Labor Reform 2026: What Is Changing and How Will It Impact Workers and Companies?

On March 6, Law No. 27,802 (hereinafter, the “Law”) was published in the Official Gazette, thereby promulgating the Labor Modernization Act, which introduces significant changes to Argentina’s labor regulatory framework. Below is a summary of the most relevant aspects of the labor reform enacted by the Law.

1. Regulatory Amendments:

The Law introduces multiple changes, additions, and repeals within the text of the Labor Contract Law (Law No. 20,744, the principal labor statute in Argentina). Additionally, the Law amends more than 15 labor statutes as well as certain tax laws, including modifications affecting individual employment relationships, collective labor relations and trade union matters. It also amends procedural labor rules, simplifies employment registration mechanisms, regulates the right to strike, introduces substantial changes to the collective bargaining regime, offers penalty relief for the regularization of employment, promotes the creation of new jobs through employer incentives, establishes a specific legal regime for independent service providers operating through digital platforms, repeals certain special labor statutes effective January 1, 2027, creates an incentives program for medium-sized investments, and sets forth the framework for the transfer of jurisdiction from the National Labor Courts to the Labor Courts of the City of Buenos Aires.

2. Amendments to the Labor Contract Law:

Notwithstanding the broad scope of the amendments introduced, the most relevant changes may be summarized as follows:

• (i) The criteria for calculating seniority when an employee returns to work for the same employer has been modified. Under the reform, if two years elapse between the termination of employment and the employees rehire, prior seniority will not be recognized.
• (ii) A ten-year period is established for the retention of labor books, and digitalization of such records is permitted, granting digital copies the same legal validity as paper originals.
• (iii) If, as a result of changes in the form or modality of work introduced by the employer, the employee believes such changes cause material harm, the employee may treat the contract as terminated but may not demand restoration of previous working conditions.
• (iv) With respect to employment certificates—a highly litigated matter in Argentina in recent years—the employer’s obligation is deemed satisfied when the certificates are made available at the workplace or in digital format.
• (v) Employers are allowed to grant “dynamic compensation” composed of additional fixed or variable components designed to reward employee merit, without such components being considered acquired rights.
• (vi) Salary payments may be made in local or foreign currency, and expenses borne by the employer for work related mobile phone or internet use shall not be considered remuneration.
• (vii) Wages must be deposited into a bank account at no cost to the employee. Payment via check or transfer to digital wallet accounts is not permitted.
• (viii) Pay slips may be issued in paper, digital, or electronic format.
• (ix) Vacation periods may be split into segments of no fewer than seven days, by mutual agreement. The annual vacation period must be taken between October 1 and April 30, and employees must be afforded a vacation period during summer at least once every three years. The employer must give at least 30 days’ prior notice when unilaterally scheduling vacations.
• (x) A “bank of hours” system is introduced, allowing employer and employee to agree on extended workdays of up to twelve hours, compensated with equivalent rest. This system may also be established via collective bargaining, in all cases respecting statutory limits on working hours and rest periods, with both parties maintaining adequate records.
• (xi) In cases of non-work-related illness or accident, medical certificates submitted by employees must include diagnosis, treatment, and prescribed rest and must be digitally signed by licensed medical professionals. In the event of disagreement between medical evaluations, a medical board may be convened at the employer’s expense.
• (xii) Employees may submit resignations via physical or digital telegram.
• (xiii) Regarding severance for dismissal without cause, the Law establishes guidelines for calculating the base amount, excluding non-regular payments such as vacation bonuses, the thirteenth salary, and any bonuses lacking monthly regularity. For high ranking, highly compensated employees, the Law adopts the criterion established by the Supreme Court of Argentina and applies a cap equal to 67% of the employee’s highest monthly remuneration. The calculation method remains one month’s salary per year of service or fraction greater than three months. The Law expressly establishes that severance constitutes the sole remedy available, precluding additional claims once paid.
• (xiv) Labor claims must be updated based on the variation of the Consumer Price Index published by the National Institute of Statistics and Census, plus an annual 3%.
• (xv) Judgments ordering payment of labor debts may be paid in installments: large companies may pay in up to six installments, while small and medium sized enterprises may do so up to twelve.

3. Labor Assistance Fund:

The Law creates the Labor Assistance Fund (FAL), mandatory for employers, intended to guarantee the payment of labor severance. Employers must contribute monthly 1% of payroll (large companies) or 2.5% (micro, small, and medium-sized enterprises). Funds will be channeled through ARCA and administered by an entity authorized by the National Securities Commission. Employers may choose to use the FAL, in whole or in part, to satisfy severance obligations, or they may elect to pay severance without using the fund.

4. Amendments to Labor Procedural Rules: The Law amends Law No. 18,345 governing labor proceedings before the National Labor Courts. Key changes include:

• (i) Limitations on fees payable to medical and psychological experts.
• (ii) Application of jurisdictional rules in competence disputes.
• (iii) Amendments to rules on challenges and recusals of judges, clerks, arbitrators, and experts.
• (iv) Replacement of ex officio procedural impetus with party driven impetus, including the possibility of declaring abandonment of proceedings.
• (v) A requirement that plaintiffs file all supporting evidence together with the complaint.
• (vi) An obligation for labor judges to adhere to Supreme Court precedent, with deviation constituting grounds for removal.

