12-03-2026

On March 6, 2026, Law No. 27,802, called  the “Labor Modernization Law,” was published in the Official Gazette. This law introduces significant amendments to the current labor framework (both individual and collective) as well as to labor proceedings. Below we outline the main labor-related changes introduced by this law, which entered into force on March 6, 2026.

Employment Contract

Certain type of engagements governed by the Argentine Civil and Commercial Code, as well as independent workers with collaborators (a category created by the so-called “Law of Bases and Starting Points for the Freedom of Argentines”) and independent service providers operating through technological platforms are excluded from the scope of application of the Employment Contract Law (“LCT”).

In addition, interpretative provisions contained in the LCT are reformulated. For example, the principle of the “most favorable rule” must now be assessed by considering the set of rules governing each labor law institution (grouping by institutions). The “in dubio pro operario” principle is eliminated with respect to the interpretation of the scope of the law in relation to a specific situation.

With regard to the presumption of the existence of an employment contract, such presumption will not apply in cases where services are provided without an employment relationship and where receipts or invoices are issued or where payment is made through banking or similar means.

Labor Registration

Labor registration is centralized in the Revenue and Customs Control Agency (“ARCA”), and no additional registries by other authorities will be required. The law establishes that employment records may be kept in digital format and must be retained for a period of 10 years.

The period for issuing and delivering employment certificates is extended to 45 business days (counted from the termination of the employment relationship). Such certificates may be prepared in digital form and delivered through the system established by ARCA.

Remuneration

The law establishes that salaries may be paid in national or foreign currency, and that payment must be made, under penalty of nullity, into a free salary account opened at a bank or official savings institution. The possibility of paying salaries in cash at the employee’s request is eliminated.

The list of social benefits (excluded from the salary and severance calculation base) is expanded to include items such as private health insurance coverage and canteen services provided at establishments near the workplace.

Additionally, the following are considered non-remunerative benefits: mobile phone and internet services, reimbursement of public transportation expenses to the workplace, documented travel expenses, and shares or securities granted by the employer during the employment relationship. Tips are also expressly excluded from the concept of remuneration.

The law introduces the concept of “dynamic salary,” allowing additional compensation components (fixed or variable) to be incorporated into remuneration—eother by agreement of the parties or by unilateral decision of the employer—linked to personal merit or company-related factors. Such components are temporary in nature and do not create a vested right to permanent payment.

Overtime

The law allows the implementation of overtime compensation systems (such as “time banks” and compensatory time off), provided that the applicable legal minimum rest periods are respected. These systems must be formalized in writing and specify their operational rules as well as a reliable monitoring method enabling both parties to record hours actually worked and hours available for the employee to take as time off.

Vacations

The law requires employers to notify employees of their vacation period in writing at least 30 days in advance. Vacation periods may be divided with a minimum duration of one week, and the parties may agree to take vacations outside the statutory period (October to April).

In the event of a sick leavel during the vacation period, the employee must return to work either at the end of the originally scheduled vacation period or upon the end of the sick leave, whichever occurs later. Any remaining unused vacation days must then be rescheduled.

Sick Leave

With respect to sick leave due to non-work-related illness or injury, the law requires medical certificates to include the diagnosis, treatment, and number of prescribed rest days, and to be issued in digital format.

In the event of a discrepancy between the diagnosis of the employee’s physician and that of the company physician, the matter may be referred to a medical board at a public or private institution, at the employer’s expense.

Termination of the Employment Relationship

If the employment relationship is terminated during the probationary period, the notice of termination requirement does not apply.

Employees may submit their resignation telegram in digital format.

With regards to dismissals without cause, the law maintains the severance scheme of one month’s salary per year of service or fraction exceeding three months, calculated based on the employee’s best monthly, normal and habitual remuneration (“MRMNH”) accrued during the last year. The calculation excludes the annual bonus (SAC), vacation pay, and non-monthly payments.

