employment law overview argentina 2019-2020 · an alliance of employers’ counsel worldwide | 2 4. new develoPments Decree 1043/2018, published on November 13, 2018, provides that

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employment law overview argentina 2019-2020Allende & Brea / Proud Member of L&E GLOBAL

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table of contents.

i. General overview 01II. PRE-EMPLOYMENT CONSIDERATIONS 03III. EMPLOYMENT CONTRACTS 04IV. wORkINg CONDITIONS 06V. ANTI-DISCRIMINATION LAwS 08VI. SOCIAL MEDIA AND DATA PRIVACY 10VII. AuThORISATIONS fOR fOREIgN EMPLOYEES 11 VIII. TERMINATION Of EMPLOYMENT CONTRACTS 12IX. RESTRICTIVE COVENANTS 15X. TRANSfER Of uNDERTAkINgS 16XI. TRADE uNIONS AND EMPLOYERS ASSOCIATIONS 17XII. EMPLOYEE BENEfITS 19


i. general overview

2. Key Points•Argentinalaborlawsareproemployee,designedtoprotecttherightsofemployeesandworkers,bysettingrulesgoverningworkingconditionsandworkinghours,providingforpaymentofsalariesduring illnesses, setting surcharges on salariesforovertime,establishingannualvacations,andrequiringthepaymentofseverancecompensationintheeventofunfairdismissal(dismissalwithoutjustifiedcause).

•Argentinelaborlawiscomprisedofpublicorderrulesandthuscannotberuledout,orwaivedbyanyagreement,orapplicablelaw,orjurisdictionclauses eventually included in any agreements.Therefore, Argentine labor law will apply -andlabor courtswill have jurisdiction- in respectofanyeventuallaborcourtclaimfiledinrespecttoworkperformedinArgentina.

•Employeesareentitledtoa13thsalaryorstatutoryannual bonus, called “aguinaldo” or “sueldoannualcomplementario/SAC”.Itispayableintwosemi-annualinstallments,fallingdueonJune30and December 18. Each installment is equal to50%ofthehighestmonthlysalaryaccruedduringthecorrespondingsemester.

•Employersmustpayacompulsorylifeinsuranceforallemployees.

•The employer can only change the terms andconditions of the labor employment, providedthatthosechangesarenotunreasonableanddonoteither:

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•Modify the essential terms of the employmentcontract;nor

•Cause material or moral damages to theemployee.

3. legal frameworK•LaborLawsare federal laws,so the labor termsandconditionsarenationallystandardized.

•A general Employment Labor Law 20,744,complemented by additional laws and anyapplicablecollectivebargainagreement,governsemploymentconditions.

•The Health Insurance Act, law No. 23,660 setsforththerequirementsforgrantingproperhealthservicetoemployeesandtheirfamily.

•Employees’PensionandRetirementAct,lawNo.24,241,establishestheaccesstopublicfundsforemployees and independent workers who areeligibletoapplyforretirementorapensionplan,retirementfordisabilityandpensioncoverageincaseofdeath.

•TheOccupationalHealthandSafetyatWorkLawNo.19,587regulatestheconditionsofhealthandsafety at work applicable to all establishmentsregardlessthenatureoftheireconomicactivity.

•Working Hours Act. No. 11.544/1929 regulatesworkinghours.

•Law No. 24,013 regulates temporary personnelservice companies and applicable fines forimproperregistrationoflaborrelationships.

1. introductionLaborlawsareverycomprehensiveandrulealmosteverytermoftheemploymentrelationship.Laborlawsarepublicpolicyandtherefore,aremandatory.Theemployer isobligedtograntemployeesat leastwhatisprovidedbylaborlaws.Therefore,anemployercangrantemployeesbenefitsontopofwhatisprovidedbythoselaws,butcannotagreewithemployeesindetrimentofwhatisprovidedbythoselaws,norcananemployeewaiveanyrightincludedinthoselaws.


employment law overview2019-2020 / argentina

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4. new develoPments Decree 1043/2018, published on November 13,2018,providesthatuptoMarch31,2019,employersin Argentina must follow a procedure beforedismissing, without justified cause, employeeshired under an indefinite term employment. TheemployermustservenoticeofthatdismissalupontheMinistryofProductionandLaborofArgentinanolessthan10business-daysbeforethedismissalbecomeseffective.

TheMinistryofProductionandLaborofArgentinamay,eitheron itsown initiativeorattherequestof any of the parties, request the employer andthe employee, together with the proper unioncounseling,toattend,duringthat10daylegalterm,atasmanyhearingsas itmaydeemnecessarytodiscuss the conditions for the future dismissal.Breachofthisobligationmayentailtheimpositionof thepenalties thatmay rangebetween25%upto200%oftheminimummandatorywage,thatasfrom December 1, 2018 is AR$ 11,300, currentlyequaltoUS$290.

In October 2018, a Labor Court ordered severalbus companies to hire at least 30% of femalebus drivers. This percentage was determined inaccordancewiththequotaprovidedbyunionlawsforfemaleuniondelegates.

In July2018, theMinistryofLaborappliedaUSD29M fine (one of the highest fines ever) to thetruck-drivers’ union (one of the strongest unionsinArgentina)basedonthefactthattheunionhadnotfulfilledthemandatoryconciliationprocedureandcontinuedtoprotestafterthelaborauthoritieshadcalledbothpartiestoamandatoryconciliationprocedure. The union filed an appeal against thefineandtheLaborCourt ratifiedthefine, thoughreduced it, ruling that the fine should only becalculated considering the union members thatactively participated in the protest and not thetotalnumberofunionmembers.


ii. PRE-EMPLOYMENT considerations 1. does a foreign emPloyer need to establish or worK through a local entity to hire an emPloyee? A foreign employer needs to establish a localentitytohireanemployee,inordertoregistertheemployeebeforethelocaltaxauthoritiesandpaylocaltaxesandsocialsecurityobligations.

