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Employment and employee benefits in Argentina: overview
Practical Law Country Q&A 6-502-9887 (Approx. 22 pages)
Employment and employee benefits in Argentina: overview
by Ignacio Funes de Rioja and Eduardo Viñales, Funes de Rioja & Asociados (member of Ius Laboris)
| Law stated as at 01 Nov 2013 • Argentina |
A Q&A guide to employment and employee benefits law in Argentina.
The Q&A gives a high level overview of the key practical issues including: employment status; background checks; permissions to work; contractual and implied terms of employment; minimum wages; restrictions on working time; illness and injury; rights of parents and carers; data protection; discrimination and harassment; dismissals; redundancies; taxation; employer and parent company liability; employee representation and consultation; consequence of business transfers; intellectual property; restraint of trade agreements and proposals for reform.
To compare answers across multiple jurisdictions, visit the Employment and Employee Benefits Country Q&A tool.
The Q&A is part of the Multi-jurisdictional Guide to Employment and Employee Benefits law. For a full list of jurisdictional Q&As visit www.practicallaw.com/employment-mjg.
Scope of employment regulation
1. Do the main laws that regulate the employment relationship apply to:
- Foreign nationals working in your jurisdiction?
- Nationals of your jurisdiction working abroad?
Laws applicable to foreign nationals
Argentinean employment law applies to all workers, regardless of their nationality or the place of execution of the contract, as long as the employment relationship is conducted within the country. The main sources of employment law are:
- The national Constitution.
- International treaties.
- The Employment Contract Act No. 20,744 (ECA).
- The Workday Act No. 11,544.
- The Employment Injuries Act No. 24,557.
- The Mandatory Pensions Act No. 24,241.
- The Collective Bargaining Act No. 14,250.
- Other domestic law, such as health and safety legislation and special professional statutes.
- Collective bargaining agreements (CBAs).
These laws apply to every person working in Argentina, but do not apply to persons from Argentina working abroad, unless the work done abroad is transitory or incidental and most of the relationship is executed in Argentina (see below, Laws applicable to nationals working abroad).
Argentine employment law governs all employment relationships executed in Argentina, regardless of the place of incorporation of the employer or the place in which the contract was concluded.
The ECA gives employees rights to, among other things:
- Severance payments and minimum notice periods in the case of dismissal (see Question 19).
- Paid sick leave (see Question 12).
- A minimum weekly rest period of 35 hours, a 12-hour break between work days and overtime (see Question 10).
- Annual paid vacation (see Question 11).
- A 13th month payment (a form of mandatory yearly bonus).
- Healthcare protection (see Question 28).
- A compulsory retirement plan.
Employment status
2. Does the law distinguish between different categories of worker? If so, what are the material differences in entitlement to statutory employment rights and are there any maximum time periods for which each category of worker can be engaged?
Categories of worker
As there are different types of employment contracts, there are different categories of worker, depending on the type of contract that is signed. Generally, the categories of worker are as follows:
- Full time workers. Work full time under a long-term contract.
- Part-time workers. Work part-time under a long-term contract (receiving proportional payment to full time workers).
- Fixed term contract workers. Work for a specific period of time, which can be no longer than five years, and which must be justified by an extraordinary reason to need to apply a fixed term contract.
- Temporary workers. Work for no longer than six months. These employees can be hired directly by the company or be hired from an employment agency. In all cases, there must be a special reason to apply a temporary work contract (for example, to cover maternity leave or replace an employee who is leaving).
- Seasonal workers. Work under a long-term contract that is performed only at certain periods of the year.
Additionally, all workers can be hired on an initial three-month trial period.
Recruitment
3. Are any grants or incentives available for employing people? Do any filings need to be made when employing people?
Grants or incentives
Some incentives exist, such as a reduction in social security contributions when hiring new employees (see Question 29).
In addition, if an employer hires a person who was previously unemployed and who was receiving a social subsidy, the employer can get a subsidy for part of the employee's salary.
The employment of people with disabilities receives favourable tax treatment.