For purposes of calculating the MRMNH, the law clarifies that any concept accrued for at least six months during the last calendar year is considered “habitual.” In the case of variable compensation, the “normal” amount is deemed to be the average of the last six months or the last year, whichever is more favorable to the employee.

The law also establishes a limit to the application of the collective bargaining agreement severance cap, setting a minimum threshold of 67% of the MRMNH, in line with the doctrine established in the “Vizzoti” Supreme Court ruling of 2004.

In cases of termination due to the death of the employee, the law specifies who is entitled to receive the severance payment and the payment mechanism to be followed by the employer.

Adjustment of Labor Credits

The law introduces a new mechanism for adjusting labor credits, consisting of the variation of the Consumer Price Index (CPI) – General Level plus 3% annual interest (for new judicial proceedings). For ongoing cases, late-payment interest will be calculated according to the passive rate set by the Central Bank of Argentina, subject to a maximum equal to the above criterion for new cases and a minimum of 67% thereof.

Companies are also allowed to pay court judgments in installments—either 6 installments for large companies or 12 installments for micro, small, and medium-sized enterprises—with application of the aforementioned adjustment mechanism.

Labor Assistance Fund

The law creates the Labor Assistance Fund (“FAL”), intended to contribute to the fulfillment of certain indemnification obligations arising from the termination of employment contracts (dismissal, notice, salary in lieu of notice, integration of the month of dismissal, and other severances).

The FAL will be financed through a mandatory employer contribution calculated on declared salaries for purposes of employer social security contributions. The contribution will be 1% for large companies and 2.5% for micro, small, and medium-sized enterprises.

These contributions will be deposited into an individual employer account at an entity authorized by the National Securities Commission.

The existence or insufficiency of funds does not limit the employer’s liability for full payment of obligations.

Participation in the FAL is mandatory and is accompanied by a reduction in employer social security contributions equivalent to the contribution made to the FAL.

Reduction of Labor Costs and Promotion of Registered Employment

The law establishes a reduction in employer contributions to certain social security subsystems equivalent to the contribution made to the FAL, subject to the fund entering into force.

A Labor Formalization Incentive Regime is created for a period of one year, applicable to new hires under certain conditions. It provides reduced contribution rates to the Argentine Integrated Pension System, the National Employment Fund, and the Family Allowances System of 2%, and 3% contributions to the subsystem governed by Law No. 19,032 (National Institute of Social Security for Retirees and Pensioners), in both cases for a period of 48 months.

A Registered Employment Promotion Program is also established, aimed at regularizing unregistered or improperly registered employment relationships, providing for the waiver of certain violations, penalties, and outstanding debts, subject to certain limitations.

Additionally, a Medium Investment Incentive Regime is created, providing tax benefits for micro, small, and medium-sized enterprises that make productive investments during the first two years of the regime’s validity.

Labor Procedure

Amendments are introduced to the law governing labor proceedings before the National Labor Courts, including the incorporation of the principle of procedural initiative by the parties, the lapse of proceedings as an abnormal method of terminating the process, and the binding nature of criteria established by higher courts, among other aspects.

It should also be noted that the transfer of the National Labor Courts to the Autonomous City of Buenos Aires is currently in progress.

Repeals

The law repeals the Telework Law, as well as the statutory regimes governing journalists, traveling sales representatives, hairdressers, and administrative employees of press companies, among other regulations.

Collective Labor Law

The law introduces changes in the structure of collective bargaining and in the system of representation. It also establishes a new hierarchy among collective bargaining agreements, whereby agreements at a lower level may prevail over those at a higher level.

Furthermore, the ultra-activity of collective agreements is limited. Once the term of an agreement expires, only its normative clauses will remain in force until a new agreement is concluded.

The law also redefines the treatment of unfair labor practices and certain conduct related to the exercise of trade union activity. Rules aimed at balancing the obligations of employers and trade unions are introduced, and the scope of assemblies and collective actions within company establishments is clarified.