Globalisation has meant that many employees move from one country to another for fixed periods of time. Therefore, granting social security rights to migrant employees is of fundamental importance. This update examines issues that need to be taken into account for employees assigned to undertake work in Argentina.

Territoriality principle

The validity, rights and obligations of any labour relationship performed in Argentina are governed by Argentine law, regardless of where the employment agreement was executed or the nationality of the parties. This general rule is known as lex loci executionis or the principle of territoriality.

Within this scope, all work in a labour relationship performed in Argentina is governed, in principle, by Argentine labour law. Consequently, if the employee is assigned to render services abroad, Argentine labour legislation is not applicable.

The principle of territoriality also applies to social security rules. Taking into account the fact that labour and social security laws are mandatory in Argentina (ie, they cannot be modified by the parties, except for the benefit of the employee in the case of labour law), the employment contract of an expatriate in Argentina is governed by Argentine law.

Social security obligations and retirement benefits

Pursuant to Argentine labour law, employers and employees have certain obligations to make social security contributions for family allowance, medical services, pensions and unemployment benefit.

The percentage amounts for withholdings and contributions are based on the employee's gross remuneration and take into account the employer's main activity and income. The base for calculating an employee's contribution has a cap of Ps43,202.17 (approximately $4,660). Employer contributions have no cap and must therefore be calculated based on the employee's full remuneration.

As regards retirement benefits, pursuant to the Retirement and Pension Law 24,241, all employees working in Argentina must be covered by the Argentine social security system. According to Section 19 of the law – and to be entitled to receive the retirement and additional benefits that result from it – the beneficiary must be:

  • 65 years old in the case of men; or
  • 60 years old in the case of women (women may opt to continue working until they are 65).

In both cases, the beneficiary must provide evidence of 30 years of service and social security payments.

It is mandatory in Argentina to adhere to the retirement system, but there are certain exceptions. According to Section 4 of Law 24,241, professionals, research workers, scientists and technicians recruited abroad to work in Argentina for no more than two years on a one-off basis are exempt and do not need to contribute to the retirement system. To avail of this exemption, the employee must not have permanent residency in Argentina and be protected against the contingencies of old age, disability and death by the laws of his or her own country of permanent residence.

International social security agreements

'International social security agreements' can be defined as agreements on social security matters between two or more countries which establish reciprocal rules that people who render services in those countries must follow to obtain the benefits foreseen in the relevant legislation of each state subscribed to the agreement.

Expatriates who have developed duties in a labour relationship or are self-employed and have made the respective contributions to the social security systems of countries that are parties to a reciprocity agreement for retirement matters can request the recognition of their duties in order to receive benefits by the international agreement.

Consequently, these international agreements guarantee access to social security rights for certain employees who have worked in different countries. Otherwise, they would not be entitled to receive their retirement benefits, as they would have no evidence in their country of permanent residence of their years of service or social security payments.

Under such international agreements, expatriates are covered by old-age, disability, death and medical-care benefits, family allowance, work-related illness and accidents and benefits for funerals.

Argentina has social security agreements with:

  • Chile;
  • Colombia;
  • Spain;
  • Slovenia;
  • France;
  • Italy;
  • Portugal;
  • Peru; and
  • the Mercosur (ie, Brazil, Uruguay, Paraguay and Argentina).

These agreements establish that social security rights will be provided to expatriate employees and their families and that these employees are subject to the same obligations as local employees. However, not all agreements include the same benefits (eg, some cover only the pension system, while others include health coverage).

Certain exceptions are permitted regarding the application of international social security agreements. Professional and research workers, scientists and technicians transferred for a limited period of time are entitled to remain subject to the social security system of their country of permanent residence.

The time limit depends on the international agreement in question. For example, it could be 12 months under the Mercosur Agreement or 24 months under the agreement between Spain and Argentina.

Comment

Depending on the country that expatriates come from, and taking into account the length of time that they have worked in Argentina, certain employees are entitled to request recognition of work carried out in Argentina under the relevant international social security agreement in order to receive their retirement benefits.

For further information on this topic please contact Javier E Patrón or Enrique M Stile at Marval O'Farrell & Mairal by telephone (+54 11 4310 0100) or email (jep@marval.com.ar or ems@marval.com.ar). The Marval O'Farrell & Mairal website can be accessed at www.marval.com.ar.

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