Background checks
Permission to work
Procedure for obtaining approval. Foreign nationals require an entry permit to apply for a working visa. Entry permits can be obtained from either:
- An Argentine embassy or consulate.
- The National Immigration Office.
Migrant worker requirements:
- Identity card, passport or certificate of citizenship with photo.
- Birth certificate.
- Marriage certificate (if applicable).
- Certificate of Argentine criminal records issued by the National Registry of Recurrence, or Argentine Federal Police (only required for those over 16 years old).
- Certificate of lack of criminal records issued by the competent authorities of those countries where the applicant has resided for a period exceeding one year, during the course of the last three years. It is only required for those over 16 years old.
- Certificate of domicile or utility bill.
- Employment contract.
- Proof of employer's registration with the Federal Administration of Public Revenue (AFIP).
- Proof of employer’s registration in the single national registry of foreigner applicant of the national direction of migration.
- All documents issued abroad must have the legalisation of the Argentine Consulate, located in the country issuing the document, Ministry of Foreign Affairs, International Trade and Worship, or Apostille, if the country has ratified the Hague Convention.
- All documents issued in a foreign language have to be translated into Spanish by a national public translator and legalised by the Translators' Association.
Work permits usually impose restrictions on the employer. In most cases, a permit lasts for up to three years.
Cost. Residence fee costs about US$130, plus professional fees.
Time frame. It can take around 20 days to obtain an entry permit.
A simplified process applies to citizens from Bolivia, Brazil, Colombia, Chile, Ecuador, Paraguay, Perú, Uruguay and Venezuela.
The following documentation is required:
- Identity card, passport or certificate of citizenship with photo.
- Birth certificate.
- Marriage certificate (if applicable).
- Certificate of Argentine criminal records issued by the National Registry of Recurrence, or Argentine Federal Police (only required for those over 16 years old).
- Certificate of lack of criminal records issued by the competent authorities of those countries where the applicant has resided for a period exceeding one year, during the course of the last three years. It is only required for those over 16 years old.
- Certificate of domicile or utility bill.
- All documents issued abroad must have the legalisation of the Argentine Consulate, located in the country issuing the document, Ministry of Foreign Affairs, International Trade and Worship, or Apostille, if the country has ratified the Hague Convention or legalised on the consulate of the country issuing the document in Argentina, only for Mercosur (Mercado Común del Sur) (a regional trade agreement between Brazil, Argentina, Uruguay and Paraguay).
- All documents issued in a foreign language have to be translated into Spanish by a national public translator and legalised by the Translators Association, except Portuguese language for Brazil.
Cost. Residence fee costs about US$65, plus professional fees.
Time frame. It can take between 20 days (if the applicant is in the country of origin) and four months (if the applicant is in Argentina) to obtain an entry permit.
Restrictions on managers and directors
Regulation of the employment relationship
Written employment contract
Written employment contracts are not required for permanent, full-time employment relationships, although they are advisable in many cases. In the case of casual employment, as well as part-time and fixed-term contracts, a written agreement is required.
Implied terms
Terms are implied into employment contracts by statute (from the ECA and other Acts) and by collective agreements (but not by case law).
Collective agreements
Sector or industry-wide collective agreements are common and cover almost every employee, regardless of union affiliation. Most collective agreements apply nationally across a particular industry. However, it is possible to have a collective agreement that applies, for example, to a particular company or group of companies, or even to a particular company premises. All collective agreements must be signed by the trade union. In addition, company level agreements must be signed by up to four employee representatives.
8. What are the main points to consider if an employer wants to unilaterally change the terms and conditions of employment?
The employer can exercise its unilateral rights (ius variandi) provided the changes to the terms and conditions of employment are not unreasonable and do not either:
- Modify the essential terms of the employment contract.
- Cause material or moral damages to the employee.
Where the employee considers that the employer has exceeded the legal limitations of this right, the remedies are constructive dismissal or a summary action to re-establish the prior terms and conditions of the employment contract.
Minimum wage
The Committee for Minimum Wages, which is composed of government, employees and employee representatives, establishes minimum wages for the country. Since 1 September 2012, the general minimum wage is ARS2,267 and since 1 February 2013 the general minimum wage is ARS2,875, regardless of the worker's age and experience.