2. limitations on bacKground checKsIn Argentina, an employer cannot perform acriminal background check on an employee,eitherdirectlybytheemployerorbytheuseofavendor.Onlytheemployeecanobtainthecriminalbackground and then provide it to the employer.This is established in section 8 subsection (f) oftheCriminalRecordsRegisterAct(LawNo.22,117)which states that the Criminal Records Registrywillbeconfidentialandmayonlyprovide reportsto: (i) the individuals who, by demonstrating theexistenceofalegitimateinterest,requestacriminalcertification.Moreover,theRegulatoryDecreeNo.2004,statesthatthecertificatemustberequestedby the interested party personally or through hislegal representative. In addition, the ArgentineDataProtectionActestablishesthatpersonaldatareferringtocriminalrecordscanbeprocessedonlybythecompetentpublicauthorities.

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3. restrictions on aPPlication/interview QuestionsEmployers cannot include restrictions onapplicationthatmayentailanydiscrimination,suchasgender,age,politicalorreligiousbeliefsand/ormaritalstatus.Potentialemployeesarenotobligedtoprovidebackgroundinformationduetothefactthat it isconsideredpersonalprivate information.The employer is obligated to conduct pre-employment medical examinations to determineif the employee is fit to work and to determineanypriorhealthconditionsatthebeginningofthelaborrelationship.



iii. emPloyment contracts1. minimum reQuirementsWrittenemploymentcontractsarenotrequiredforpermanent, full-time employment relationships,because labor laws are mandatory, verycomprehensive and rule almost every term ofthe employment relationship. Labor laws onlyrequire the employer to register the employeein the company labor books and before the taxauthorities,paysocialsecurityandtaxesinrespecttoallsalariespayabletotheemployee,andprepareand deliver to the employee the correspondentsalary slips on a monthly basis. Employers mustalsoprovideformandatorylifeinsuranceaswellasworkingaccidentinsuranceforallemployees.

2. FixEd-TERM/OPEN-ended contractsForafixed-termcontract:

•awrittenemploymentcontractmustbeexecuted;•it requires an extraordinary need that dulyjustifiesexecutingafixedtermcontract

•thereisamaximumtermof5years;•the employer must serve prior notice oftermination(nolessthan1monthandnomorethan 2 months). Failure in serving such noticecannot be replaced by any compensation andwillautomaticallytransformthecontractintoanindefinitetermcontract;

•in case the employer dismisses an employeewithout justified cause before the expiration oftheagreedterm,theemployeeisentitledtoclaimdamages. Labor Courts have usually awardedpendingwagesuntiltheoriginalexpirationoftheagreedterm;

•once the agreed term finalises, the employermust pay a severance compensation equivalent

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to50%ofaregularone;andafixedtermcontracthasnotrialperiod.

A temporary contract can be used whenextraordinary and transitory production demandsor requirements are foreseeable, although aspecific term for the contract termination cannotbeforeseen.Thecontractwillalsotakeplacewhentherelationshipbeginsandendswiththespecificjobexecutionorwiththespecificserviceforwhichtheemployeewashiredtoexecute.Theguidelinesrequiredbylaware:

•there is no obligation to give any notice oftermination;

•no severance payments or compensations areowedwhenthecontractfinishes;

•awrittencontractisrequiredbylaw;•thespecificcausemustbeclearlydescribed,astheemployermustprovethetemporarynatureofthecontract;

•notrialperiodisapplicable;•Law 24,013 caps the term of this contract to amaximumtermof6monthsperyearandupto12monthsona3yearperiod;and

•itcanbeeitherprovideddirectlybytheemployeror through an employment agency authorisedby the Ministry of Labor. In this last case, thecompany is jointly and severally liablewith theemployment agency for any labor and socialsecuritydebts inconnectionwiththeemployeehiredthroughanemploymentagency, includingpaymentofseverancecompensation.

3. trial PeriodTrialperiodscanbeupto3monthsfor indefinitetermcontracts.Terminationduringthetrialperiodcanbedecidedwithoutpayinganycompensationor severance payment liability for the employee(except that a 15-dayprior noticeand thewagesaredue).




4. notice PeriodEmployers must give a prior written notice tothe employee in the event of a termination ofemployment with no justified cause. Such priornoticemustbegivenbytheemployer:(i)15daysinadvance,iflaborcontractisunderthetrialperiod;(ii)1monthinadvance,ifemployeehasservedforupto5years;and(iii)2monthsinadvance,ifemployeehasservedformorethan5years.Employerhastheoptionnottonotgivesuchpriornotice, inwhichcaseitmustpayseverancecompensationinlieuofnotice,equalto15dayssalary,oneortwomonthlysalaries, depending each case. It is custom thatemployersopttopaythiscompensationinsteadofgivingpriornotice.15dayspriornoticeisprovidedto be given by the employee to the employer incasehewillresigntohis/herjob,withoutdetrimentof his seniority. Decree 1043/2018, published onNovember 13, 2018, provides that up to March31, 2019, employers in Argentina must follow aprocedure before dismissing, without justifiedcause, employees hired under an indefinite termemployment. The employermust serve notice ofthatdismissalupontheMinistryofProductionandLabor ofArgentinano less than 10business-daysbeforethedismissalbecomeseffective.


iv. worKing conditions 1. minimum worKing conditionsEmployees are entitled to aminimumwage thatisadjustedfromtimetotime.As fromDecember1, 2018, the minimum mandatory wage is AR$11,300,currentlyequaltoUS$290.ItwillincreasetoAR$11,900(U$S305)inMarch2019anduptoAR$12,500(US$320)inJune2019.

