal without good cause, above).

An employer who orders a worker’s dismissal without good cause, either with or without notice, must pay the worker compensation equal to one month’s wages for every year of service and every fraction of a year greater than three months, taking as a basis for the calculation the highest monthly remuneration normally and regularly received during the last year or during the period for which the services were performed, whichever is less.

The amount of such compensation should not exceed the equivalent of three times the monthly sum resulting from the average of all remuneration provided for in the collective labour agreement applicable to the worker at the time of his or her dismissal in respect of a legal or agreed day’s work, excluding length of service.

In the case of workers who are not protected by collective labour agreements, the limit established in the preceding paragraph will be the one corresponding to the service agreement applicable to the establishment where the work is being performed, or to the most favourable agreement, where more than one exists.

In the case of workers paid on commission or with variable remuneration, the service agreement to be applied should be the one pertaining to such workers or applicable to the enterprise or establishment where they are performing services, whichever is the more favourable. The amount of such compensation should in no circumstance be less than two months’ wages (LCT, art. 245 and LNE, art. 153).

Where an employer orders the dismissal of a worker with good cause and, in the judge’s estimation, can provide justification for the decision, the dismissal will proceed without entitlement to compensation (LCT, arts. 242, 243 and 244).

Where a dismissal is ordered for reasons of force majeure or on account of a reduction of work that is duly proved to be beyond the employer’s control, the worker is entitled to receive compensation equal to half that provided for in cases of dismissal without good cause (see above) (LCT, arts. 247 and 245, and LNE, art. 153).

If the worker can prove that his or her withdrawal from the employment contract was based on good cause, he or she will be entitled to compensatory indemnification (LCT, arts. 232 and 233) and to severance pay (LCT, art. 245) (see above).

Under Law 25323 (Official Bulletin of 11 October 2000) the amount of severance pay and compensation in lieu of notice is paid at twice the base rate (i.e. a 50 per cent increase) when the employer had failed to register the employment relationship. This measure has been adopted to fight against undeclared employment, which in 1999-2000 affected more than one third of all wage earners.

In fixed-term contracts, an unjustified dismissal which occurs before the expiry of the contract will give the worker the right, apart from the compensation corresponding to the termination of the contract in such circumstances, to damages in accordance with ordinary law.

When a contract is terminated after due notice has been given and after the contract has been fully performed, the worker is entitled to compensation prescribed for cases of dismissal without good cause, on condition that the contract has been in force for at least one year (LCT, arts. 95 and 250).

There will be no entitlement to compensation where the employment relationship ceases as a result of the termination of the work or task assigned, or the cessation of the grounds giving rise to the contract (LNE, art. 73).

Avenues for redress

Litigation of individual legal disputes, regardless of who the parties are (including the Government), through claims or counter-claims based on contracts of employment, collective labour agreements, awards having the effect of collective agreements, legal provisions or labour law regulations, and actions between employers and workers relating to an employment contract, although based on provisions of ordinary law applicable to it (Act No. 18345 on the organization and procedure in national labour regulations., art. 20), fall within national labour regulations.

Under the provisions of article 105 of Act No. 18345, final rulings and all decisions which put a partial or complete end to the action are subject to appeal, since such rulings and decisions are not subject to appeal when the value they seek to challenge on appeal is equivalent to four times the sum of the minimum living wage in force at the time the action was brought (Act No. 18345, art. 106). When the ruling or decision against which the appeal is made is due to disciplinary reasons, no payment will be required (Act No. 18345, art. 108).

Further information

• ILO NATLEX Argentina
• Marshall, Adriana.  Labor market policies and regulations in Argentina, Brazil and Mexico: Programmes and impacts.  Consejo Nacional de Investigaciones Científicas y Técnicas and Instituto de Desarrollo Económico y Social, Buenos Aires.  2004. 
• “Good or Bad?  Labor Market Reform and the Unorganized, Unprotected Workforce in Latin America Today,” presentation at McGill University’s Center for Developing Area Studies, March 1, 2006. 
• Keenan, Paul, “The 1998 Argentine Labor Reform Act: A Perpetuation of the “Incoherent State”?, University of Miami Law Review, October, 1999. 
• Heckman, James and Carmen Pagés, “The Cost of Job Security Regulation: Evidence from Latin American Labor Markets". 

[1] Law No. 20.744, art.21, text ordered by executive decree 390/76, at 1177 (governing contracts of employment).

[2] Law No. 24.013.

[3] Law No. 25.013.

[4] Law No. 25.250.

[5] One of the main innovations of the LNE is the recognition of the possibility of concluding contracts of specified duration even when they cover or fill posts or tasks of a permanent nature (arts. 43 and 109, LNE). Thus, the legal text invokes the principle of employment stability for exceptional requirements having nothing to do with the promotion of employment.

[6] Law No. 25.561, Public Emergency and Exchange Regime Reform (Emergencia Publica y Reforma Del Regimen Cambiaro).

[7] Law No. 25.561, Public Emergency and Exchange Regime Reform (Emergencia Publica y Reforma del Regimen Cambiario), was passed in 2002 in reaction to Argentina’s financial crisis.  It doubled indemnification payments for dismissals without just cause to prevent massive layoffs.  This law was extended by successive presidential decrees, the last of which, Decree 2014/04 in 2004, left indemnification payments paid by employers at 50% over the original labour law.