Restrictions on working time
10. Are there restrictions on working hours? Can an employee opt out on either an individual or collective basis?
Working hours
Employees must not work more than:
- Eight hours a day, which can be extended to nine hours a day if an employee works fewer hours on another day of the week.
- 48 hours a week.
Employees doing work that has been declared unhealthy by the relevant labour authority must not work more than six hours a day and cannot work overtime. Unhealthy work includes working in refrigerated chambers or in some underground premises. The relevant labour authority is the Ministry of Labour, Employment and Social Security (Ministerio de Trabajo, Empleo y Seguridad Social de la Nación) (Ministry of Labour) or the provincial labour authorities, depending on the circumstances.
Overtime must not exceed 30 hours a month and 200 hours a year, unless authorised by the relevant labour authority (see above).
Overtime hours must be paid at a rate of 50% on top of normal salary. This rule applies unless overtime is worked during the weekly rest period or on a public holiday, in which case the relevant pay rate is 100% on top of normal salary. However, some CBAs set higher rates for overtime work.
Rest breaks
Employees must also have rest periods of:
- 12 hours between two working days.
- 35 continuous hours a week.
Shift workers
In the case of shift work, average working hour periods can be established, usually by CBAs. However, there must always be a 12-hour rest period between each working day and the average hours worked a week over three weeks cannot exceed 48 hours.
Night work is performed between 9pm and 6am. Employees must not work more than:
- Seven hours a day.
- 35 hours a week.
Each hour of night work is paid with an additional eight minutes of overtime. Night work limits do not apply to employees on rotating shifts.
Holiday entitlement
Minimum holiday entitlement
Employees who have worked for an employer for more than six months are entitled to two weeks' holiday. The amount of holiday entitlement increases with the length of continuous employment, up to a maximum of five weeks (35 days).
The employer must pay salary and other benefits to the employee during annual leave. This payment is calculated by dividing the salary by 25 and then multiplying it by the number of days' holiday to which the employee is entitled. This must be paid in advance, and leave must begin on a Monday.
Other circumstances in which an employee receives paid leave are:
- Marriage: ten continuous days' leave.
- Death of a child, parent or spouse: three continuous days' leave.
- Death of a sibling: one day's leave.
- A high school or university exam: two continuous days up to a maximum of ten days a year.
Illness and injury of employees
12. What rights do employees have to time off in the case of illness or injury? Are they entitled to sick pay during this time off? Can an employer recover any of the cost from the government?
Entitlement to time off
In the case of illness or accident that is not related to work performed for their employer, employees can take:
- Up to three months' paid leave if they have worked for an employer for less than five continuous years.
- Up to six months' paid leave if they have worked for an employer for more than five continuous years.
The entitlement to paid sick leave doubles if the employee receives family allowances.
After the paid sick leave period expires, the employer must keep the employee's position open for 12 months. If the employee partially or completely recovers during this period, the employer must provide work. If it does not, it must grant complete severance pay, unless it can show that it cannot accommodate the employee.
In the case of accident, injury or (some) illnesses that are related to the work performed for the employer, the cost of treatment, rehabilitation and sick pay is covered for up to 12 months by compulsory employment risk insurance (Aseguradora de Riesgos del Trabajo).
Statutory rights of parents and carers
13. What are the statutory rights of employees who are:
- Parents (including maternity, paternity, surrogacy, adoption and parental rights, where applicable)?
- Carers (including those of disabled children and adult dependants)?
Maternity rights
Female employees are entitled to 90 days' paid maternity leave. This is usually taken in the 45 days before giving birth and the 45 days afterwards. However, the employee can instead choose to take 30 days' leave before giving birth and 60 days' leave afterwards. Leave is paid by the social security system as a family allowance.
Female employees can request additional unpaid leave of between three and six months.
While a newborn baby is breastfeeding, a female employee can take two half-hour periods a day to feed her baby, for up to one year after the birth.
