Argentina’s Emergency Decree on Labor Matters Challenged

In November 2023, the economist Javier Milei was elected as the new president of Argentina. He took office in December 2023. One of his first measures was to issue an emergency decree that included a chapter dealing with labor issues.

Emergency decrees are issued under the provisions of the National Constitution and a specific law for urgent matters that allows the president to exercise legislative powers in extraordinary situations. The emergency decree is considered valid unless a special legislative commission rejects it.

The changes made by the emergency decree cover individual employment regulation and collective matters involving unions and regulating the right to strike in certain activities.

The decree is being attacked by unions, which have obtained injunctions against the application of the labor chapter and a partial ruling from one labor court suspending the effects of the new act. That ruling is now pending confirmation by the National Supreme Court of Justice or the National Congress.

The initiative covers various different matters that can be summarized as follows.

Collective Bargaining and Union Activity

The initiative provides that:

• Unions can no longer impose mandatory solidarity dues from the employees covered by a collective bargaining agreement (CBA) without the explicit consent of the employee.
• Collective bargaining agreements must be renegotiated after their initial term, which means that there is no tacit extension of certain CBA provisions.
• The right to strike has been restricted for certain activities such as essential services and public interest services. In the case of essential activities, unions must guarantee that at least 75 percent of the workforce will provide regular services, while public interest activities that are listed in the decree must assure at least 50 percent of regular production.
• Assemblies in the workplace during working hours must not disrupt work activities.
• Collective bargaining agreements can provide for the substitution of the seniority severance matrix with an insurance or special fund for dismissal without cause.
• The special statute for salespersons has been eliminated.

Individual Employment Law

There are several provisions in the decree that aim to provide certainty to the labor relationship between employers and employees. To mention only the most relevant:

• The decree specifies which items should be considered for severance calculations.
• The special fines and increased severance payments for irregularities in the registration of the employment contract have been eliminated.
• Work certificates and labor receipts can be provided digitally.
• Individual agreements that modify labor conditions or even affect salaries can be presented for approval to the labor authority.
• The trial (probation) period is extended to eight months.
• Parties can agree in a CBA to implement a compensation system based on a bank of hours that can be distributed over a certain period.
• In cases of discrimination, a special severance is payable, but in no case can the discriminated employee claim reinstatement (with the exception of union representatives, who maintain the reinstatement option).
• There are new provisions on telework regarding reversion to in-person work. In the case of transnational work, the place where the employee is living and working determines the applicable law.
• New provisions have been added favoring the use of freelance workers and reducing the use of independent workers and interns.
• Mandatory health care coverage for employees has been deregulated.

This is just a short selection of the numerous modifications that were addressed by the new decree. It also includes court guidelines for interpretation of applicable law and rules of evidence, and a cap on the interest rates to be applied to employment claims.

Message for Employers

This initiative is aligned with other measures taken by the government that cover a multitude of issues including the privatization of state-administrated companies, commerce, banking, taxes and foreign affairs.

Employers in Argentina will need to wait for further judicial and legislative activity to confirm whether or not all of the above measures will go into effect.

Eduardo Juan Viñales is an Ius Laboris lawyer with Bruchou & Funes de Rioja in Argentina. © 2024 Bruchou & Funes de Rioja. All rights reserved. Reposted with permission of Lexology.