Law 27742: Labor and Social Security Aspects

Law 27742 of Bases and Starting Point for the Freedom of the Argentine People establishes several significant changes in labor matters. We will summarize them here.

•    Labor regularization: Employers may now regularize labor relationships existing at the time the Law was enacted. This regularization will apply to unregistered labor relationships, as well as to those deficiently registered, even for debts disputed in administrative or judicial proceedings. The effects of the regularization and the remission percentages will be established by the regulation of the Law, but could include the extinction of the criminal action, the cancellation of the Public Registry of Employers with Labor Sanctions (REPSAL), the remission of the social security debt (capital and interest), and the granting of regularization plans for up to five years. The Law also establishes that: 
1. the remission percentages may in no case be less than 70% of the amounts owed,
2. the regularization must be carried out within 90 days of the effective date of the regulation of the Law.

•    Labor registration: A new mechanism for labor registration is established, which will be detailed in the regulation.

•    Modification of the scope of application of the Labor Contract Law 20744 (LCT): Contracts for works, services, agency, and those regulated in the Argentine Civil and Commercial Code are excluded from the scope of application of the LCT.

•    Modification of the presumption of the existence of an employment contract: For labor and social security purposes, contracts for works or professional services in which receipts or invoices are issued, or where the payment is made according to the banking systems determined by the regulations, are excluded.

•    Mediation and intermediation: The law maintains the joint liability of the user company for labor and social security obligations and removes the concept of unregistered employment with the user company by expressly stating that workers will be considered employees of the entity that registers the relationship, even if they were hired to work for third-party companies.

Under the law, it is also established that: 
1.    workers employed by contractors or intermediaries may request that the amounts owed by their employer for wages, severance payments, and any other monetary rights be withheld and paid by the main beneficiary company of their services,
2.    the main company may deposit the amounts owed by contractors or intermediaries to social security agencies and withhold these amounts from payments due to them without prior notice.

•    Trial period extension: The trial period now spans six months as a standard guideline. Furthermore, this period can be extended to eight months through collective bargaining for companies with 6-100 employees, and up to one year for companies with up to five employees.

•    Amendments regarding maternity leave matters: The maternity leave is now expressly extended to "gestating person” in the regulations concerning maternity leave, job preservation, and employment protection. Also, the law modifies the timeframe for pre-birth leave, allowing to reduce it to a minimum of ten days.

•    Modification of dismissal with just cause: Explicit incorporation as a serious labor offense and grounds for dismissal with just cause includes participation in blockades or occupation of premises. The Law also establishes various presumptions of serious misconduct linked to behaviors during direct action measures.

•    Enhanced compensation: The law introduces enhanced compensation for dismissals based on discriminatory acts, defined as those stemming from reasons related to race or ethnicity, religion, nationality, ideology, political or union opinion, sex or gender, sexual orientation, economic status, physical characteristics, or disability.

We highlight that: 
1.    the application of this enhancement does not affect the effectiveness of termination,
2.    the enhancement consists of an amount equivalent to 50%-100% of the severance pay based on seniority, subject to judicial assessment of the severity of the facts,
3.    in theory, and as established by the Law, the burden of proof lies with the party invoking the grounds.

•    Establishment of the severance fund: The possibility of opting to enter into a severance fund or system, or a private system for making severance payments and/or sums agreed upon in the framework of mutual labor termination agreements is explicitly established. The parameters for implementing the severance fund will also be established by the Executive in the regulations.

•    Independent Worker: The Law creates the figure of independent worker. An independent worker may independently engage up to three other independent workers to develop a productive enterprise. It is important to note that the relationship between these independent workers among themselves, as well as with the persons contracting their services or works, will be autonomous, and not an employment one.