During pregnancy, and up to 7.5 months after giving birth, a female employee's employment cannot be terminated without fair cause. If the employee's employment is terminated, she can claim additional severance (one year's salary, plus regular severance, notice and so on) (see Question 19).
Paternity rights
Male employees can take two days' paternity leave after the birth of a child although some CBAs establish longer periods. There are Bills currently before parliament that propose the extension of statutory paternity leave (see Question 33).
Adoption rights
There is no right to adoption leave in Argentina. However, there are several Bills currently before parliament that propose the provision of full maternity leave to an adopting mother (see Question 33).
Parental rights
The mother of a sick child can resign to care for that child. In this case, she has the right to a payment equal to 25% of the severance payment she would have received if she had been dismissed without cause (see Question 19).
Continuous periods of employment
14. Does a period of continuous employment create any benefits for employees? If an employee is transferred to a new entity, does that employee retain their period of continuous employment? If so, on what type of transfer?
Benefits created
Continuous employment brings the following benefits:
- A higher severance payment for dismissal without cause (see Question 19).
- Increased notice periods (up to two months), for employees with more than five years' continuous employment (see Question 19).
- Increased sick leave entitlement (see Question 12).
- Increased holiday entitlement (see Question 11).
- Increased salary under many CBAs.
Fixed term, part-time and agency workers
15. To what extent are temporary and agency workers entitled to the same rights and benefits as permanent employees? To what extent are part-time workers entitled to the same rights and benefits as full-time workers?
Temporary workers
Temporary and agency workers have the same rights as those granted to permanent employees under CBAs. However, the agency employment relationship is also subject to special regulation, which limits the situations in which an agency worker can be hired, and the length of such a contract (Law No. 24,013).
Agency workers
An agency worker can only be hired to render extraordinary services or to cover extraordinary and transitory requirements of the employer, in cases where the duration of the situation in not certain. Collective bargaining agreements in some cases regulate caps in percentages and duration of the contracts of agency workers, which normally cannot exceed six months per year.
Data protection
16. Are there any requirements protecting employee privacy or personal data? If so, what are an employer's obligations?
Employees' data protection rights
In general, an employee's personal information is protected by law and considered confidential (Constitution and Data Protection Law 25,326). It cannot be used for any purpose other than that for which the information was provided.
Any person can obtain information on their data that is registered in public records or databases, or in private databases intended to supply information (section 43, Constitution). If data is false or used for the purposes of discrimination, an employee can request that the data be suppressed, rectified, made confidential or updated.
Employers' data protection obligations
The international transfer of data to countries not providing an adequate level of protection is prohibited, unless expressly authorised by law (section 12, Data Protection Law).
The Data Protection Law also contains provisions on the protection or rectification of data, and administrative and criminal penalties for breach of the law.
Discrimination and harassment
Protection from discrimination
Discrimination is regulated by the Anti-Discrimination Act No. 23,592 and specific anti-discrimination provisions in the Constitution (section 14 bis), as well as multiple laws and treaties, such as the ECA.
If an employer discriminates against an employee on any of the protected grounds, the employee can claim reinstatement, damages or unfair dismissal, depending on the circumstances.
The ECA applies to all employment contracts executed in Argentina. The Act:
- Prohibits any type of discrimination based on sex, race, nationality, religion, politics, union affiliation or age (section 17).
- Prohibits an employer from requiring employees to express their political, religious or union opinions (section 73).
- Requires that employers treat employees in similar situations equally (section 81). Different treatment based on good-faith principles is permitted (for example, when one employee is more efficient, harder working or more dedicated than another).
- Includes protections concerning maternity, youth and length of time in employment, illness, accidents and disability.
The Constitution provides for:
- Equal pay for equal jobs (section 14).
- Protection against arbitrary dismissal (section 14).
- Employment on the grounds of competence only (section 16).
- Equal rights for foreign nationals (section 20).
- Individuals to have standing in actions against public bodies where discrimination has occurred (section 43).
- Equal opportunities and treatment for, among others, women and people with disabilities (section 75(23)).
