The hiring of employees is regulated by Labor Contract Act No. 20744 (LCT in Spanish), which establishes various types of contracts which are described below.
INDEFINITE TERM CONTRACTS
Typical labor contracts in Argentina are indefinite term contracts, under which the employment relationship extends until it is terminated by a specific cause such as the employee’s resignation, dismissal by the employer with or without cause, retirement (in accordance with legal requirements) or the employee’s death. For the first three months, employees work for a probationary period. During this period, the employer must file the employment relationship and both parties are subject to the rights and obligations inherent to the employment relationship, with the exception that, during the probationary period, both the employer and the employee may terminate the employment contract without the obligation to explain the cause and the employee is not entitled to receive a severance payment. The party who wishes to terminate the contract must give 15 days’ notice to the other party.
In general, indefinite term contracts provide for full time employment, that is, eight hours per day or a maximum of 48 hours per week, depending on the terms established by the sector’s or the company’s collective agreement. However, the employer may hire an employee part time, that is to say, for a given number of hours per day, week or month representing less than two-thirds of the usual work day in the sector (section 92 of the LCT). In this case, the remuneration may not be lower than the proportional amount, established either by law or collective agreement, corresponding to a full time employee in the same working category or position. Part time employees may not work overtime.
Under indefinite time contracts, the employer may terminate the contract of their own accord and without stating the reason. If the probationary period has ended, the employer must give a one month’s notice to an employee with less than five years of service, and a two months’ notice to an employee with more than five years of service. The employer must pay the employee, by way of severance, an amount equal to a month’s salary for each year of service or fraction of over three months, based on the highest regular monthly salary earned by the employee during the time worked (section 245 of the LCT). Employees who decide to terminate a work contract must give the employer a 15 days’ notice regardless of their length of service with the company.
SPECIAL EMPLOYMENT CONTRACTS
In order to provide a proper legal framework to the specific needs of both companies and employees, the Labor Contract Act or LCT provides for various employment contract types with different hiring procedures: the fixed term contract (sections 90, 93 to 95); the seasonal contract (sections 96 to 98); the temporary employment contract (sections 99 and 100); and the group or team employment contract (section 101)
Fixed Term Contracts
Fixed term contracts last for a specified period which may not exceed five years. This type of employment contract may be used when there are reasons that justify it, for example to fill a nonpermanent position within a company or the position of an employee who is on leave.
The contract must be drafted in writing and its term of duration must be expressly stated. The employer must give the employee due notice of termination of the contract (via legal notification letter or registered telegram) not less than a month and not more than two months prior to the contract end date, except in those cases in which the contract term is shorter than a month. The law establishes that a fixed term contract will become an indefinite time contract when an employer does not give the employee notice of contract termination at least 30 days prior to the contract end date, or when the purpose of the contract does not justify a fixed term arrangement.
If the employment relationship is terminated by expiration of the contract term or completion of the tasks under the contract, provided the contract term was at least one year and due notice was given by the employer of contract termination, the employee will be entitled to receive a severance payment. The amount to be paid will be calculated as half of the amount stipulated by section 245 of the LCT.
In case of unjustified dismissal before expiration of the contract term, the employee is entitled to receive the severance payment stipulated for indefinite term contracts (section 245 of the LCT), plus payment for the damages suffered by the employee resulting solely from early termination of the contract. In general, previous judicial rulings have ordered the payment of a sum equal to the addition of the salaries that the employee would have received had the contract been executed until its original expiration date. This severance payment replaces the one required when the employer fails to give advance notice of termination to the employee.
Seasonal Employment Contracts
As provided by section 96 of the LCT, seasonal employment contracts are entered into when businesses need to carry out certain tasks inherent to the company’s activity on a recurring basis, at the same time every year, due to their particular nature.
This type of contract covers the services of workers in sectors such as tourism, sugarcane harvesting and rural activities related to fruit growing (citrus fruit, soft fruit, etc.). The latter activity is unforeseen in the National Rural Work Regime (Act No. 26727).
Under a seasonal employment relationship, the contract is fully executed during the period of activity while, during the periods not covered by the contract, obligations cease; thus, neither does the employee render services nor does the employer pay the remuneration.