However, the minimum wage is higher foremployeesundercollectivebargainingagreements,which are also granted periodic salary increasesagreed upon by unions and industry chambers.Parttimeworkersand internshipcanbepaid lesssalary, provided that they comply with the legalrequirementssetforthforthoserelationships.

Employees are entitled to mandatory healthcoverage and pension plan (funded throughmandatory social security contributions by bothemployer and employee), paid vacations, 13thsalary and maximum working hours. They arealso entitled to paid sick leave. There are othercompulsory leaves of absence on the grounds ofchildbirth, marriage, mourning or educationalexaminations. Applicable collective bargainagreementsalsoprovideadditionalpayleaves.

2. salaryA minimum wage has been established and isadjusted at intervals. However, said minimumwage is generally exceeded by the basic salariesestablishedinthecollectivebargainingagreements.Collectivebargainingagreementsarenegotiatedbyunionswiththechambersthatrepresentemployersof each industry. The provisions of a particularcollectivebargainingagreementaremandatorybylaw and regulated by law. A particular collective

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bargainingagreementisapplicabletoallemployeesworkinginactivitiessuchasindustrial,commerce,health, and others. In general, employees whoworkasmanagers, supervisorsorotherhierarchypositionsareexcludedfromthelegalframeworkofthe collective bargaining agreement. The consentof the employee is not necessary since they areautomaticallyincludedinthecollectivebargainingagreement just for working in a company undera particular collective bargaining agreement.Collective bargain agreements usually providebenefitstoemployeesontopofwhat isprovidedforbyMexicanemploymentandlaborlaws.

3. maximum worKing weeKThe normal working hours for employees andworkersare limited to8perdayor48perweek.Night shift and unhealthy work provide reducedworkinghours.

4. overtimeOvertime is paid at a rate of 50% of the normalpay,unless it isworkedonSaturdaysafter1P.M.,Sundays and holidays, in which case it is paidat a rate of 100% of the normal pay. ApplicableCollectiveBargainAgreementsmayprovidehigherpayments. Overtime must not exceed 3 hoursperday,30hoursamonthand200hoursayear.All employees are entitled to overtime payment,exceptcorporatedirectorsorcorporatemanagersregisteredassuchbeforetheOfficeofCorporations(Register of Commerce). Part time employeescannotperformovertimework.



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5. health and safety in the worKPlace

A. EMPLOYER’S OBLIgATION TO PROVIDE A hEALThY AND SAfE wORkPLACE

Employers are obliged to grant mandatory lifeinsurance and working accident insurance toemployees.Employersarealsoobligedtoprovidea healthy and safe workplace (both physical andpsychological), in compliance with the laborauthorities’ instructions, as well as the workinginsurance instructions. Employers, in certainindustries, must provide employees clothingworkingtoolsandprotectionequipment,aswellashavepreventiveactionstopreventaccidents,andregularmedicalexaminations.

B. COMPLAINT PROCEDuRES

Employees may file a petition before the unionand/or the labor authorities complaining aboutthe breach of health and safety obligations byemployer. The labor authorities may inspect theworkplaceatanytimeandordertheemployertoremedyanybreachandimposefines.



V. ANTi-diSCRiMiNATiON laws1. brief descriPtion of ANTi-diSCRiMiNATiON lawsLabor Law20,744aswell as LawNo. 23,592andinternationaltreatiesenteredbyArgentinaprohibitdiscrimination. If an employee is discriminatedagainst because of race, religion, age, gender,disability or political or union activities, theemployer’sactioncanbedeclarednullorvoidandtheemployercanbeorderedtobothreinstatethedismissedemployeeandcompensatetheemployeeforanydamagescaused.Asfaraslaborconditionsare concerned, the law obliges the employer togivethesamebenefits/salarytoemployeeswithinthesamecategoryandseniority.

2. extent of Protection Different conditions granted by the employerto the employees must be justified in objectiveparameters(seniority,jobposition,responsibilitiesandperformance).Theemployerisobligedtokeepa safeworkingenvironment, includingpreventingand protecting employees against physical andpsychological damages caused by discrimination.The employer could not only be ordered toprotect an employee, but can also be held liableforanydamagessufferedbytheemployeeduetodiscrimination.

3. Protections against harassmentThe employer is obliged to keep a safe workingenvironment, includingpreventingandprotectingemployees against harassment. The employercouldnotonlybeorderedtoprotecttheemployee

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butcanalsobeheldliableforanydamagessufferedbyemployeesduetoharassment.

4. emPloyer’s obligation to Provide reasonable accommodations Employers are obliged to provide reasonableaccesstodisableemployees,suchasemployeesinwheelchairs.

5. remediesEmployeesthatarediscriminatedagainstcanclaimunequal treatment, claiming payment of salarydifferences or to be granted the same benefits.In case of termination due to discrimination theemployeeisentitledtoclaimtortdamagesandevenreinstallation atwork and that the discriminativeactisdeclarednullandvoid.

Additional severance is provided for dismissedemployees recently married or pregnant. Uniondelegates cannot be dismissed while they holdoffice and for one year thereafter. In the caseof dismissal, the union delegate may claimthe reinstatement or consider himself/herselfdismissedinaconstructivebasisandclaimpaymentof severance compensation plus pending salariesuntil the expiration of his period, plus additionalseveranceequalto13salaries.

