The Senado de la Nación Argentina has approved, in first reading, the Labor Modernization Bill proposed by the National Executive Branch.
Below is a brief overview of the main amendments that would be introduced to the current text of the Ley de Contrato de Trabajo (LCT) should the bill be enacted into law by the Cámara de Diputados de la Nación Argentina. The legislative session is expected to take place toward the end of February.
Additional amendments included in the bill will be analyzed in a separate document, as their scope warrants a more detailed review by title.
The principal proposed amendments to the LCT are summarized below:
Section 2 – Scope of Application
The amendment expands the exclusion already introduced by the “Bases Law,” clarifying that the LCT does not apply to contracts for works, services, agency, transportation or freight services, independent service providers operating through technological platforms, maritime personnel subject to the navigation law regime, persons deprived of liberty, and, more generally, parties bound by agreements governed by the Código Civil y Comercial de la Nación.
Section 12 – Principle of Non-Waiver of Rights
The provision reverts to the wording in force prior to 2009, establishing that rights granted by law, collective bargaining agreements, or professional statutes are non-waivable. The reference to individual employment contracts as a source of non-waivable rights is removed, thereby allowing modifications to contractual conditions provided that public policy and mandatory minimum standards are not affected.
Section 18 – Calculation of Seniority
Seniority will continue to be calculated as the aggregate of all periods during which the employee has worked under the employer’s direction, including cases of termination followed by re-employment. However, if more than two years elapse between termination and re-employment by the same employer, the prior seniority will no longer produce legal effects.
Section 23 – Presumption of Employment Relationship
Consistent with the Bases Law, the presumption of an employment relationship will no longer apply to contracts for works or professional services where no elements of subordination are present, provided that receipts or invoices are issued.
Section 29 – Labor Intermediation
Following the approach adopted by the Bases Law, employees will be deemed dependent on the entity that formally registers them. Where employees are hired to provide services to third parties, they remain employees of the hiring entity. The user company will only be jointly liable in relation to those employees and only for the duration of the services rendered, and it will have recourse against the employer for payments made under such joint liability.
Section 30 – Joint Liability in Outsourcing
Joint liability will not extend to ancillary or supporting activities. In cases involving the outsourcing of part of the company’s core activities, compliance with the monthly documentary verification requirements established by this section—such as proof of tax identification (CUIL), salary payments, social security contributions, occupational risk insurance coverage, and employees’ bank accounts—will release the contracting company from liability. Joint liability will arise only if such controls are not performed.
Section 52 – Labor Registry
Employers must register employees before the Agencia de Recaudación y Control Aduanero (ARCA). No additional requirements will be necessary, and the obligation to maintain labor books will be eliminated. Existing records must be preserved, in physical or digital form, for ten years.
Section 66 – Ius Variandi
Employers may modify non-essential terms of employment. If essential terms are modified, employees may consider themselves constructively dismissed; however, they will no longer be able to seek summary judicial relief to restore the previous conditions.
Section 80 – Employment Certificates
Certificates may be issued electronically through a system to be implemented by the enforcement authority. The deadline for delivery is extended to 45 business days after termination of employment.
Section 92 ter – Part-Time Employment
The current restriction preventing working-hour reductions below one-third of the standard working day in the relevant activity will be eliminated. Parties may agree to any reduction in working hours, with proportional salary adjustments.
Section 95 – Fixed-Term Employment Contracts
Under the current regime, termination of a fixed-term contract before its expiration could trigger both statutory severance and additional civil damages equivalent to the remaining salaries under the contract. Under the proposed reform, early termination would only require payment of the severance compensation provided under Section 245 of the LCT, calculated on the basis of the total seniority the employee would have acquired upon completion of the fixed term.
Section 103 bis – Social Benefits
Non-remunerative social benefits will expressly include employee meals (through company cafeterias or meal-card systems) and medical or private health insurance expenses.
Section 104 bis – Dynamic Compensation
Beyond mandatory compensation items, the new provision grants employers broad flexibility to grant special payments, bonuses based on performance objectives, and other incentives, which may be discontinued without being considered acquired rights under the doctrines of custom or vested rights.