The Civil Rights Act 1988 (No. 23,592) prohibits the arbitrary constraint, limiting or undermining of the rights and guarantees provided by the Constitution (section 1). This includes discrimination on the basis of race, religion, nationality, ideology, political or union opinion, sex, economic status, social status or physical characteristics. A person who breaches the Act must, at the request of the injured party, undo the effects of the discriminatory action or stop doing it, and repair any emotional harm or material injury caused.
The Civil Rights Act also:
- Increases the penalties for persecution and hate crimes against a race, religion or nationality (section 2).
- Criminalises participation in organisations that advocate racial, religious, ethnic origin or colour supremacy, which have the object of justifying or promoting any form of racial or religious discrimination (section 3).
- Criminalises the actions of those who encourage the persecution or hatred of any person or group based on race, religion, nationality or political opinion (section 3).
Some courts have recently held that the Civil Rights Act is applicable to employment claims, regardless of specific employment legislation that may also apply.
The Trade Unions Act 1988 (No. 23,551) also contains anti-discrimination provisions:
- Unions cannot differentiate on ideological, political, social, religious, national origin, race or sexual orientation grounds (section 7).
- Trade unions must refrain from discriminatory treatment (section 7).
- All employees and unions must be free to exercise their right to freedom of association (section 47).
- Union officers are protected, in particular against employer discrimination or retaliation (sections 48 to 52).
The following international treaties have constitutional authority:
- OAS Inter-American Convention on Human Rights 1965.
- The American Declaration of the Rights and Duties of Man 1948.
- The UN Universal Declaration of Human Rights 1948.
- The UN International Convention on the Elimination of all forms of Racial Discrimination 1965.
- The UN International Convention on the Elimination of all Forms of Discrimination against Women 1979.
- The OAS Inter-American Convention on the Elimination of All Forms of Discrimination against Persons with Disabilities 1999.
- The UN Convention on the Rights of the Child 1989.
In addition, Argentina has ratified 75 International Labour Organisation (ILO) conventions. Among these, it has ratified all eight fundamental conventions including those regarding:
- Child labour.
- Discrimination.
- Freedom of association.
- Forced labour.
The provisions of some of these treaties can be enforced by local judges, and the government has a duty to periodically inform the ILO of efforts made to correct labour and employment abuses.
Other national legislation of importance includes the:
- Integral System of Disabilities Protection Act No. 22,431.
- Act for the Protection of Diabetic Workers No. 23,753.
- HIV Act No. 23,798.
- Act for the Prevention, Punishment and Eradication of Violence against Women No. 26,485.
Protection from harassment
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. In this regard, presidential orders are also relevant in the context of harassment:
- Decree No. 2,385/93 amended the public function regime, incorporating a sexual harassment provision (section 27(7)(e)).
- Decree No. 254/98 approved the national Plan for Equal Opportunities in Employment for Men and Women.
Argentina has ratified the OAS Inter-American Convention for the Prevention, Punishment and Eradication of Violence against Women 1994. This convention includes specific provisions against sexual harassment.
Harassment is deemed to be sufficient cause to justify a claim of indirect dismissal. The harassed employee is entitled to claim a severance payment from the employer, which is the same as that for ordinary dismissal without cause.
Termination of employment
Notice periods
The following notice periods apply:
- 15 days during the three-month probation period of a permanent employment contract.
- One month for an employee with less than five years' service.
- Two months for an employee with more than five years' service.
Payment in lieu of notice is possible in the above cases.
Severance payments
Severance pay is calculated on the basis of the employee's highest regular, normal monthly salary accrued over the last year, although the payment is capped by law for companies that apply CBAs (most companies do).
The Supreme Court recently held the cap to be contrary to the protections provided by the Constitution (Vizzotti v AMSA, 2004). As a result, the application of the legal cap cannot reduce the amount of severance pay by more than 33%.
The employer must pay the employee's salary in full for the month when the termination occurs.
Fixed-term employees whose employment is terminated before finishing the project or period for which they were hired can claim damages. These are usually calculated as the remaining salary that would have been paid had the employees finished the project or period for which they were hired.
