By: Germán Capoulat

Firm: Funes de Rioja & Asociados

This article describes the main changes in Argentinian employment law in 2017.

The Employment Accident and Occupational Disease Act

Law 27348 published on 24 February 2017, introduces several changes to the Employment Accident and Occupational Disease Acts (N° 24557 and N° 26773).

The main changes are as follows:

  • Employees can no longer submit a direct claim to an employment tribunal regarding a workplace injury or illness without the prior intervention of a Medical Commission, which will determine the existence of the employee disability and the corresponding compensation under the Employment Accident and Occupational Disease Acts.
  • Once the Medical Commission assessment has been completed, a review may be requested from the Central Medical Commission or an employment court. Unregistered workers who suffer an accident at work or professional illness do not need to go through the Medical Commission’s procedure and can submit a claim directly to any employment tribunal.
  • The Medical Commission’s decisions can be reviewed by the Central Medical Commission. The worker will have the option to file an appeal against the decisions of the Jurisdictional Medical Commission before the employment courts of the provincial jurisdiction, or the Autonomous City of Buenos Aires, depending on the address of the Medical Commission that intervened.
  • Central Medical Commission decisions are subject to direct appeal by any of the parties (i.e. the employee or the occupational risk insurer).
  • Jurisdictional Medical Commission and Central Medical Commission resolutions shall be notified to the parties and to the employer.
  • Any tests administered at any point in the process will be free of charge to the employee.
  • Official medical experts who intervene in legal disputes under this legislation must be members of the medical examining body of the intervening jurisdiction or any equivalent entity that replaces it. Their fees will not be variable or linked to the amount at issue in the judgment in question and must be directly related to work done for the trial.
  • The Jurisdictional Medical Commission decision must be issued within 60 administrative days. This period can be extended for well-founded factual reasons.
  • A Homologation Service was created at the Jurisdictional Medical Commission.
  • The permitted term of temporary incapacity to work has been extended from one to two years.
  • The occupational risk insurer may terminate an employer's policy in the event of non-payment of two monthly, consecutive or alternate installments (or where a total debt equivalent to two installments has accumulated, taking as a reference point the highest value in the last year). From the termination date, the employer will be considered uninsured. Notwithstanding this, the insurer shall provide benefits in kind for contingencies occurring within the three months following termination due to non-payment. The Insurer may recover the cost of the benefits granted under the above provisions from the employer.
  • The criterion for determining the ‘base income’ for benefit and compensation calculations has been adjusted and updated to reflect the average monthly salary according to the Average Compensation of Stable Workers (RIPTE).
  • Within three months, the Employment Risk Superintendence must submit a preliminary draft of a Protection and Prevention Labour Act to ensure that Argentine working and environmental conditions are in line with best practices and international regulations. These general principles will be adjusted in specific ways for each employment activity through Collective Bargaining Agreements.

Adjustment to the National Minimum wage (Resolution (CNEPSMVM) 3-E/2017)

As of 1 July 2017, the general minimum wage was set at ARS 8,860 by the Committee for Minimum Wages (composed of government, employees and employee representatives). From 1 January 2018 it will be raised to ARS 9,500 and from 1 July 2018 a further increase to ARS 10,000 will take effect. The national minimum wage applies regardless of the worker's age and experience.

Changes to the pension regime (Law 27426 modifying Section 252 of the Argentine Employment Law)

When a worker reaches 70 years of age and meets the necessary requirements (30 years of employee pension contributions) to access the Universal Basic Benefit (PBU), an employer may formally request that the employee start administrative pension procedures, issuing a certificate of service and other necessary documentation for this purpose. From that moment, the employer must continue to employ the worker until they receive the pension, up to a maximum period of one year. Under previous legislation, the employer could request the employee start this process from age 65. This change came into force on 29 December 2017.

The provisions in the preceding paragraph do not affect a worker’s right to apply for a pension before 70 years of age. Under current legislation men of 65 with 30 years of pension contributions, or women of 60 (this can be extended to 65) with 30 years of pension contributions can apply for a pension.

Once a pension has been granted, or the one-year period has expired, the employment contract can be terminated by the employer with no obligation to pay seniority compensation.

The new rule clarifies that once a worker meets the necessary requirements to access the PBU, the employer must withhold employee contributions to the social security system (17% of the employee’s monthly salary), and with respect to employer’s contributions, will only have to pay Health Insurance (6%) and Work Injury Insurance. The employer will not have to contribute to the pension system.

Section 253 of the Argentine Employment Law has also been modified. The new provision states that if an employee obtains retirement benefit and keep working without interruption for the same employer, only seniority acquired after the benefit was granted will count for seniority compensation purposes.

Income tax

Article 47 of Law 27430, published on 29 December 2017 and effective from 2 January 2018, modifies the Income Tax Law, establishing that the amount paid on termination to executive directors of public and private companies in excess of the statutory seniority compensation amount (one month per year of service), will be subject to income tax deductions.

Social security contributions

Law 27430 also modifies social security contributions to encourage greater investment, promote the creation of employment and fight against tax and labour evasion. One of the implemented measures is a gradual move towards a minimum non-taxable amount of ARS 12,000. As of 2018, the first ARS 2,400 of gross compensation will not be subject to employer pension contributions. By January 2022, this amount will reach ARS 12,000, and will be updated in accordance with the consumer price index and in line with inflation.

This measure seeks to discourage the unregistered hiring of lower-skilled workers, reducing the implicit incentive to operate outside the law through unregistered employment created by social charges.

At the same time, a gradual unification of the applicable rate of employer’s contributions to the social security system has been implemented, eliminating current differences relating to a firm’s size and its main activity. From January 2022 onwards, employers’ contributions to the pension system will be harmonised at 19.5%, replacing the previous 17% and 21% rates. In practice, this will increase pension contributions for companies whose main activity consists of primary and secondary production (currently 17%). It will decrease for those engaged in services (currently 21%).

This change will be gradually implemented according to the following table: