Paths to formalize employment relationships in Argentina

By María Lucía Belliz, Argentina Ministry of Foreign Affairs and Worship
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In our previous issue, we introduced a number of taxation issues at the national level in Argentina. For this column, we will discuss employment regulation.

In Argentina, the Employment Contract Law (in Spanish, Ley 20744 Contrato de Trabajo, or LCT) establishes the framework for hiring employees. The law provides for several types of contracts which are introduced below.

Continuous contracts

Typically employment contracts in Argentina are non-fixed-term contracts. This implies that the work relationship will continue indefinitely until a specific cause makes it impossible to continue. Possible scenarios for termination include an employee’s resignation, dismissal with or without cause decided by the employer, retirement (complying with legal requirements) or the employee’s death.

María Lucía Belliz 阿根廷外交和宗教事务部 投资者服务办公室主任 Director of the Investors Assistance Office Argentina’s Ministry of Foreign Affairs and Worship
María Lucía Belliz
阿根廷外交和宗教事务部
投资者服务办公室主任
Director of the Investors Assistance Office
Argentina’s Ministry of Foreign Affairs and Worship

The law establishes that non-fixed-term contracts have a three-month trial period, before the end of which the employer must register the employment relationship. During these three months, both parties are subject to the rights and obligations inherent to an employment relationship, with the exceptions that either side may terminate the relationship without cause during this period and that the employee is not owed any severance payment. The party seeking termination must give 15 days’ notice to the other party.

Full-time employment. A non-fixed-term contract generally contemplates a full-time commitment. Full-time employment is eight hours per day or a maximum of 48 hours per week as established in the sector or in the company’s collective agreement.

Part-time employment. The employer may require a worker’s services part-time for a specific number of hours per day, week or month, representing less than two thirds of the normal working day. In this case, remuneration may not be less than the proportional amount which would correspond to a full-time employee established either by law or by collective agreement for the same category or job position. Part-time workers may not work overtime.

Term-delineated contracts

There are several forms of term-delineated contracts. The fixed-term contract and seasonal or temporary work contract will be presented in this issue.

Labour relations in the agricultural sector, excluding fruit harvesting or packing, are governed by the National Agricultural Working Regime, which provides for different types of contracts. In the case of cyclical or seasonal services, the hiring of personnel must be specified in the framework of a non-fixed-term work contract, the regulations for which can be verified in the working regime.

Fixed-term contracts. This contract has a fixed term which cannot exceed a five-year period. It may be used when duly justified, for example, to cover a non-permanent post within a company or the position of a worker on leave of absence. The contract must be provided in writing and its duration must be explicitly stated.

Seasonal or temporary contracts. This contract covers the services provided by workers working in sectors such as tourism and agriculture, specifically in harvesting and other rural activities linked to the growing of citrus, soft fruits and other fruit produce.

Section 96 of the LCT establishes that seasonal or temporary work contracts may be used for hiring workers to cover certain tasks corresponding to the company’s seasonal activity. These tasks by nature require workers during certain times of the year and are repeated on a cyclical basis according to the type of activity involved, e.g. harvesting.

A seasonal work contract is active and valid during the period of activity. Outside the period specified in the contract, all obligations cease. This means that the worker neither provides services to nor receives payment from the employer during the non-contracted period of time.

A worker who fulfils the tasks required during the season for which they were hired has the right to be rehired for the following season. To officially rehire the worker, the employer must send the worker an invitation to accept the job in writing at least 30 days before the start of the new season. The worker must accordingly accept the job in writing or make a physical appearance at the employer’s address within five days of notification.

If the employer does not extend the employment invitation, the worker can be considered to have been unfairly dismissed and be entitled to a severance payment.

Severance payment is subject to section 245 of the LCT, not taking into account off-season periods. Severance for damages is calculated under the same terms as those used in situations of an unfair dismissal under a fixed-term contract described below. The payment must be equivalent to the time worked plus damages suffered, particularly if the growing season is under way.

Termination

Continuous contracts. In a non-fixed-term contract, the employer may decide to terminate the relationship without giving any reason. After the trial period has ended, the employer must give an employee who has been with the company for less than five years one month’s notice, and two months’ notice if the employee has worked with the company for more than five years.

The employer must pay the employee severance based on a month’s salary for each year of service, or fraction of a year over three months based on the employee’s highest regular monthly wage historically. Employees must give two weeks’ notice irrespective of years of service when terminating a work contract.

Fixed-term contracts. In a fixed-term contract, the employer is obliged to give the worker due notice of the contract’s termination via telegram or certified letter. Except for when the contract’s duration is less than one month, there must be no less than one month and no more than two months’ notice of termination.

If an employer does not provide the worker with due notice of the termination of the contract 30 days before its expiry date, or if the tasks to be performed do not merit a fixed-term contract, the fixed-term contract will be considered a non-fixed -term contract in accordance with the law.

A worker has the right to receive a severance payment if the work relationship under a fixed-term contract after a period of at least one year comes to an end as foreseen by the term of the contractual agreement, or the completion of the tasks and due notice has been given.

A worker who has experienced an unfair dismissal before the end date of the contractual agreement has the right to receive the severance payment foreseen for non-fixed-term work contracts, in addition to damages suffered by the worker due to the breaking of the contract.

María Lucía Belliz is the director of the Investors Assistance Office of the Argentina Ministry of Foreign Affairs and Worship

Argentina Ministry of

Foreign Affairs and Worship

Esmeralda 1212 – Piso 6 Ciudad Autónoma de Buenos Aires

(C1005AAG) República Argentina

电话 Tel: 54 11 4819 7904

传真 Fax: 54 11 4819 7904

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[email protected]

www.inversiones.gov.ar