Regulation of the labor chapter of the Law on Foundations and Starting Pointsfor the Freedom of Argentinians
Department Labor & Social Security Law Report| Regulation of the labor chapter of the Law on Foundations and Starting Pointsfor the Freedom of Argentinians
Decree 847/2024 published in the Official Gazette of Argentina on September 26, 2024 (the “Regulatory Decree”) regulates various aspects of the labor chapter of the Law on Foundations and Starting Points for the Freedom of Argentinians No. 27,742 (“Law of Foundations”). Below, we outline the most relevant aspects:
1. Promotion of Registered Employment
1. Labor relations and applicable periods:
The Regulatory Decree establishes that the program for the promotion of registered employment provided for in Articles 76 to 81 of the Law of Foundations will only be applicable to:
-Employers belonging to the private sector.
-Labor relations initiated before the promulgation date of the Law of Foundations.
-Obligations related to contributions, taxes, and fees destined for the National Health Insurance System and the Work Risk System accrued until July 31, 2024, inclusive.
The forgiveness does not apply to labor relations covered by the Special Regime Law for Domestic Workers, nor to items irregularly classified as non-remunerative under the terms of Article 223 bis of the Labor Contract Law.
1. Granted Benefits:
The debt forgiveness generated by employer contributions and taxes will be as follows:
-Micro and small businesses: 90%
-Medium-sized businesses (categories 1 and 2): 80%
– Other employers: 70%
Debts related to the National Health Insurance System and the Work Risk System fees will be 100% forgiven.
Additionally, employers will have access to a payment plan established by the AFIP (Federal Administration of Public Revenue), which includes a 50% reduction on the non-forgiven debt if paid in full.
1. Effects on Workers:
The period included in the regularization will be considered as service time and will be counted toward:
-Meeting the minimum years required for obtaining the Universal Basic Benefit.
-Establishing contributor status for the Temporary Disability Retirement or the Death Pension of an active affiliate.
-Accessing unemployment benefits and determining their duration. The amount of unemployment benefits will be calculated based on the current Minimum Vital and Mobile Salary or the highest registered salary, as applicable.
2. Probationary Period
The new probationary period deadlines will apply to employment relationships initiated from the effective date of the Law of Foundations.
3. Changes to the Labor Termination System
The Labor Termination System is regulated as an alternative regime to be agreed upon within the framework of collective bargaining agreements, which allows for the replacement of the severance pay provided in Article 245 of the Labor Contract Law (or those that use this severance as a reference for calculation). The Regulatory Decree establishes that it must be set under one of the following modalities:
a. Individual Settlement System
In this system, the employer makes a direct payment to the worker without the need to create a specific fund.
b. Labor Termination Fund System
The Labor Termination Fund is managed through the creation of individual or collective accounts to accumulate funds that will be used to compensate the worker at the end of the employment relationship.
There are three possible administration modalities:
1- Labor Termination Bank Accounts: Funds are deposited in bank accounts dedicated exclusively to this purpose.
2- Open-end Mutual Funds: Managed under the supervision of the National Securities Commission (CNV), where funds are invested to generate returns aimed at compensating workers.
3- Financial Trusts: Established as independent entities that manage resources intended for the payment of severance.
The collective agreements will determine the percentage of remuneration or fixed amount that the employer will contribute to said individual or collective account and the frequency of this contribution.
Similarly, the Labor Termination Fund is non-seizable, and the signatory parties cannot benefit from unclaimed funds.
c. Labor Termination Insurance System
Collective agreements may agree to implement the Labor Termination System through a labor termination insurance with insurers authorized by the National Insurance Superintendency (SSN).
4. Insurance
Regardless of the existence of a Labor Termination System, employers may purchase insurance to fully or partially secure the amount of severance payments.
5. Status of Independent Workers
The Regulatory Decree provides that both the independent worker and the three independent workers who may act as collaborators, as established in Article 97 of the Law of Foundations, must be registered in the general tax and social security system and must submit a sworn statement to the AFIP (Federal Administration of Public Revenue) regarding the independent nature of the relationship.
Additionally, the relationship can in no way limit or restrict the possibility for the collaborating worker to carry out other activities simultaneously.
6. Solidarity
The Regulatory Decree establishes that the maximum amount that the principal company can withhold from its contractors must not exceed the contributions owed by contractors or intermediaries to the various subsystems of Social Security.
Please, do not hesitate to contact us should you require any additional information on this matter.
Sincerely,
María Eduarda Noceti
Álvaro Galli
Carolina Conde