A seasonal work contract is considered by the law to be an indefinite term contract without the probationary period. If the employee performs his duties during one season, they have the right to be hired again for the following season. In order for this right to become effective, the employer is required to give the employee written notice of recall to work at least 30 days prior to the beginning of the new season, and the employee must accept in writing or report to work at the employer’s domicile within five days from being notified. If the employer does not give notice of recall to work, the employee may consider they have been unfairly dismissed and will have the right to receive the corresponding severance payment for the time of service actually rendered plus payment for damages suffered if the season’s contract term or expected term is still ongoing. Severance payment will be calculated as provided in section 245 of the LCT, without taking into account the non-work periods. The amount of the payment for damages will be fixed in the same way as indicated for the termination of fixed term contracts by dismissal without cause.
Employment contracts related to agricultural activities, except for fruit harvesting and/or packaging, are subject to the provisions of Act No. 26727, which stipulates different contract types and, in the case of cyclical or seasonal activities, the hiring of employees must be framed in the form of a non-fixed term contract, whose terms may be consulted in the referred law.
Temporary Employment Contracts
Temporary employment contracts are arranged when an employer needs to hire services to fulfill tasks which are not related to their company’s ordinary business operations (e.g. the refurbishment of an industrial establishment or the presentation of products at corporate events), or tasks which, being related to the company’s ordinary business, have so increased in volume or quality that they exceed the company’s possibilities (e.g. replacing an employee who is on leave or satisfying a greater work demand).
The employer may opt to hire the employee directly under a temporary work contract or through a temporary services company (ESEs in Spanish) which is duly authorized by the Ministry of Labor, Employment and Social Security. These companies offer the services of temporary personnel to companies with the needs described above.
If the employer opts to hire the employees directly, a written contract must be signed and copies delivered to the employee and to the trade union representing them within 30 days of the signing date.
If the purpose of the contract is to temporarily replace an employee, the name of the replaced employee must be indicated, and, if the purpose is to meet extraordinary work demands, the reasons justifying the contract must be specified in detail.
Temporary employment contracts will not be valid when the purpose is to replace an employee who has not reported to work in exercise of their legal right to strike, or if the employer has laid off or dismissed other employees due to lack or reduction of work in the course of the last six months.
As the term of this type of contracts cannot be established in advance because it is determined by the task or activity under the contract, the employment relationship will begin and end with the performance of the task or the rendering of the services. However, according to the provisions of National Employment Act No. 24013, if the purpose of the contract is to meet extraordinary market demands, the duration of the cause originating it may not exceed six months per year and a maximum of one year during a period of three years (section 72).
If these terms are exceeded, the contract will be considered as a permanent work contract for the provision of services on a discontinuous basis (i.e. seasonal employment contract) or as an indefinite term contract for the ongoing provision of services (indefinite term contract), as the case may be.
The employer is under no obligation to pay the employee any kind of severance when the contract is terminated by completion of the task, work or service agreed upon. On the other hand, if, prior to termination of the contract, the employee is dismissed without cause, they are entitled to receive the severance amount stipulated in section 245 of the LCT.
Group or Team Employment Contracts
Group or team employment contracts are entered into between an employer and a group of employees so as to perform an activity or task which the group or team is involved.
The employment relationship is established between the employer and each one of the persons who make up the team. Once they have been appointed, each one of them will have the rights and obligations arising from any work contract.
As defined by the LCT, a contract under which a company, association, community or group of persons undertakes to provide services or perform work or tasks which entail an employment relationship in favor of a third party, on a permanent and exclusive basis, will be considered to be a group or team work contract, and each of the team members will be considered as an employee reporting to the third party for whom the services are actually rendered.
Contracts for Training Purposes
Contract of Apprenticeship
The contract of apprenticeship is a type of work contract for theoretical and practical training purposes and it is regulated by section 1 of Act No. 25013 as amended by Act No. 26390. It is entered into between an employer and an unemployed young person of between 16 and 28 years of age, provided that no other kind of work relationship has previously existed between them. It has a minimum duration of three months and a maximum of one year, and the working time may not exceed 40 hours per week.