Incaseofdismissalofasickemployee,employeescaneitherclaimreinstatementorbepaidseverancecompensation, plus the pending salaries untilthe expiration of the paid sick license, plus tortdamages.





6. other reQuirements In recent case law, a labor court ordered atransportation company to hire at least 30% offemalebusdrivers.Thispercentagewasdeterminedinaccordancetothequotaprovidedbyunionlawsforfemaleuniondelegates.

vi. social media and data Privacy 1. restrictions in the worKPlaceEmployers can restrict the employees’ Internetuseand/orsocialmediauseduringworkinghours,instructingemployeesthatitcanonlybeusedforlaborpurposes.

A. CAN ThE EMPLOYER MONITOR, ACCESS, REVIEw ThE EMPLOYEE’S ELECTRONIC COMMuNICATIONS?

Employers can monitor, access and reviewonly labor/corporate employees’ electroniccommunications, provided that the employee isnotified inadvance (by signinga corporatepolicyinthatrespect)thattheelectroniccommunicationsaretobeusedonlyforworkingpurposesandcanbemonitoredandtherefore,theemployeeshouldhavenoexpectationofprivacy.

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2. emPloyee’s use of social media to disParage the emPloyer or divulge confidential informationProvidedthattheemployeeshavesignedacopyofthecompany´spolicyfortheuseofsocialmediaandprovidedthatemployercanprovetheemployee´sbreachandthedamagetotheemployer,employeesthatdonot followthesocialmediapolicycanbesubject to disciplinary sanctions. Employees thatdivulgeconfidentialinformationcanalsobesubjecttodisciplinarysanctionsordismissedwithjustifiedcause,dependingtheseriousnessofthefaultandtheseniorityandpriorsanctionsoftheemployee.



vii. authorisations for foreign emPloyees reQuirement for foreign emPloyees to worK There isno restriction regarding theemploymentof foreigners in Argentina. Requirements differif the employee´s nationality is from a countryof Mercosur or affiliated to Mercosur (Uruguay,Paraguay, Brazil, Argentina, Colombia, Chile,Venezuela, Ecuador, Bolivia and Perú) or othercountries. Employees that are not nationals of acountrymemberof theMercosur, or affiliated toMercosur, are required to obtain a working visato work under an employment relationship inArgentina. Employers must first register before aregistryofemployersthathireforeigners.Inorderto obtain a working visa, the employee shouldbe registeredasanemployeeofa local companyinArgentina.All foreignershave tofilea criminalrecordscertificatedullylegalizedfromthecountryorcountrieswheretheyhavebeenlivinginthelast3yearsaswellasfromArgentina.

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viii. termination of emPloyment contracts 1. grounds for termination Employerscanterminateemploymentatanytimewithout justified cause, subject to payment ofseverance compensation provided by labor laws.Employees on a trial period, i.e. during the firstthree months of employment, are not entitledto severance compensation, exception made topriornotice(15days).Terminationofemploymentwith justified cause does not entail payment ofseverancecompensation.

The employer can dismiss an employee withjustified cause in the event of failure of theemployee to fulfil his obligations which, by theirgravity,donotconsenttothecontinuationoftherelationship.Laborlawsdonotlistspecificbreachesthatjustifydismissalandshouldbeanalyzedonacasebycasebasis.Theemployerhastheburdenofprovingthecauseofdismissal.Theemployeecanalso challenge any dismissal with justified causedecidedbyemployer,inwhichcaseaLaborCourtwilldecideiftheemployerhadajustifiedcausefordismissal. LaborCourts are very restrictive at thetimeofevaluatingifthecausedismissalmeetsthelegalstandardsinordertobeconsideredjustified.LaborCourtsusuallyanalyzeifemployeehaspriordisciplinarysanctionsalsoprovidedbylaborlaws,theemployee´sseniorityandhierarchy.

An employee can also resign, in which case, noseverancecompensationispayable.Theemployeecan consider himself dismissed in constructivebasisduetoabreachofemployer,byitsgravity,donotconsenttothecontinuationoftherelationship,in which case a Labor Court will decide if theemployee had a justified cause for constructivedismissal.Lastly,employmentcanterminateduetothefactthattheemployeeretiresatthetimehe/

sheisgrantedthegovernmentalpensionplan.Noseverancecompensationispayableinthatcase.

2. collective dismissalsThe company has to go through a mandatoryconciliationprocedurebeforetheMinistryofLaborprior to dismiss a certain minimum number ofemployees provided in Law 24,013, as describedabove:

•Whenthecompanyhaslessthan400employeesandthecompanywilldismissmorethana15%ofthetotalpayroll;

•Whenthecompanyhasbetween400and1,000employees and the company will dismissmorethana10%ofthetotalpayroll;

•When the company has more than 1,000employees and the company will dismissmorethana5%ofthetotalpayroll.

3. individual dismissalsEmployer can terminateemploymentat anytimewithout justified cause, subject to payment ofseverancecompensationprovidedbylaborlaws.Union delegates are protected and therefore,cannot be dismissed during their term and oneyear afterwards. In case of dismissal of pregnantormarried employees or sick employees, amongothercases,additionalseverancecompensationispayable.

Employers have to serve noticeof termination inwritten and through a notary public or certifiedletter of all dismissals. Resignation has to bemade inwrittenand theemployeehas to sendatelegramfromtheofficialpostalcompany(CorreoArgentino).