In addition, fixed-term employees who have been employed for more than a year are entitled to 50% of the severance pay that a permanent employee would receive when terminated if the term of employment for which the fixed-term employees were hired has been completed.
Procedural requirements for dismissal
A special procedure applies in the case of redundancy (see Question 21). For other dismissals, the employer must give the employee written notice, stating the cause of dismissal (if any) and the date of termination.
The Constitution prohibits arbitrary dismissals (see Question 17). Under the ECA, employment is presumed to be for an indefinite term. If an employee is dismissed without cause, this is deemed to be arbitrary dismissal.
Different laws regulate this Constitutional protection, with higher protection granted to union representatives, pregnant women and recently married employees. In these cases, discrimination is presumed and the employer bears the burden of proving that the dismissal was not discriminatory.
20. What protection do employees have against dismissal? Are there any specific categories of protected employees?
Protection against dismissal
Employees can claim severance for unfair dismissal, plus an additional amount that increases the severance payment by 50%.
However, in some cases where dismissals have been found to be discriminatory, the courts have ordered the reinstatement of the employee (applying general anti-discrimination legislation, international treaties and the Constitution).
There is no separate claim for wrongful dismissal.
Protected employees
Higher protection is granted to union representatives, pregnant women and recently married employees (see Question 19).
Redundancy/layoff
21. How are redundancies/layoffs defined, and what rules apply on redundancies/layoffs? Are there special rules relating to collective redundancies?
Definition of redundancy/layoff
Redundancies are the termination of a number of employment contracts for business reasons, for example, lack of available work, technological changes, economic reasons or force majeure. It is necessary for an employer to evidence the grounds for the redundancy.
Procedural requirements
On business reorganisations and redundancies, special procedures must be followed before the redundancies can be notified to employees.
The procedure to be followed varies, depending on the percentage of 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.
This procedure can take ten or 20 working days, depending on the percentage of employees to be made redundant. However, the procedure for a large number of redundancies, called a crisis procedure, usually takes longer than 20 working days (the relevant labour authority can allow an extension of time). The crisis procedure is governed by Employment Law Act No. 24013 (Ley de Empleo) and Decrees No. 2072/94, No. 264/02 and No. 265/02.
The crisis procedure must be followed if:
- More than 15% of the workforce is to be reduced in an employer with up to 400 employees.
- 10% of the workforce is to be reduced in an employer with between 400 and 1,000 employees.
- 5% of the workforce is to be reduced in an employer with more than 1,000 employees.
Once the relevant labour authority has been notified of the crisis procedure, it calls for negotiations between the union and the employer to discuss the collective redundancies (or dismissals) and draft a social plan. The employer must provide certain prescribed information to the labour authority and must negotiate in good faith.
Redundancy/layoff pay
This is a reduced payment, equivalent to 50% of the severance payment applicable in the case of dismissal (see Question 19).
Regardless of the type of procedure followed, employees can receive a reduced severance payment if the employer can show that the reason for the redundancy is a result of either:
- A reduction in production not due to the fault of the employer.
- Force majeure.
This reduced payment is equivalent to 50% of the severance payment applicable in the case of dismissal (see Question 19).
Employee representation and consultation
22. Are employees entitled to management representation (such as on the board of directors) or to be consulted about issues that affect them? Is employee consultation or consent required for major transactions (such as acquisitions, disposals or joint ventures)?
Consultation
Every year, employers with more than 300 employees must submit a social balance report to the relevant union and labour authority. This report contains information on, among other things:
- The types of employment contract used.
- Levels of employment.
- Wages.
- Benefits.
- Dismissals.
- Investments.
- Technological innovations.
In addition, if an employer is contemplating collective redundancies (or dismissals) of a certain number of employees, it must follow a special procedure (which varies, depending on the number of employees) (see Question 19).
23. What remedies are available if an employer fails to comply with its consultation duties? Can employees take action to prevent any proposals going ahead?
Remedies
If an employer fails to adhere to the law in a collective redundancy or suspensions, the Ministry of Labour can order the employer to stop taking any measures towards this. Any measures that have already been taken have no effect until the correct procedures are followed.
