1. SOURCES OF EMPLOYMENT LAW
The sources of employment law in Argentina are the following:
The National Constitution (section 14 bis) establishes that work in its diverse forms shall enjoy the protection of law to ensure dignity and equality in working conditions. Among others, it guarantees workers the following rights: limited work day, paid vacations, fair compensation, minimum wages, equal compensation for equal work, protection against arbitrary dismissal, stability for public employees and freedom of association. In addition, it guarantees to the unions the right to bargain collective agreements and the right to strike; and gives union representatives guarantees to perform their union duties and stability at work. Finally, it mandates that the State shall provide integral social security benefits.
Some international conventions have constitutional authority due to the 1994 Constitutional Amendment. These include: the Inter-American Convention of Human Rights; the Universal Declaration of Human Rights etc. Other treaties and conventions can acquire constitutional authority if they are approved by two-thirds of the total number of the Senate and Deputies chambers’ members. The conventions that enjoy constitutional authority prevail over the national laws.
Argentina has ratified many International Labour Organization (ILO) Conventions, including Conventions nos 1 on Working Hours, 87 on Freedom of Association, 98 on Collective Bargaining, 105 on Forced Labour, 111 on Discrimination, 156 on Equal Opportunities between male and female workers, 163-166 on Sea Workers and 189 on Child Labour.
The most important employment laws are the Employment Contract Act 20744, the Working Time Act 11544, the Employment Act applicable for minimum wages and collective dismissals 24013 and the Collective Bargaining Act 14250.
Collective Agreements generally cover almost every activity nationwide. Each agreement establishes the workers covered and excluded from the agreement. Collective agreements for activity at the national level are usually negotiated between the national certified union of the highest level for the activity and the chamber of businesses of the corresponding activity. Lower level – regional or company – collective agreements can also negotiated, but they cannot reduce the benefits of an agreement of superior level.
Individual contracts cannot waive legal employment rights or the ones arising from collective agreements.
2. PRINCIPAL INSTITUTIONS
The Ministry of Labour, Employment and Social Security is the national official government department that deals with most issues related to employment law in Argentina.
Among its functions it must assist the President and the Chief of Ministers in matters of individual and collective employment conditions and relations, work training and social security. In particular is has the following role:
In addition, each province has its own department in charge of inspections, law enforcement and mediation procedures.
3. ROLE OF THE NATIONAL COURTS
The National Labour Courts deal with all cases related to employment, as long as they are filed in the City of Buenos Aires. Most of the procedure is written.
The National Labour Courts concentrate most on employment litigation. On appeal, claims are decided by the National Labour Chamber, which is divided into divisions. Finally, employment cases can reach the Supreme Court, where federal issues are discussed. The Supreme Court’s rulings are binding only on the specific case under consideration. However, the lower courts follow the Supreme Court’s doctrine due to the intellectual influence that it exerts.
When complaints are filed in a province, the Employment Tribunal or a general trial court or tribunal can have competent jurisdiction depending on which province the action is brought.
4. EMPLOYMENT STATUS AND CATEGORIES OF WORKER
Under Argentinean law, reality has priority as the basic rule to define whether a person is a dependent employee or a self-employed worker. The legal, technical and economic subordination used to be a key factor in determining the existence of an employment relationship. The real nature of the relationship and the existence of subordination preempts any contract.
In the last few years, the criteria to follow are more and more focused on the existence of economic dependence and the assumption of a financial risk. Main income deriving from a single source and a continued relationship in time will very likely determine that the worker is a dependent employee. Personal services rendered for a third party’s benefit, correlative invoices issued, the place where the work is performed etc are some factors that the court will analyse to determine the existence of an employment relationship.
In addition, under s 23 of the Employment Contract Act, it is presumed that an employment contract exists when the service provider cannot be categorised as a business organisation. A wide debate has taken place regarding the correct interpretation of this section. It is usually understood that the presumption does not apply to freelance professionals.