A. IS SEVERANCE PAY REquIRED?

In case of termination of employment withoutjustified cause, the employer must pay theemployee mandatory severance compensationprovidedbylawwithin4daysafterservingnoticeoftermination,asfollows:

Seniority compensation: equivalent to the bestmonthly salary for each year of employment orperiod exceeding 3 months, taking as a basisthe best monthly, regular and ordinary salary,accrued during the last working year. Such basishas a maximum ceiling amount provided by theapplicable bargaining agreement (3 times theaverage of all wages provided by such collectivebargaining agreement) and a minimum capamount (one employee’s gross monthly salary).TheSupremeCourtruledthatsaidceilingmustnotimply a reduction ofmore than 33% of the bestmonthlysalarybasis.

Compensation in lieu of notice: The employermust give apriorwrittennotice to theemployeeintheeventofaterminationofemploymentwithnojustifiedcause.Suchpriornoticemustbegivenbytheemployer:(i)15daysinadvance,ifthelaborcontract is under the trial period; (ii) 1month inadvance, if the employee has served for up to 5years; and (iii) 2months in advance, if employeehasservedformorethan5years.Iftheemployerdoes not give such prior notice, it must pay thisseverance compensation in lieu of notice, equalto 15 days salary, one or two monthly salaries,dependingeachcase. It iscustomthatemployersopttopaythiscompensationinsteadofgivingpriornotice.

Pending days till the end of the month: If thedismissaldoesnottakeplaceinthelastdayofthemonth, the employer must pay a compensationequal to the proportional salary for the pendingdays to complete the entiremonth in which thedismissaltookplace.

Compensation for unused vacations: Theemployeeisentitled tocompensationequal to thevacationpayinproportiontothedayseffectivelyworkedoftheyearinwhichthedismissaltookplace.

Statutory Annual Bonus: Theemployeeisentitledtotheproportionalamountofthis13thsalary.

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The severance compensation is reduced by onehalfifthelaborrelationshipendsasaresultoftheemployee’s death. Additional severance (equalto 13 monthly salaries) must be paid in case ofterminationwithout justified causeof apregnantemployee(duringpregnancyandupto7.5monthsafter giving birth) or an employee that has beenmarried(andisfiredwithin3monthspriortothemarriage or 6months after themarriage). If theemployee isdismissedduringherorhispaid sickleave,theemployeeisentitledtoclaimthemonthsremainingtocompletethepaidleaveprovidedbylawplusmoraldamages.Theemployeemayclaimpaymentofcertainlaborfinesprovidedinhis/herfavorthatmaysignificantlyincreasetheseverancepayable, in the event he/she proves his laborrelationshiporsalarywasnotdulyregistered.

4. seParation agreements

A. IS A SEPARATION AgREEMENT REquIRED OR CONSIDERED BEST PRACTICE?

No separation agreement is required. Theadvantages of a separation agreement should beanalyzed on a case by case basis, depending onthe amount to be paid to the employee and theemployer´sexposure.Incertainoccasions,itisbestpractice to attend to the Ministry of Labor aftertermination of employment to sign a settlementagreement to be approved by such authority,whichistheonlybindingagreement(resjudicata)andvalidwaiveraccordingtolocallaborlaws.Anyotheragreementwillnotprecludetheemployeetocollectanyamountandfileaclaim(evenifawaiverprovisionisincluded),inwhichcase,anyamountspaid in connection with the agreement, may beoffset in against eventual amounts awarded by acourt.

B. whAT ARE ThE STANDARD PROVISIONS Of A SEPARATION AgREEMENT?

BothpartiesmustattendtotheMinistryofLaborcounseled by a lawyer. A settlement paymentshouldalwaysbeincluded,withoutacknowledging





anyfactsorrightsandsubjecttothepriorapprovalof the agreement by the Ministry of Labor. Aconfidentiallyprovision,aswellasabroadwaiver,arealsostandard.Lastly,aprovisionstatingthattheamountpayableduetotheseparationagreementshouldbeoffsetagainstanyeventualfutureclaimoramountawardedtotheemployeebyacourt.

C. DOES ThE AgE Of ThE EMPLOYEE MAkE A DIffERENCE?

In principal the age of the employee does notmakeadifference,butwhenemployeesreach70years old and have 30 years of contributions tothesocialsecuritysystem,theemployerisentitledto demand the employee begin the process toobtain retirement and the governmental pensionplan. The employer must serve notice to theemployeeofthesecircumstancesanddemandtheemployeetostarttheprocess.Theemployermustalsodeliverpreviously to theemployee the laborcertificatesandverifythattheemployeeiseligibleforretirement.

Once theemployerhas servednoticeanddeliverthe labor certificates, the employer is obliged tomaintainthelaborrelationshipwiththeemployee(andpaysalariesandallbenefits)untileither theemployee obtains retirement, or for a period ofone year since the employee was served notice(whateveroccursfirst).Oncetheemployeeobtainsretirement or the one year period has expired(whatever occurs first), the employer is entitledto terminate theemployment relationshipdue toretirement of the employee, without paying anyseverancecompensationtotheemployee.

D. ARE ThERE ADDITIONAL PROVISIONS TO CONSIDER?

Insomecases,partiesagreethat(i)theemployeereturns all work equipment or tools of thecompany; (ii) the employee resigns to any boardof directors or legal representative position; (iii)theemployerpaysemployeemedicalcoverageforalimitedperiodoftimeaftertermination;(iv)theemployerpaysproportionalbonusorstockoption;(v)theemployertransfersthecompany´scartotheemployee;(vi)theemployeereturnsthecompany´scar;and/or(vii)nocompeteprovisions.