In addition, the employer may have to pay employees' salaries until the procedure is finished, and it cannot attempt to pay a reduced severance on the basis of a reduction in work or force majeure (see Question 21).
Fines set by the Federal Work Compact can also be imposed. The relevant fine is up to ARS5,000 per employee involved in the measures.
Employee action
Generally, employees can:
- Claim that measures have been illegally taken, and are null and void. If this is the case, the Ministry of Labour orders that the measures be stopped, and employees continue to accrue their salaries. The Ministry can also make an order to the effect that an employer cannot pay a reduced severance on the basis of a reduction in workload or force majeure (see above, Remedies).
- In the case of collective suspensions, employees can argue that they have been constructively (indirectly) dismissed, and claim full severance and notice payments. If this is the case, they also receive any pending salaries, unused holiday leave and a proportional part of the 13th month payment. Employees bring their claims before the Ministry of Labour.
Consequences of a business transfer
Protection against dismissal
If the assets of a business are transferred and the employee is dismissed because the new employer is insolvent, the employee can claim constructive dismissal. In addition, the employee is protected against dismissal without cause even when the new employer is solvent.
Harmonisation of employment terms
Conditions of employment cannot be diminished or reduced, under the acquired rights doctrine and salary protection provisions. In addition, major changes cannot be made to an employment contract without the employee's consent (Article 66, ECA).
Employees also have the general right to equal pay for equal jobs (see Question 17, Protection from discrimination).
Employer and parent company liability
25. Are there any circumstances in which:
- An employer can be liable for the acts of its employees?
- A parent company can be liable for the acts of a subsidiary company's employees?
Employer liability
The employer is liable for the acts of its employees, taken in the course of their employment, that cause harm or damage to another employee or a third party.
Parent company liability
Technically, the parent company can only be held liable for the acts of its subsidiary's employees in limited circumstances, such as malice, fraud and common administration (that is, where both companies have the same management). However, courts have in several cases extended liability to parent companies (in addition to subsidiary companies), even where malice or fraud were not evident.
Employer insolvency
26. What rights do employees have on the insolvency of their employer? Is there a state fund which guarantees repayment of certain employment debts?
Health and safety obligations
One of an employer's main responsibilities is the duty of safety (ECA). The employer must ensure a safe environment and comply with all health and safety regulations and limitations on working hours (see Question 10).
Any damages suffered by an employee as a consequence of work performed under the employment contract must be repaired in accordance with the Employment Injuries Act No. 24,557. Under the Act, a special type of insurance covers this type of damages, unless there is malicious behaviour on the part of the employee.
However, the Supreme Court recently held that the Employment Injuries Act is contrary to the Constitution's principles, as the law imposes caps on the damages that can be awarded and sets specific procedures to be followed. As a result, employees can now claim against the insurer and the employer above the prescribed legislative caps.
Taxation of employment income
28. What is the basis of taxation of employment income for:
- Foreign nationals working in your jurisdiction?
- Nationals of your jurisdiction working abroad?
Foreign nationals
Income tax depends on the place of residence and the source of income. Employees in Argentina (that is, who have a real domicile there) must pay income tax in Argentina on all of their income, regardless of the source. Argentina has entered into double taxation treaties with some countries to avoid overlap between the payment of social security contributions and income tax.
Nationals working abroad
If Argentine employees work abroad but are still deemed to be residing in Argentina, they must pay income tax on the whole of their income. Social security contributions are not paid in Argentina if an employee works abroad permanently. However, voluntary contributions can still be made to the state retirement system. International agreements (that is, double taxation treaties) concerning social security contributions may also apply.
29. What is the rate of taxation on employment income? Are any social security contributions or similar taxes levied on employers and/or employees?
Rate of taxation on employment income
A system of progressive taxation is used, which is collected as deferred tax. Employers must withhold income tax of up to 35%, depending on the employee's total taxable income.
Tax rates are as follows:
- ARS0 to ARS10,000: 9%.
- ARS10,001 to ARS20,000: 14%.