Upon expiration of the contract term, the employer is under no obligation to pay severance to the employee, but he is required to give the apprentice notice of contract termination 30 days prior to the agreed end date. If due notice is not given, the employer must pay a substituting severance amount equal to half a month’s salary.
In case the employment relationship is terminated by the employer prior to the agreed end date without express cause, the employee is entitled to receive the severance payment stipulated by the legislation applicable to employees under indefinite term employment contracts.
In all cases, the employee or apprentice has the right to demand of the employer a certificate accrediting the experience or specialization acquired. Failure by the employer to comply with the obligations set forth in the framework of this contract will turn this employment relationship into one of an indefinite term contract, which will confer on the employee all the rights determined by law.
In addition to the regulations explained above, the employer must be aware of the fact that, if the contract of apprenticeship is entered into with a minor between 16 and 18 years of age, the work relationship will be subject to the work regime for minors, regulated by sections 187 to 195 of the LCT. What is more, it should be pointed out that in no case may a contract of apprenticeship be entered into if the employer is a work cooperative or a temporary services company.
A legally established company from the private sector may enter into internship contracts with students from higher and adult education institutions as well as professional training centers for people over 18, provided they have previously signed an agreement with educational institutions and bodies under the terms of Act No. 26427, which regulates the Educational Internship System.
An internship contract does not entail a work relationship as its objective is to promote, in both public and private organizations, training activities which are linked to the curricula studied at the educational establishments.
The key characteristics of internship contracts are:
– It must be drawn up in writing and specify the contents of the educational internship plan as well as its duration, working hours, venue and tasks assigned to the intern.
– As defined in the agreement, the internship should last a minimum period of two months and a maximum of twelve months. It may be renewed for an additional six months by the signing of a new individual contract.
– The intern has the right to receive a monetary sum which is considered of a non-remunerative nature. The amount of this incentive pay will be calculated based on the basic salary stipulated by the collective agreement applicable in the company and it will be proportional to the internship hour load.
In the case of activities which are not governed by a collective agreement, the amount will be determined based on the adjustable minimum living wage, and it will be proportional to the internship hour load.
– The weekly working time must be of up to 20 hours.
– The intern is entitled to a leave of absence in the event of exams, sickness or accident, and other regular benefits conferred on the companies’ employees under the regulations.
The company must provide the intern with health care insurance as provided for in Act No. 23660 on Health Insurance Plans and must take out insurance against accidents or sickness as provided for in Act No. 24557 on Occupational Hazards, to cover for any contingency occurring in the context of the activities performed by the intern and/or at the establishment where the intern is working.
The number of interns each company is allowed to take will be determined by the regulations. It will be proportional to the company’s size and to the number of tutors assigned.
Remuneration is defined as the consideration that the employee must receive by virtue of the employment contract (section 103 of the LCT). It may consist of a sum of money or a part in money and up to 20% of the total amount in kind, accommodation or food.
The amount payable by way of remuneration will be equal to the amount determined for the employee’s job category or position by the salary scale of the collective labor agreement applicable to the activity or the company in which the employee works.
In regard to remuneration, the employer has the following obligations:
– To pay the salary in money by means of a deposit in a bank account in the employee’s name. Said account must be opened in authorized banking institutions which offer automatic telling machines within a radius no greater than two kilometers from the workplace in urban areas and of ten kilometers in nonurban or rural areas. In no case must the account administration entail any cost to the employee.
– To provide a pay stub, issued in duplicate.
– To comply with payment terms as set forth by the LCT: salaried employees must be paid at the end of the month worked; employees who are paid by the day or by the hour must receive their pay weekly or fortnightly; and personnel paid by the piece or part must also collect weekly or fortnightly for the total amount of works completed during that period. Once these terms have expired, the employer must pay within four working days in the case of employees who are paid monthly or fortnightly, and within three working days in the case of employees who are paid weekly.
Adjustable Minimum Living Wage
Under no circumstances may the total remuneration of a monthly employee who works the legal working time be lower than the adjustable minimum living wage guaranteed by section 14 bis of the National Constitution and section 116 of the LCT. According to section 139 of Act No. 24013, the minimum living wage is determined by the National Board for Employment, Productivity and the Adjustable Minimum Living Wage, made up by representatives of the business sector, the union sector and the national executive branch.