5. Amendments to the Collective Labor Disputes Act:

The Law expands the list of essential services and introduces categories of activities deemed of “transcendental importance.” In the event of a strike, essential services must maintain 75% service levels, while activities of transcendental importance must maintain at least 50%. Essential services include education, energy transport, hospital and pharmaceutical services, aeronautical operations, telecommunications, and waste collection, among others. Transcendental activities include all forms of passenger transportation, radio and television services, customs and immigration services, continuous industrial processes, banking, and the entire food production chain.

6. Domestic Workers Regime:

The Law extends the probationary period for domestic workers to six months, aligning it with the general regime under the Labor Contract Law. It also sets out rest periods, duties of the parties, and mechanisms for updating labor credits.

7. Services Provided Through Digital Platforms:

The Law establishes a special legal regime for individuals providing services through technological platforms, who are expressly excluded from the Labor Contract Law. The regime recognizes freedom of connection and sets forth specific rights and obligations for both platforms and independent service providers.

8. Collective Bargaining Agreements:

The Law amends Law No. 14,250 and eliminates the ultra-activity of collective bargaining agreements. Once a CBA expires, only its normative clauses remain in effect, not its obligatory clauses. It also sets contribution caps: 0.5% of employee remuneration for employer organizations and a 2% solidarity contribution limit for unions. Furthermore, the Law provides that a CBA of a lesser scope (e.g., company level) prevails over a broader scope agreement, whether earlier or later in time.

9, Trade Union Associations:

The Law requires prior employer authorization for employees or delegate assemblies, and employers are not obligated to pay wages for the duration of such assemblies.

10. Basic Labor Training Program:

The Law creates the Basic Labor Training Program to ensure the development of the minimum competencies required for labor market integration among individuals who have been unable to acquire them.

11. Labor Formalization Incentive Regime (RIFL):

The Law establishes the RIFL, which grants reductions in employer social security contributions for new hires intended to promote formal job creation.

12. Registered Employment Promotion Regime (PER):

The Law establishes incentives for the regularization of preexisting unregistered employment relationships, providing for the extinguishment of penalties and forgiveness of social security debts.

13. Medium Sized Investment Incentives Regime (RIMI):

The Law creates the RIMI to incentivize investment and the creation of new employment opportunities in the country.

14. Amendments to VAT, Income Tax, and Reduction of Tax Burdens:

The Law includes measures aimed at enhancing competitiveness and reducing tax distortions, such as VAT exemptions for electricity used in agricultural irrigation; adjustments to Income Tax—including CPI adjusted loss carryforwards, new exemptions for real estate leases and sales, updated valuation rules for feedlot operations, and clarification that naturalization based on investment does not automatically confer tax residency. It also eliminates certain excise taxes applicable to insurance, cellular and satellite services, luxury goods, vehicles, vessels, and aircraft, thereby reducing costs and simplifying the tax structure. Additionally, it modifies the INCAA’s financing model, which will now depend exclusively on budget allocations under the National Budget Law.

15. Repeals:

The Law repeals several special labor regimes (including those applicable to journalists, traveling sales representatives, teleworkers, certain agricultural workers, and artisanal fishers). It also repels various provisions of the Labor Contract Law and related statutes that conflict with the new regime. Furthermore, it restructures cultural and media entities (such as the INCAA) by significantly reducing prior regulatory structures and repeals portions of the penal execution law related to prison labor.

16. Transfer of the National Labor Courts to the City of Buenos Aires:

The Law incorporates, as Annex I, the Agreement on the Transfer of Labor Judicial Authority from the National Labor Courts to the Labor Courts of the City of Buenos Aires. The agreement outlines the legal and operational steps required for the City to assume full jurisdiction over labor matters, supported by constitutional autonomy and Supreme Court precedent. During the transition, the National Labor Courts will retain jurisdiction solely over cases filed before the new local labor courts commence operations, until final judgment is rendered. New cases will be filed exclusively before the City’s courts, while matters involving the National Government, federal controversies, collective labor disputes, or union matters will remain under national or federal jurisdiction. The transfer will occur through a progressive reallocation of human, technological, infrastructure, and budgetary resources from the Nation to the City. The City must operationalize its labor courts within 180 days, appoint judges, and establish court infrastructure, while the National Government must ensure the availability of necessary resources until the transfer is complete. The process will culminate in the phased closure of the National Labor Courts and the Seventh Chamber of the National Labor Court of Appeals. The City’s Supreme Court will serve as the court of extraordinary review for decisions of the new labor courts.

17. Entry into Force:

Pursuant to the Law’s own provisions, the Labor Modernization Act entered fully into force on March 6, 2026, from which date all its legal and operational effects became applicable, except for specific provisions with deferred implementation as expressly set forth in the Law.