5. remedies for emPloyee seeKing to challenge wrongful terminationThe employee can challenge dismissal withjustified cause by claiming payment of severancecompensation for dismissal without justifiedcauseplusafineinhisfavorequalto50%ofthatseverance compensation (plus interest and legalfees),inwhichcaseaLaborCourtwilldecideiftheemployerhada justifiedcause fordismissal. Theemployerhas theburdenofproving thecauseofdismissal.

The employee can also claim payment ofseverance differences alleging that the severancecompensation was not properly calculated, aswell as certainfinesprovided in his/her favor forimproper registration of salary or entry date, inwhichcaseaLaborCourtwilldecideiftheemployercorrectlypaidsalariesandseverancecompensationaswellasproperlyregisteredtheemployee´slaborrelationshipandsalary.

The employee must go through a mandatoryconciliationprocedurepriortofilingacourtclaim.Partiesmustattendhearingsbeforeaconciliationappointed by the Ministry of Labor to explore asettlement.

6. whistleblower laws Argentine criminal laws provide reduction ofpenalties for whistleblowers in respect to crimesagainst the public administration (corruption andfraud against public administration), customscriminal offenses, economic and financial crimes,drug trafficking, terrorism, human trafficking andmoneylaundering,amongothers.Theselawsalsoprovide a reduction of penalties to be imposedon companies for crimes committed by theiremployeesorofficers,providedthatthecompanyhas set forth a compliance policy that includes,among others, the company´s protection towhistleblowersagainstretaliation.

ix. restrictive covenants 1. definition of restrictive covenantsDuring the employment relationship, employeesare obliged in respect to employer´s intellectualproperty,confidentialityandnocompetition.Thereare no specific laws about restrictive covenantsafter termination of employment. However, theConstitution provides freedom of work, whichmeans that the employee may challenge anynon-compete or non-solicitation provisions afterterminationofemployment.

2. tyPes of restrictive covenants

A. NON-COMPETE CLAuSES

Theemployeeisobligedbylaborlawsnottocompetewithemployeeduringthelaborrelationship.LaborCourts have ruled that non-compete provisionsafter termination are only permissible if they arelimited in time (maximum2 years, in exceptionalcases can be exceeded) and compensated (atleast 50% of monthly salary approx.). Failure tofollowtheserequirementswillturnanon-competeprovisionnullandunenforceable.

B. NON-SOLICITATION Of CuSTOMERS

The employee is bound during the laborrelationship.Aftertermination, itwillbeanalyzedasanon-competeprovisionasmentionedbefore.

C. NON-SOLICITATION Of EMPLOYEES

Non-solicitation of employees in unenforceableinArgentinaduetotheemployee´sconstitutionalrightoffreedomtowork.

3. enforcement of restrictive COVENANTS—PROCESS and remediesNon-compete or non-solicitation of customerscovenantsafterterminationofthelaborrelationshipmust comply with specific requirements to beenforceable. The provision should be limited intime (maximum 2 years), compensated (at least50%ofmonthlysalaryapprox.)andclearlyoutlinedthegeographicalandindustry/companiesscope.

4. use and limitations of garden leave (dEFiNiTiON ANd APPLiCABiLiTY)Labor laws have no specific provision regardinggardenleave.Employerscannotforceemployeestotakegardenleave(paidleave),sincetheemployerisobligedtogiveworktotheemployee.However,the employee can accept the garden leave, inwhichcase theemployeemustbepaidhis salaryandbenefitsinfull,asifhewasworking.



x. transfer of undertaKings 1. emPloyees’ rights in case of a transfer of undertaKingIn case of a transfer of undertaking, employeesare transferred as a matter of law, and consentof the employees is not required, and no noticeisrequired.Thenewemployermustmaintaintheemployee’sworkcategory,benefits,rights,salariesand seniority acquired with the prior employerorthetermsofemploymentmaychangeonlyforthe benefit of the employee. All liabilities of thein-scope employees transfer automatically to thenewemployer.Theemployeemayconsiderhimselfdismissed in constructive basis, by reason of thetransfer, if thetermsofemploymentarechangedtothedetrimentoftheemployeeorhesuffersanydamageduetothetransfer.

In caseofassignmentofpersonnel thatdoesnotentailatransferofundertaking,theemployeemustgive his/her prior written consent and the newemployermustmaintain the employee’s workingconditions.Allliabilitiesofthein-scopeemployeestransferautomatically to thenewemployer,as inthetransferofundertaking.

2. reQuirements for Predecessor and successor PartiesTheprioremployerwillbe jointly liablewithnewemployer for any labor and social security debtsarising out of the employment before the dateof transfer. The new employer becomes solelyliableforthosedebtsgeneratedafterthetransfer.There is no legal obligation to inform, consult orrequire authorization of trade union/employeerepresentativesorlaborauthorities.



xi. trade unions and emPloyers associations 1. brief descriPtion of emPloyees’ and emPloyers’ associations InArgentina,therearecurrentlytradeunionsandemployers’ associations that represent all typesofactivities.Employeeshavetherighttoorganizethemselves into unions. Affiliation to unions byemployees is not mandatory. The employee isfree to decide whether to affiliate or not to theunion.TheGovernmentgrantsofficialrecognitiononlytothemostrepresentativeunion.This is theonly union that can represent the employees incollectivebargainingagreements.

Uniondelegatesareprotectedbylaw.Theycannotbe demoted, sanctioned, suspended, changedthe termsand conditionsof employment in theirdetriment, nor dismissed without justified causewhile they act as delegates and until one yearaftertheir termexpires. Inorder foranemployertoapplyadisciplinarysanction,suspendordismisswith justified cause a union delegate during theprotectionterm,theemployermustseekthepriorauthorizationofalaborcourt.Thesameprotectionisgrantedtoemployeesthatrunascandidatesforunion delegates but are not elected and until 6monthsaftertheelection.

2. rights and imPortance of trade unionsArgentina has ratified ILO Convention # 87 thatestablishes that workers and employers, withoutdistinction whatsoever, shall have the right toestablish and to join organizations of their own

choosing. It also provides that workers’ andemployers’ organizations shall have the right todrawuptheirconstitutionsandrules,toelecttheirrepresentatives in full freedom and to organizetheiradministrationandactivities.Italsosetsforththat workers’ and employers’ organizations shallhavetherighttoestablishandjoinfederationsandconfederationsandanysuchorganization.

Section 14 bis of the Argentine ConstitutionprovidesthattheGovernmentmustguaranteefreeand democratic unions and that unions have therighttoexecutecollectivebargainingagreements,fileconciliationproceduresandcallastrike.

Law23,551providesfreedomofassociationrighttounions,therighttoorganize,meet,filepetitionstotheauthorities,freedomofaffiliationforworkers,requirementsforuniondelegates,minimumuniondelegates per company and protection of uniondelegates.Italsoprovidesthattheunionthathasbeengrantedofficialrecognitionbythegovernmentastheonlyonethatcanrepresenttheemployeesandengageincollectivebargainingagreements.

Union delegates from the union that has beengrantedofficialrecognitionbythegovernmentareprotected by this law. They cannot be demoted,sanctioned, suspended, changed the terms andconditions of employment in their detriment nordismissedwithoutjustifiedcausewhiletheyactasdelegatesanduntiloneyearaftertheirtermexpires.In order for an employer to apply a disciplinarysanction,suspendordismisswithjustifiedcauseauniondelegate,theemployermustseekthepriorauthorizationofalaborcourt.Incasetheemployerbreaches thisprotection, theuniondelegatemayclaim his reinstatement or payment of severancecompensation for dismissal, payment of pendingsalariesuntiltheexpirationofhisterm,plusmoraldamages and additional severance equal to 13monthly salaries. The same protection is granted



to employees that run as candidates for uniondelegatesbutarenotelectedanduntil6monthsaftertheelection.

3. tyPes of rePresentation

A. NuMBER Of REPRESENTATIVES

Law 23,551 provides the minimum number ofuniondelegatesinrespecttotheemployeesofthecompany:

•from10to50employees:1uniondelegate.•from51to100employees:2uniondelegates.•more than 101 employees: an additionalrepresentativeevery100employees.

Applicable collective bargain agreements mayprovideahighernumber.

B. APPOINTMENT Of REPRESENTATIVES

The union delegates are chosen by free anddemocratic vote of all employees, affiliated andnon-affiliated. 30% of the candidates must bewomen.Unionsmust informtheemployerof thenameofthecandidatesthatwillrunascandidatesaswellastheonethatiselected.

4. tasKs and obligations of rePresentativesThe main tasks of the union delegate are: (i)to represent and make petitions representingindividualworkers;(ii)toverifycomplianceoflaborlawsandcollectivebargainagreements inrespectto workers; (iii) to participate in any inspectioncarriedonbythelaborauthorities;(iv)toorganizeandconductmeetings;(v)toeducateandinstructindividualworkers.

5. emPloyees’ rePresentation in managementManagement can organize their own union,separate from the union of non-managementemployees

6. other tyPes of emPloyee rePresentative bodies Labor Laws also allow the existence of otherunions that are not officially recognized asthe most representative union (referred to as“simply registered unions” before the Ministryof Labor) and therefore, cannot represent theemployees in collective bargaining agreements.They can represent employees inother collectiveclaims and file petitions to the labor authoritiesalleging employer´s breaches to labor laws. TheSupremeCourt and Labor Courts have ruled thatthe union delegates of simply registered unionsare also protected against demotion, sanctions,suspensions, change of the terms and conditionsof employment in their detriment and dismissalwithoutjustifiedcause.



xii. emPloyee benefits 1. social securityAllemployeesarecoveredbyanationalretirementpension scheme funded through mandatorycontributionsbybothemployerandemployee.Itispaidbytheemployeethroughwithholdingsoftheirgross salary and by the employer through fixedcontributions,witheachcalculatedasapercentageoftheemployee´ssalary.Employeesareeligibleforretirementandcollectgovernmentalpensionwhenthey reach retirement age (65 years formenand60yearsforwomen)andhavemadecontributionsto this system for 30 years. Employers can onlydemandemployeestoobtainretirementwhentheyreach70yearsoldandhavemadecontributionstothissystemfor30years.

2. healthcare and insurancesHealth care schemes exist for all employees,entitling them to free medical treatment andhospitalcare.Thesearefundedthroughemployercontributions and employeewithholdings, both apercentage of the employee´s salary. Employersmust obtain a mandatory insurance that coversthe employee’s death, illness or disability inconnection to work. Employers must engageinsurance contracts through authorized insurancecompanies. Such entities are obliged to providefinancial and medical assistance to the injuredemployees. For this provision and coverage, theemployermust pay amonthly contribution. Onlytheaccidentsinconnectionwithlabordutiesandarestrictedlistofoccupationaldiseasesarecoveredbythisinsurance.Duringtheinsuranceassistance,theworkerisentitledtoreceivemedicalassistanceandmedications,prosthesesandorthopedicitems,if required. Burial expenses are also included.The employer must also provide mandatory lifeinsurance for his employees, payable by theemployer throughmonthlycontributions.Keep inmindthatapplicablecollectivebargainagreementsmightsetforthotheradditionalinsurances.