In order to establish the existence of employment and to claim payment of social security taxes, the National Administration of Public Income (AFIP) requires the following information:
Employees have the right to be notified before dismissal, to collect severance pay in case of dismissal without cause and severance pay in case of redundancy. They have the right to a minimum wage, paid vacation, special paid leave, paid maternity leave, thirteenth month payment, sick leave pay, equal pay and payment free of unauthorised deductions. They are entitled to freedom of association and union rights.
Indefinite-term workers, part-time workers, white and blue collar workers, fixed-term workers and even casual workers are all subject to employment laws. Most blue collar workers are covered by collective agreements, and cannot opt out. In some cases even white collar workers are covered by collective agreements.
Directors are not necessarily employees. They are considered employees if they perform executive duties. However, a director can opt to be excluded from the social security system applicable to employees.
There is no requirement for a written employment contract. The employment contract exists whenever there is an employment relationship.
The employment contract can be for an indefinite term, fixed term or casual term. The indefinite-term contract can be seasonal. In addition, all types of contracts can be part time.
The indefinite-term contract has a three-month initial period during which both parties can terminate the contract without the need to express any cause and without paying severance. However, the employer must give or pay 15 days’ prior notice.
Employers cannot give part-time workers, fixed-term workers or casual workers less favourable treatment than full-time, indefinite-term employees.
Part-time workers cannot work more that two-thirds of the complete legal or CBA work time. In addition, these workers are not allowed to work overtime. These types of contract should be formalised in writing.
Finally, in the case of dismissal without cause, indefinite-term employees are entitled to severance pay and, in case of redundancy for economic reasons, lack of work or force majeure, to half the severance pay they would have received if dismissed without cause.
The Business Associations Law governs directors. However, directors can choose to be excluded from the social security system.
In addition, if directors have executive responsibilities, they are to be considered also as employees. Therefore, many directors are also employees. In those cases, they enjoy the same rights as any other company employee.
The role of director and employee remain separate and the termination of one of the relationships does not imply the termination of the other.
5. CONTRACT
Under Argentinean law, an employment contract exists when a natural person obliges him or herself (intuitu personae) to render services or perform work for a fixed or indefinite period in favour and under the control of another person, for the payment of a remuneration. The object of the employment contract is the productive and creative activity of the human being.
No formal requirements are set for indefinite-term contracts. However, employees must be registered with the Social Security Administration, must have a social security number and the On time Registration Procedure must be completed. Other formal procedures are to be followed. Some of them depend on the employers’ activity and the province where employment takes place.
Fixed-term, casual, seasonal and part-time contracts should be formalised in writing and must include some of the formal requirements discussed above.
The employment contract may include references to other contracts or documents.
The employment contract cannot repeal any other employee rights emerging from laws or collective bargaining agreements. Any contractual term purporting to impair said rights will be considered void.
6. TERMS AND CONDITIONS
No mandatory express terms are fixed for employment contracts.
As in any other written contract, the names of the parties must be included. Usually, the date of commencement of the employment, salary, hours of work and job title or description are included.
In addition, contracts also include confidentiality and non-compete clauses as well as email, internet and telephone use policy.
If bonuses are paid, or the remuneration is variable, it is advisable to include the express terms and conditions governing this type of compensation.
7. EMPLOYEE REPRESENTATION
Trade unions can have different statuses. In order to be able to bargain collectively and to strike, unions must be awarded official union representation, ie Official Union Status granted by the Ministry of Labour. Employees do not need to be trade union members in order to be represented. All employees of the activity are represented once a trade union gets the status. In addition, unions run the health insurance schemes and employees can affiliate themselves to the trade unions to get additional benefits and to be able to be elected as union officers. Many collective bargaining agreements establish union dues, which are paid in compensation for the expenses a union must incur in order to bargain collectively.
Union elections can be called at company level. One representative can be elected in companies employing up to 50 employees, and two in those employing up to 100 employees. Exceeding that number, one additional representative can be elected per each 100-employee number.
In case of companies where work is organised in shifts and as long as the number of employees is sufficient, there must be one representative per work shift.
