The labor reform presented by the Executive before Congress aims to update the Labor Contract Law, the regulatory core of employment in Argentina for the past fifty years. The Government argues that the current system requires modernization, greater legal predictability, and a restructuring of costs, while labor sectors and specialists debate the scope of its implications. In any case, the project introduces structural changes that alter the way labor relationships are organized, compensated, and terminated.
With inflation slowing to 2.5% monthly in November—according to the Indec—and in the context of broader reforms, the text addresses sensitive dimensions of employment. Below is a detailed examination of its main chapters.
Severance: cap, calculation base, and scope of compensation
Article 245, one of the pillars of the Labor Contract Law, is rewritten. The formula for salary per year worked remains, but the reform establishes three substantive modifications:
The calculation base will be the highest monthly, normal, and habitual remuneration of the last year.
The maximum severance cap will be three times the average salary of the applicable agreement.
The severance will be the only compensation, excluding additional civil claims.
The project also allows companies to create labor cessation funds, instruments intended to cover future severances. These tools aim to reduce unpredictability and litigation, according to the official explanation.
Vacations: scheduling the period and new rules for splitting
The reform defines an official period for granting vacations, which must fall between October 1 and April 30, although workers and employers can agree on dates outside of that window.
It also establishes:
the possibility of splitting the rest in blocks of no less than seven days,
the obligation to guarantee vacations in the peak summer season at least every three years,
and a procedure for rescheduling if the worker experiences an illness during the vacation period.
The declared objective is to standardize criteria and provide administrative predictability.
Workday and hour banks: compensation and reorganization of working time
One of the most significant changes is the incorporation of the “hour banks” system, through which the parties can agree on compensating overtime within broader work cycles. This allows for the reorganization of peaks and valleys of activity without necessarily resorting to the traditional payment of extra hours.
The scheme requires respecting:
the 12 hours of minimum rest between shifts,
and the weekly breaks provided by law.
This mechanism aligns with models applied in some specific activities and aims to introduce greater flexibility in the administration of working time.
Salaries: definition, payment methods, and “dynamic” income
The project precisely redefines which concepts are included in remuneration, allowing its payment:
in pesos,
in foreign currency,
and partially in kind.
A relevant novelty is the possibility of establishing a “dynamic salary”, a variable portion of remuneration associated with merit, performance, or productivity, which can be agreed upon in collective agreements or implemented by company. This concept introduces criteria for internal differentiation and greater variability in certain segments of income.
Sick leave: certification and medical control
The reform establishes stricter requirements to certify an illness:
the certificate must include specific diagnosis, treatment, and number of days of rest;
it must be issued exclusively by qualified medical personnel.
If there is a discrepancy between certificates, an medical board will intervene to determine the final validity. The declared purpose is to standardize criteria and reduce controversies.
Reintegration after accident or illness: continuity with adjustments
The project retains the obligation to preserve the employment of workers who return with a permanent decrease in their work capacity. However, it allows for the adjustment of salary to the new tasks, category, or working hours that they may perform. The bond is preserved, but a remuneration adjustment mechanism based on residual capacity is introduced.
Trial period and notice: greater flexibility in hiring
Another relevant modification is the elimination of the obligation to give notice in case of contract termination during the trial period. This decision concentrates greater flexibility in the early months of the employment relationship, a phase during which the definitive continuity is evaluated.
A structural reform that opens a new cycle of debate
The labor reform by Milei reorganizes central aspects of Argentine employment, from defining salary to compensating time and calculating severance. Its approval or modification will depend on the legislative process, but the text has already reinstated a structural debate: how to adapt the labor regime to new productive dynamics without dismantling the balances that have defined historical protection.
In the coming months, Congress and various social actors will need to discuss not only the technical details but also the employment model that Argentina wants to project moving forward.
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