Section 105 – Form of Salary Payment
Salary may be paid in pesos or in foreign currency. Complementary non-salary benefits may include stock-based compensation, share rights, securities, and reimbursement of public transportation costs for commuting, subject to regulatory provisions.
Section 124 – Payment through Banking System
Salary must be paid through electronic banking methods. The employee’s option to receive payment in cash will be eliminated.
Section 154 – Annual Leave
The parties may agree not to adhere to the traditional October–April vacation period and may instead divide annual leave into blocks of seven days rather than a single continuous period.
Section 197 bis – Hours Bank
The bill authorizes the implementation of overtime hours banks through individual or collective agreements, allowing longer working days with compensatory time off in other periods. In all cases, a minimum rest period of twelve hours between working days must be respected.
Section 208 – Sick Leave for Non-Work-Related Illness
Leave for non-work-related illness will be limited to three or six months depending on whether the employee has dependents. Seniority will no longer affect the duration of the leave. During the leave, employees will receive 50% of their remuneration if the illness or accident arises from a voluntary activity involving health risks, or 75% if it does not.
Section 210 – Medical Certificates
Medical certificates justifying absences must be issued digitally through authorized platforms. In the event of discrepancies between such certificates and the employer’s medical control, a medical board may be convened at an official institution or an opinion may be requested from recognized public or private medical institutions.
Section 228 – Liability of the Acquirer of an Establishment
The acquirer will only be liable for labor obligations that it knew or could have known through due diligence. Hidden liabilities or obligations arising from misleading information provided at the time of acquisition will not be included. Under the current regime, the acquirer may be liable even for labor relationships terminated prior to the acquisition.
Section 231 – Probationary Period
The obligation to provide advance notice (currently 15 days) upon termination during the probationary period will be eliminated, making termination during such period free of severance obligations.
Section 241 – Termination by Mutual Disinterest
The provision clarifies that termination due to mutual disinterest occurs when neither party requests continuation of the employment relationship or demands compliance with contractual obligations for a period of two months.
Section 245 – Severance Compensation for Dismissal
The calculation base of “best normal and habitual monthly remuneration” is clarified. The annual bonus (SAC), vacation pay, and non-monthly bonuses will not be included. Variable compensation will be averaged, and remuneration will be considered habitual if paid in at least six of the last twelve months. The judicial doctrine established in the Vizzoti v. AMSA case regarding severance caps will be incorporated into statutory law. Severance compensation will be the sole compensation payable upon termination, excluding additional damages claims under civil law.
Section 248 – Compensation upon Death of the Employee
Beneficiaries will be clearly defined as the spouse or cohabiting partner, minor children, and disabled adult children, all of whom will share the compensation equally. If such beneficiaries do not exist, adult children or dependent parents will be entitled. Payment must be made within thirty days.
Section 255 – Re-Employment
If an employee who was previously dismissed is rehired and subsequently dismissed again, seniority will include all employment periods (subject to the two-year limitation described in Section 18). If severance was previously paid, it will be updated according to the Consumer Price Index and deducted from the new severance payment.
Section 276 – Interest in Labor Litigation
For new labor claims, interest will accrue at the Consumer Price Index plus 3% annually. For ongoing proceedings without final judgment at the time the law enters into force, interest will be calculated using a passive interest rate to be determined by the Banco Central de la República Argentina, within a range capped at CPI plus 3% annually and with a minimum of 67% of that amount.
Individuals and micro, small, and medium-sized enterprises may pay court-awarded amounts in up to twelve monthly installments, adjusted as indicated. Large companies may pay such amounts in six monthly installments.
Section 278 – Incompatibility of Compensation Regimes
The reform reinforces that claims for salary and statutory labor compensation are incompatible with actions based on civil law.
As may be observed, although some of the initially proposed amendments were not included in the final version approved by the Senate, the bill as currently drafted represents a substantial structural modernization of labor legislation, which is expected to contribute to improved labor relations and to the creation of opportunities currently constrained by an outdated regulatory framework.