Where more than three workers’ representatives are elected in a company, they must be organised as a works council.
In order to bargain collectively per company, the workers’ representation is in charge of the officially recognised trade union and the workers’ representatives elected in the company, with a cap of four company workers.
Workers’ representatives are protected by law. This guarantee is established in s 14 bis of the National Constitution. Argentina has ratified the ILO’s Fundamental Conventions in this field, among them, Conventions nos 87 and 98 establishing protection for trade union representatives.
The Trade Unions Act 23.551 establishes the protection of workers’ representatives:
Consequently, the employer’s faculties depend on the legal procedure necessary to exclude workers’ representatives from the abovementioned guarantee. Once such protection ends the employment relationship develops as normal.
It would be convenient to note that the law grants protection only to those representatives who hold elective or representative positions in ‘legally recognised’ trade unions. Let us recall that such status implies the ‘representation capacity’ qualification that the state grants to the most representative union.
For the purpose of specifying the kind of protection that workers’ representatives have pursuant to the current legislation in force, the individuals protected by Act 23.551 and its regulatory decree are as follows.
In order to enjoy the abovementioned protection the following conditions must be met.
1. The appointment must legally comply with:
The requirements of participating associations and lists are controlled by the Electoral Office that is the specific monitoring entity within the union sphere, notwithstanding the eventual or possible intervention of the administrative authority, ie the Ministry of Labour, Employment and Social Security or in a last stage, the Labour Courts.
The above are public order requirements; however, according to case law, if the employer does not object to them in due time – jointly with the appointment notification – the objection is ineffective against the representative if his or her mandate is challenged when a compensation claim is filed.
2. The appointment must be notified to the employer through telegram, registered letter or any other written document.
The notification must be sent by the pertinent trade union or the worker him or herself. It is essential that the employer knows about the appointment and the protection related to its workers’ representative status. Obviously the worker must also be aware of the legal protection that the Workers’ Associations Act grants.
If the employer allows the performance of union activities without due and timely notification, case law and jurisprudence allow it to allege ignorance of the worker’s status due to lack of pertinent written communication.
This is a judicial proceeding that is before dismissal, suspension or modification of working conditions.
The employer’s acts violating such guarantee are illegal and absolutely null and void. As compensation, the law authorises reversal of the situation to its previous status, to reinstate the worker to his or her previous position and to pay the salaries due during the time the proceeding takes. The worker may choose to consider the labour relationship as terminated in which case the pertinent legal severance must be paid plus the salaries corresponding to the mandate’s remaining time plus the subsequent protection year.
8. INFORMATION AND CONSULTATION
On business reorganisations and redundancies, special administrative procedures must be followed before the redundancies can be notified to the employees.
The procedure to be followed varies, depending on the percentage of the employees to be made redundant. In any case, the Ministry of Labour and the union representing the employees must be notified and take part in the proceedings, if the employees were hired before 1 January 2002.
Collective dismissals involve different possible scenarios.
The first is redundancy, when the employer contends economic reasons, lack of work or force majeure and intends to apply s 247 of the Employment Contract Act to pay 50 per cent of the severance. In these cases, before any dismissals are notified to employees, a Dispute Prevention Proceeding (DPP) must be commenced and followed for companies employing up to 400 employees that decide to make redundant more than 15 per cent of the workforce, or companies whose workforce is between 400 and 1,000 employees when more that 10 per cent of the employees are to be made redundant, or companies employing more than 1,000 employees when up to five per cent of the workforce is to be made redundant.
The DPP must be filed before the local labour authority. It is established that a hearing before the labour authority must be held between the union and the employer within 48 hours after the proceeding is commenced. If no agreement is reached on that opportunity, a bargaining stage of ten working days is opened. If this stage is successful, the administrative authority must approve or deny it within a ten-day period. Otherwise, the proceeding is closed.
The employer and the union cannot adopt any measures during the proceeding. After the proceeding is closed, the employer can notify the dismissals and the union can strike.
Usually, this proceeding’s schedule is not strictly followed and if no agreement is reached, the Labour Authority can establish a mandatory conciliation period during which the parties cannot adopt any measures and must bargain in good faith. This period can take up to 20 additional working days.
The initial document to file a DPP must include:
In addition, during the DPP, employers with more that 50 employees must inform the labour authority and the union about the measures proposed to overcome the crisis in the following areas:
The second possibility takes place when the company decides to implement collective dismissals in the percentages described above, without alleging the abovementioned causes. In this case, no proceeding must be followed and the complete severance must be paid if employees were hired after 31 December 2002.
However, after the 2001 crisis and based on the emergency laws and Executive Orders passed, the DPP must also be followed for employees hired before 1 January 2003 and that are to be dismissed in the percentage described above without alleging economic reasons, lack of work or force majeure.
Finally, the following information must be provided in case of company reorganisation:
Every year, employers with more than 300 employees must submit a social balance (report) to the union and to the labour authority. This balance contains information on, among other things:
9. EQUAL OPPORTUNITIES
The scope of the Anti-Discrimination Act is broad and specific anti-discrimination provisions are established in the National Constitution, ILO Conventions and other specific laws, such as the Employment Contract Act (ECA). The ECA prohibits discrimination based on any of the following grounds:
According to the latest decisions of the Chamber of Appeals, this act is applicable to employees, who are entitled to claim reinstatement, damages or consider themselves as unfairly dismissed if they suffer discrimination by the employer based on any of the grounds mentioned above.
In addition, specific provisions apply to the dismissal of pregnant women and newly married employees. These provisions presume discrimination and increase the severance compensation in case of dismissal.
Union members, legally elected employee representatives and candidates to an election enjoy a similar type of presumption and can request reinstatement or increased severance compensation. Their employment conditions cannot be changed and they cannot be suspended or terminated without a prior legal proceeding.
National legislation and International Conventions establish the principle of equal pay for equal work, especially regarding female workers.
Law 22.432 promotes the employment of disabled people with an income tax reduction of up to 70 per cent of the amount paid to those employees. Additionally, the national government, state-run companies and public services private companies must necessarily employ at least four per cent of disabled people out of the total workforce.
Harassment can be deemed to be sufficient cause to justify a claim for indirect dismissal. The harassed employee is entitled to claim severance pay from the employer. This severance is the same as that for ordinary dismissal without cause.
There are specific anti-harassment provisions for public workers at national and provincial levels which vary depending on the province. In general, they prohibit sexual harassment.
Female employees are entitled to 90 days’ paid maternity leave. Usually, this is taken as 45 days before giving birth and 45 days after childbirth. However, the employee can choose to distribute the leave differently, by taking 30 days before giving birth and 60 days after childbirth. This leave is paid by the social security system.
Female employees can also request additional unpaid leave of between three and six months.
In addition, while breast-feeding, female employees are entitled (for up to one year after the birth) to two daily half-hour periods to feed the baby.
During the pregnancy period, and up to seven-and-a-half months after giving birth, the employment of a female employee cannot be terminated without a fair cause.
The Chamber of Representatives has very recently approved the extension of the paternity leave (for birth and adoption cases) for male employees to 15 days. The approval of the Senate is expected very shortly.
Meanwhile, paternity leave after childbirth is only two days.
No specific legislation has been passed regarding adoption leave, even though there are several bills for discussion in Congress.
9.4 Non-occupational disease or accident paid leave
Employees with less than five years’ seniority and no family allowance are entitled to up to three months’ paid leave in case of illness. If the employee has more than five years’ seniority, he or she can take up to six months’ paid sick leave. The entitlement to paid sick leave doubles if the employee receives family allowances. Sick pay is paid by the employer.
10. DISCIPLINE AND TERMINATION
Employers have disciplinary authority over their employees. Collective agreements can establish grievance procedures.
The employer’s disciplinary powers include reprimands or warnings, suspensions and termination for cause.
In Argentina, the Constitution-based general system governing private dependent employment is the so-called ‘relative atypical stability’ according to which the employer may terminate the employment contract without cause but paying the pertinent mandatory severance.
The termination, although it may be discriminatory and therefore illegal, shall be effective and shall cause the payment of severance but not job reinstatement except when expressly demanded by law.
The National Constitution prohibits arbitrary dismissals. Under the ECA, employment is presumed to be for an indefinite term. Therefore, when an employee is dismissed without cause, this is considered to be an arbitrary dismissal. Different Acts regulate this constitutional protection.
Employees hired for an indefinite term who have more than three months’ seniority have the right to severance pay and notice when they are dismissed without cause. The severance payment’s calculation basis is the employee’s highest regular monthly salary, although the payment is capped by law. This cap means that the salary taken as multiplication basis per year of seniority cannot be higher than three times the average salary established in the applicable collective agreement.
The Supreme Court has recently ruled that the legal cap was contrary to the protections enshrined in the National Constitution and consequently it cannot reduce the amount of the severance pay by more than 33 per cent.
In any event, Emergency Laws 25,561 and 25,972 have established an 80 per cent severance increase for employees hired before 1 January 2003.
In the case of dismissal for cause, the employee can sue for wrongful dismissal within the following two years, which is the period established by the statute of limitations.
Union representatives, pregnant women and recently married employees have additional protection from discrimination. In these cases, discrimination is presumed and the employer carries the burden of proving that the dismissal was not discriminatory.
Non-indefinite-term employees whose employment is terminated before finishing the project or period for which they were hired can sue for damages. This is usually calculated as the remaining salary that would have been paid had the employee been able to finish the project or the employment period.
In addition, fixed-term employees who have been employed for more than one year are entitled to 50 per cent of the severance of an indefinite-term employee when their employment is terminated due to the completion of the period for which they were hired.
10.1 Governing rules for terminations
The grounds for terminating the employment contract are governed by law although this is not a restrictive enumeration, but a definition. Therefore the judicial power, guided by the objective rule of sound judgment, has final charge over evaluating the facts and categorising them pursuant to such definition.
Either party may terminate the employment contract in case of the other party’s noncompliance with their obligations and the engagement in a conduct constituting an offence that prevents the continuation of the employment relationship. Judges shall evaluate the situation based on the nature of the employment contract relations, and each case’s individual facts and circumstances.
At the first stage, the inclusion of clauses related to the offence’s degree justifying the termination are not binding for the judge and the party terminating the relationship has the burden to prove the fair cause for dismissal.
10.2 Basis for just cause terminations and their evaluation
The evaluation of just cause leading to contract termination must be based on each case’s individual circumstances and must follow the subjective liability criteria of the Argentine positive law, as well as the employers’ and employees’ good faith principles.
The doctrine and case law provide a number of useful practical rules. The offence must be evaluated from the qualitative and quantitative point of view according to the following principles:
10.3 Most frequent termination causes in Argentinean jurisprudence
10.4 Dismissal cases
Although the principle protects the subsistence and duration of the employment relationship, once the termination has taken place it shall be assessed if the facts justified the measure but not if the dismissal was valid as a legal act. Likewise, the employer may not unilaterally revoke the dismissal and the employee may not demand its annulment and the employment reinstatement, unless he or she can prove discrimination. The other exception is the dismissal, without the pertinent previous proceeding, of a worker representative duly elected or a candidate during the period of protection. In these cases the dismissal shall be null and void but, at the employee’s choice, the employment relationship may be terminated with the pertinent severance payment.
There are different circumstances modifying the consequences of dismissal:
10.5 Severance and compensation to be paid upon dismissal
The following payment criteria may be followed according to legal provisions and decisions issued by the National Court of Appeals on Labour Matters, the Buenos Aires Province Labour Courts and the Provincial High Court of Justice.
Seniority payment
One month’s pay for each year of service rendered or period longer than three months based on the higher monthly, normal and habitual salary accrued during the last year or service period if shorter. The highest normal and habitual salary collected during the last year worked must first be determined.