3. reQuired leave

A. hOLIDAYS AND ANNuAL LEAVE

Employeesareentitledtoanannualpaidvacationperiod.VacationsarecompulsoryandtheemployermustgrantthembetweenOctober1andApril30asfollows:

•upto5yearsofservice:14calendardays.•between5and10yearsofservice:21calendardays.

•between10and20yearsofservice:28calendardays.

•over20yearsofservice:35calendardays.

The partiesmay always agree to a longer periodthantheoneprovidedbylawbutmaynotagreeonashorterperiod.

National holidays must be observed, and thecorresponding salary should be paid twicewhenever services are actually performed duringthosedays.

B. MATERNITY / PATERNITY LEAVE

Female employees are entitled to 90 days’ paidmaternityleave.Thisisusuallytakeninthe45daysbefore giving birth and the 45 days afterwards.However,theemployeecaninsteadchoosetotake30days’leavebeforegivingbirthand60days’leaveafterwards. Leave is paid by the social securitysystem as a family allowance. Female employeescan request additional unpaid leave betweenthree and six months. While a newborn baby isbreastfeeding, a female employee can take twohalf-hourperiodsadaytofeedherbaby,foruptooneyearafterthebirth.Paternityleaveis2days.

C. SICkNESS LEAVE

In theeventof sickness leaveor injury related towork,theemployermustpaytheemployee’ssalary



forthefirstfifteendays.Afterthefifteenthday,theworkinginsurancecompanywillpaythesickleavetotheemployee.Inrespecttoaccidentsorillnessesnot related towork, employees that have servedforupto5yearsareentitledto3monthsofpaidsick leave. If the employeehas a family, thepaidsick leave is 6months. For those employees thathave served formore than 5 years, the paid sickleaveis6monthsandiftheemployeehasafamily,the paid sick leave is 12months. These paid sickleaves,sincetheyarenotrelatedtowork,arenotcoveredbyanyinsurancenorbythegovernment,and are paid by the employer. The employer isentitled to demand the employee to attend to amedical doctor, appointed by employer, to verifythattheemployeeisactuallyillandinnoconditiontowork.Oncethepaidsickleavetermhaselapsed,incasetheemployeeisnotabletoreturntowork,theemployer isobligedtokeeptheemployeeonitspayrollasinleave,butwithoutpayinganysalarytohim/herforuptotwelvemoremonths.

D. DISABILITY LEAVE

In theeventof sickness leaveor injury related towork, employersmust pay the employee’s salaryforthefirstfifteendays.Afterthefifteenthday,theworkinginsurancecompanywillpaythesickleavetotheemployee.Inrespecttoaccidentsorillnessesnotrelatedtowork,oncethepaidsickleavetermhas elapsed, in case the employee is not able toreturn to work, the employer is obliged to keeptheemployeeonitspayrollasinleave,butwithoutpaying any salary to him/her, for up to twelvemoremonths. In case that, during that term, theemployeehasapermanentdisabilitymakinghim/herunabletoperformthesamework,theemployerisobligedtogivehim/herworkinaccordancewithhis disability. If the employer can prove that heisnotable toprovide theemployeewithwork inaccordance with the employee’s disability, theemployercanterminatetheemploymentbypaying50%of the severance compensationprovided forindismissalwithoutjustifiedcause.Incaseoftotalpermanentdisability,theemployermustpay100%of the severance compensation provided for in adismissalwithoutjustifiedcause.

E. ANY OThER REquIRED OR TYPICALLY PROVIDED LEAVE(S)

Labor lawsalsoprovide leavesofabsenceon thegroundsofmarriage(10days),mourning(3days)oreducationalexaminations(2daysperexamandupto10daysperyear).Applicablecollectivebargainagreements usually provide for other leaves oradditionaldaystotheseleaves.

4. PENSiONS: MANdATORY and tyPically Provided Employees are entitled to collect a mandatorypensionwhentheyreachretirementage(65yearsformenand60yearsforwomen)andhavemadecontributionstothissystemfor30years.Employerscanonlydemandemployeestoobtainretirementwhen they reach 70 years old and have madecontributionstothissystemfor30years.

5. any other reQuired or tyPically Provided benefitsEmployeesunderacollectivebargainagreementforcommercial activities are entitled to a retirementinsurance.

NicolásGrandi,PartnerAllende & [email protected]+54114318-9984



mailto:ng%40allendebrea.com.ar%20?subject=

Allende& Brea is one of the preeminent law firmsin Argentina; it was founded in 1957, and enjoys along-established reputation for superior legal work.Allende & Brea’s employment department provideday to day labor advice, as well as complex laborlitigation advice to international companies frommanydifferent industry sectors. Our teamhas alsosolid experience in providing advice on laborM&A,immigrationanddataprotectionmatters,compliance,discrimination, drafting employment contracts andbenefitplans(bonus,stockoptions,restrictedshares,car and mobile phone policies, among others),identifying labor liabilities and risks, severancecompensation calculation and its tax treatment,individual and massive dismissals, top executivesdismissalsandclaims,collectivebargaining,expatriateregime,transferofemployees,obtainingworkingvisa,advising on matters related to e-mail use at work,e-mail monitoring and privacy policies dealing withinternetuseatwork,codesofconduct,amongothers.Allende&Brea´semploymentdepartment isrankedinChambers&PartnersandLegal500LatinAmerica.

This memorandum has been provided by:

Allende & BreaMaipú1300,Piso11,C1006ACT,BuenosAires,ArgentinaP+54114318-9984www.allendebrea.com

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employment law overview argentina 2019-2020 · an alliance of employers’ counsel worldwide | 2 4. new develoPments Decree 1043/2018, published on November 13, 2018, provides that