- ARS20,001 to ARS30,000: 19%.
- ARS30,001 to ARS60,000: 23%.
- ARS60,001 to ARS90,000: 27%.
- ARS90,001 to ARS120,000: 31%.
- ARS120,001 and above: 35%.
There is a minimum income that is not taxable for employees. Since 1 January 2011, employees who are single and earn less than ARS5,783 a month, and married employees with two children who earn less than ARS7,998 a month, are exempt from income tax.
Social security contributions
Social security contributions cover:
- The national retirement and pension system. The employee contributes 11% of this payment and the employer contributes 16%.
- The retirement and pension health management organisation. The employee contributes 3% and the employer contributes 2%.
- The national employment fund (the employer contributes 1.5%).
- Family allowances (the employer contributes 7.5%).
- The health system. The employee contributes 0.3% and the employer contributes 0.5%.
- The health management organisation. The employee contributes 2.7% and the employer contributes 4.5% (this rises to 2.55% and 5.25% respectively in the case of management employees).
- The national life insurance system (the employer makes contributions at the rate of US$1.3 per employee).
Bonuses
30. Is it common to reward employees through contractual or discretionary bonuses? Are there restrictions or guidelines on what bonuses can be awarded?
In some industries (such as the high-tech, software, hardware, and the banking and finance industries), bonuses have become common in recent years.
When bonuses are repeatedly paid for similar or the same amounts, they become an acquired right. As a result, clear policies regarding bonuses should be established and notified to employees. These policies help to reduce disputes and avoid litigation.
During the last few years, bonuses have been the basis of claims in relation to severance pay, 13th month payments, holiday pay, social security taxes and acquired rights. As a result, bonus payments should be determined on a case-by-case basis.
Intellectual property (IP)
An employee's inventions are the property of the employer if those inventions are made in the performance of the employment contract (ECA). This is also the case if inventions result from improvements to industrial methods or techniques used or developed in the company.
Inventions and creations not related to the object of the employment contract are the property of the employee. However, the employer has a right of first refusal if the employee decides to sell the invention or creation.
Restraint of trade
32. Is it possible to restrict an employee's activities during employment and after termination? If so, in what circumstances can this be done? Must an employer continue to pay the former employee while they are subject to post-employment restrictive covenants?
Restriction of activities
The employer can expect and require that the employee work exclusively for it during the employment contract. This forms part of the duty of loyalty inherent in the employment relationship.
Post-employment restrictive covenants
After termination, the employer can impose certain restrictions, as long as they:
- Are reasonable.
- Do not completely impede the employee from exercising his constitutional right to work.
There are no specific legal provisions relating to these types of restrictions.
While there is no legal provision on compensation for restraint of trade clauses, under certain circumstances the Ministry of Labour has allowed such compensation.
Proposals for reform
There are currently proposals to:
- Change the basis of calculation for severance payments.
- Ban payments made on a non-remunerative basis.
- Increase the length of the limitation period in the statute of limitations.
- Extend paternity leave.
- Introduce adoption leave rights.
- Regulate and create penalties for harassment.
- Ratify ILO's Convention 158 regarding the creation of a system of stability in employment.
- Regulate telework.
In addition, amendments to the Labour Injuries Act No. 24557 (Ley de Riesgos del Trabajo) are still expected.
Online resources
Infoleg Legislative Information (Infoleg Información legislativa)
Description. Documentary and legislative information area.
Contributor details
Ignacio Funes de Rioja
Funes de Rioja & Asociados (member of Ius Laboris)
)
T +54 11 4348 4100
F +54 11 4348 4161
E [email protected]
W www.funes.com.ar
Qualified. Buenos Aires, Argentina, 1999
Areas of practice. Labour law; employment law; employment discrimination law.
Eduardo Viñales
Funes de Rioja & Asociados (member of Ius Laboris)
)
T +54 11 4348 4100
F +54 11 4348 4161
E [email protected]
W www.funes.com.ar
Qualified. Buenos Aires, Argentina, 1982
Areas of practice. Labour law; employment law; employment discrimination law.