Once the base or reference salary is established, such amount must be compared with the cap applicable to the pertinent sector or industry, that is equal to three times the average of the monthly salary payments established in the collective bargaining agreement in applicable sector or industry. The Ministry of Labour shall fix and publish the corresponding cap for each collective bargaining agreement. In the case of workers not covered by collective bargaining agreements, the cap to be applied shall be the one established in the most favourable collective agreement applicable to the employer where duties are performed.
The resulting amount is multiplied by the years of service plus any additional period longer than three months.
The amount obtained must be compared with the monthly, normal and habitual remuneration accrued, since in no case shall the compensation be lower than such amount.
Payment in lieu of notice
Different notice terms are established according to the employee’s seniority: • one month for seniority not exceeding five years; and
• two months for seniority exceeding five years. During the trial period, which is for indefinite-term contracts, and of three months’ extension, notice must be given 15 days in advance.
If the advance notice is omitted, payment shall be made in an amount equal to the sum the employee would have collected during these periods.
Proportional thirteenth-month payment on compensation in lieu of notice
The proportional thirteenth-month payment shall be paid in the compensation in lieu of notice.
Payment of dismissal month
Calendar month method. As the calculation of the notice term starts the first day of the month following notice, when the employer dismisses without advance notice, compensation shall include the missing days until the end of the month in which notice is given. Payment includes the salary that the worker would have collected in the term starting on the dismissal date until the last day of the month.
Proportional thirteenth month on dismissal month payment
The proportional thirteenth month shall be paid on the dismissal month in the pertinent cases.
Payment for unused vacation leave
No matter the reason for termination, payment for unused vacations shall be equal to the payment of the leave proportional to the time worked until termination.
Proportional thirteenth month on unused vacation leave payment
The proportional thirteenth month shall be paid on the unused vacation leave payment.
Thirteenth-month payment proportional to the time worked
The thirteenth-month payment proportional to the time worked until termination shall be paid in all cases.
10.6 Wages due during the process to ascertain just cause for dismissal
In Argentina, except for provisions for trade union representatives and discrimination cases, due wages must not be paid because the employment relationship terminates once the employer notifies the dismissal.
Therefore, apart from any evidence concerning the dismissal reasons, no more wages are accrued after termination.
10.7 Emergency Acts
These Acts and their regulatory decrees have been in force since the beginning of 2002 and forbid employers to dismiss without just cause any employee hired before 1 January 2003. The penalty for such dismissal has been reduced, and now the increment of the Seniority severance payment is of 50 per cent of the amount provided by law.
Likewise, in order to be able to dismiss, employers must comply with the pertinent proceeding before the labour authority.
This emergency legislation has been challenged for not complying with the National Constitution protections.
10.8 Fixed-term employment contract
When the contract is legally executed for a fixed period of one year or more, once the term expires and the contract is terminated through advance notice the worker shall be entitled to a payment amounting to 50 per cent of the habitual seniority payment.
If the worker is dismissed before the term expires, he or she shall be entitled to the severance for termination of employment in such conditions (50 per cent of habitual seniority payment if the contract’s term is more than a year) plus compensation for damages.
Seasonal workers enjoy the same protection as all other indefinite-term workers, and in the case of dismissal without cause, their severance is calculated on the basis of the effective seniority, which means the number of months effectively worked during the whole relationship.
11. COLLECTIVE DISMISSALS
See section 8.1 above.
12. FORTHCOMING LEGISLATION
There are several projects being discussed by the Labour and Employment Committee of Congress. Some of them include an increase in paternity leave and the assimilation of adoption leave into maternity leave.
In addition an important reform to the Employment Injuries Act 24,557, is expected soon, since the Supreme Court recently found that many important sections of said piece of legislation were against the protections of the National Constitution.
Finally, a project regarding legislation on telework is going to be sent to Congress soon.
Other bills relate to discovery proceedings and extension of the statute of limitations, among others, are being discussed by the Chamber of Representatives.