Annual Wage Supplement
All employees must receive an Annual Wage Supplement (in Spanish aguinaldo or SAC). Act No. 23041 and its Regulatory Executive Order No. 1078/84 establish that this supplement must be calculated as the 50% of the highest monthly remuneration earned by the employee, considering all concepts, within the semesters ending in June and December each year. Payment of the annual wage supplement will be paid in two installments: the first on June 30 and the second on December 31 of each year.
Employer companies must pay social security contributions in behalf of their employees. These contributions partially cover family allowance, medical services, retirement and pension funds, and unemployment insurance. The rates are 27% for employers whose main activity is the hiring and provision of services and 23% for all other activities.
Remuneration on Holidays and Non-Working Days
On holidays and non-working days, employees must be paid as usual. If they are required to work on a holiday or non-working day, they must be paid their usual remuneration plus an additional 100%.
Employers are required by law to take out occupational risk insurance (ART in Spanish) or selfinsurance so as to cover all of their employees in case of occupational accidents or diseases. An occupational accident is any event occurring as a consequence of or during work, or on the way to or from work, as long as the affected party has not interrupted or altered their route for reasons not attributable to work.
The employee may declare in writing to the employer, and the employer to the insurer within 72 hours of the accident, that the itinerary was modified on the grounds of study, attendance to a different workplace or care for a sick, close and non-cohabiting relative. At the request of the employer, the employee must submit the pertinent certificate within three working days of the request.
Compulsory Life Insurance
The employer must take out a life insurance policy within 30 days of the start of the work relationship, but the policy’s effective date must be coincident with the work contract commencement date. This life insurance does not cover total, absolute, permanent and irreversible disability but only the employee’s death.
Holiday and Leave
The ordinary annual leave (“holiday”) is a remunerated rest period that the employer grants the employee for a year of continuous service. The amount of annual holiday will be based on the employee’s years of service as follows: 14 consecutive days after less than 5 years of service; 21 consecutive days after 5 to 10 years of service; 28 consecutive days after 10 to 20 years of service; and 35 consecutive days after more than 20 years of service.
In order to be eligible for these holiday entitlements, the employee must have rendered services during, at least, half of the working days of the calendar year. Employees who have not completed the minimum service period to be eligible for the statutory holiday pay will be granted a rest period based on a prorated amount of one day off for every 20 days worked.
The employer must allow employees to take their holiday leave between October 1 and April 30 of the following year. A holiday period may be extended by a third of a holiday period immediately preceding that the employee has not used. This arrangement must be agreed upon by both parties. The leave must start on a Monday or on the following working day if that Monday were a holiday.
All women are guaranteed the right to job stability during pregnancy. The LCT stipulates paid maternity leave and forbids the work of female employees within the 45 days preceding and the 45 days following delivery. However, a woman may opt to have her period of leave before the delivery reduced to a minimum of 30 days, and add the remaining days to the post-delivery leave period. In case of delivery before term, the leave will be taken after the child’s birth until the statutory ninety days of leave are completed. Once this paid leave is completed, the mother may opt to:
a) Continue working under the same terms;
b) Terminate her employment contract and receive a severance payment equal to 25% of the remuneration calculated on the average stipulated in section 245 for each year of service or fraction of over 3 months. The contract termination may be implied (if the employer is not informed of the decision 48 hours before the leave period has finished) or expressly communicated to the employer;
c) To request an unpaid extension of her maternity leave for a period of between three and six months, known as extended leave.
For a period of up to one year following delivery, the mother has the right to two daily breaks of thirty minutes each for breastfeeding purposes.
Other Types of Leave
An employee will be granted a special paid leave in the following circumstances:
a) Birth of a child: two consecutive days.
b) Marriage: ten consecutive days.
c) Death of wife, domestic partner, children or parents: three consecutive days.
d) Death of a sibling: one day.
e) High school or university exams: two consecutive days per exam, with a maximum of ten days per calendar year.
Section 208 of the LCT sets forth that a non-occupational injury or disease that prevents the employee from rendering services will not affect the employee’s right to receive their salary for a maximum period of three months when the employee has less than five years of service with the company, and of six months when the employee has more than five years of service.
If an employee has dependent family members and, due to the circumstances mentioned above, is incapable of reporting to work, they will have the right to a paid leave of six and twelve months respectively, depending on whether they have less or more than five years of service.
Occupational Accidents and Diseases
Compensations are provided to cover contingencies such as injuries or diseases resulting from work. These benefits also include disability or death pensions.
Companies must assume the costs of the employee’s medical treatment as well as the medication needed for their rehabilitation, if the latter was necessary. In order to cover their liability for injuries or diseases, employers are required to take out occupational risk insurance.
Minimun Working Age
By virtue of Act No. 26390 on Prohibition of Child Labor and Protection of Young Workers, on May 25th, 2010, the minimum working age was raised to 16.
In turn, in the context of a family business, persons over 14 and under 16 may be hired by a company whose owner is their father, mother or guardian, having obtained a permit from the labor administration authority. The minor may work up to three daily hours and 15 weekly hours, provided that they are not required to perform tasks which involve extreme hardship, danger or unsanitary conditions and that they comply with school attendance requirements. The permit will not be granted if the company is economically subordinated, or if it is a contractor or supplier of another company
The employment contract may not be terminated by either party without prior notice. If it is terminated by the employer, the employer must pay severance. Section 231 of the LCT establishes the prior notice periods, which, unless the parties have agreed upon a longer period, will be as follows:
a) by the employee, 15 days;
b) by the employer, 15 days if the employee is under probationary period; one month if the employee has less than five years of service; and two months for more than five years of service (Act No. 25877).
The party who fails to give prior notice of termination, or gives insufficient notice, must pay the other party a substituting compensation equal to the remuneration which would correspond to the employee during the terms indicated in section 231 of the LCT. The employee has two years to file a legal action to seek for severance payment for dismissal.
Registration of the Employment Relationship
No matter which contract type is selected by the employer and agreed upon with the employee as frame to the employment relationship, the employer is required to file the employment contract, even during the probationary period in the case of an indefinite term contract.
For this purpose, the employer must have a Unique Taxpayer’s Identification Number (CUIT in Spanish) and be registered as an employer. Both of these procedures are carried out at the AFIP (Federal Administration of Public Revenue). If the person to be employed does not have a Unique Worker’s Identification Number (CUIL in Spanish), one must be obtained from the ANSES (National Social Security Administration).
By means of the registration system known as “Mi Simplificación”, the employer, in one single procedure, will inform the AFIP of the employee’s registration in the corresponding medical care plan and in the occupational risk insurance company. The employer will also communicate the applicable collective agreement, information on the employee’s family and other significant data related to the employment relationship.
The employer may carry out the new employee’s registration until the day immediately preceding the work contract’s effective start date, whichever the contract type chosen, even in the case of interns. Registration may be carried out on line through the AFIP’s official website (www.afip.gov.ar) or personally at the AFIP office of the jurisdiction where the employer is registered.
The employer must also register the new employee, including relevant data about the work relationship, in the Special Book of Salaries and Wages stipulated by section 52 of the LCT, which must have been previously signed and sealed by the local labor authority and be kept under the same terms and conditions as the accounting books.
While the employment contract is effective, the employer must submit before the AFIP, by means of a monthly affidavit (AFIP Form 931), information on the personnel working for them as well as the remunerations they receive, with specifications on the corresponding social security withholdings and contributions.
Employers who have a staff of up to five workers are required to submit the monthly affidavit through the software application known as “Su Declaración” (www.afip.gov.ar), which generates the corresponding form based on data already entered by the employer in the “Mi Simplificación” system and in the Argentine Integrated Retirement System (SIPA).
At present, this system is optional for employers who have a staff of between six and ten workers.
If the employment contract is terminated, for whatever reason, the employer must communicate the termination before the Register of New Hires and Terminations in the area of Social Security within five days of the work contract termination date.
Employers under a registered employment contract will be entitled to the following statutory social security benefits:
– Health insurance (medical care plan) for the employee and their family.
– Insurance against occupational accidents and diseases.
– Family allowances.
– A retirement pension, or a disability pension if applicable as a consequence of a health condition that prevents the employee from working.
– Unemployment compensation, when the work contract is terminated due to no fault of the employee.