PEN Project – Operational, economic and strategic impact for companies

On 11 December 2025, the National Executive Branch presented its labour reform bill to Congress, proposing a thorough overhaul of Argentina's labour regime, with amendments to the Employment Contract Law (LCT), the Working Hours Law and the Trade Union Association Regime. The bill aims to create a model with greater flexibility, cost predictability and reduced legal contingencies, with a direct impact on investment decisions and the creation of formal employment.

Below, we analyse the main pillars of the reform from a business perspective.

1. Principle of non-waiver

Change: The express reference to individual employment contracts within the principle of non-waiver is eliminated.

Impact on businesses: This change introduces greater flexibility in the structuring of individual agreements. The aim is to reduce the level of judicialisation of specific agreements, which are currently often automatically challenged.

2. Conciliation agreements (Art. 15 LCT)

Change: Administrative or judicial approval grants full res judicata effect.

Impact: Provides a tool for definitively closing labour contingencies. Companies will be able to negotiate agreements with greater certainty that future claims for the same concepts will not be reopened.

3. Intermediation and user company (Art. 29 LCT)

Change: The joint and several liability of the user company is limited to the obligations accrued during the effective provision of services, also enabling recourse against the intermediary.

Impact: Strengthens the legal certainty of outsourcing and indirect hiring schemes.

4. Temporary employment agencies (Art. 29 bis LCT)

Change: Joint and several liability is maintained, but temporary workers' access to union positions with union stability is limited.

Impact: Provides predictability in temporary structures.

5. Subcontracting (Art. 30 LCT)

Change: Joint and several liability of the principal is eliminated when there is false information that cannot be detected through reasonable diligence. The obligation to exercise control is also made more flexible in the case of ancillary activities.

Impact: Significantly reduces one of the main sources of contingency in large companies. This point is key to promoting formal and specialised outsourcing.

6. Business transfers

The acquirer is exempt from liability for hidden liabilities not detected after a due diligence process.

Impact: Improves the legal certainty of M&A transactions, purchases of production units and corporate reorganisations.

7. Economic entity (Art. 31 LCT)

Change: Joint and several liability is limited to cases of fraud or reckless conduct.

Impact: Protects the assets of economic groups operating with complex structures, reducing systemic risks of legal contagion between related companies.

8. Labour records before ARCA (Art. 52 LCT)

Change: Centralisation of labour records on an official platform.

Impact: Advances towards the total digitisation of labour compliance, with potential administrative simplification.

9. Ius variandi (Art. 66 LCT)

Change: The possibility of legally demanding the restoration of labour conditions is eliminated.

Impact: Provides greater scope for internal reorganisations, operational changes and production adjustments.

10. Digital employment certificates (Art. 80 LCT)

Change: The obligation is fulfilled with digital availability in ANSES or ARCA.

Impact: Reduces formal non-compliance and penalties for purely administrative issues.

11. Part-time work with overtime

Change: Overtime is now permitted in part-time contracts.

Impact: Allows for a gradual increase in working hours in response to increases in demand without the need to automatically convert contracts to full-time.

12. Fixed-term contracts

Change: The reference to damages for early termination is eliminated.

Impact: Reinforces the usefulness of this type of contract for temporary projects, reducing the unpredictability of compensation.

13. Non-remunerative benefits

Change: Mobile phone and internet reimbursements are now considered non-salary items.

Impact: Reduces the tax burden and indirect effects on bonuses, holidays and compensation.

14. Elimination of the mandatory salary account 

Change: The mechanism for paying salaries becomes more flexible.

Impact: Allows for the optimisation of financial structures, reduction of banking costs and adaptation of payment systems to new technologies.

15. Split holidays

Change: Splitting is enabled by agreement between the parties for minimum periods of 7 days.

Impact: Facilitates productive planning in seasonal activities or those with high operational turnover.

16. Time bank

Change: Implementation is authorised by individual or collective agreement.

Impact: Potential impact on the management of production peaks without increasing permanent staffing levels.

17. Medical leave

Change: The requirement for certificates with minimum mandatory requirements to justify absences for medical reasons is implemented.

Impact: Simplifies the control of absenteeism and strengthens the transparency of the leave system.

18. Light duties and salary readjustment

Change: Salaries are adjusted to the new work capacity.

Impact: Allows costs to be balanced with effective productivity when functional limitations exist.

19. Probationary period without notice 

Change: The obligation to give notice is eliminated.

Impact: Reduces the economic risk of early hires.

20. Termination by mutual agreement

Change: Presumption of termination after two months without any indication of continuity.

Impact: Provides a legal solution for de facto inactive relationships, avoiding future litigation.

21. Re-entry of the worker

Change: Previous compensation is discounted and updated by CPI + 3%.

Impact: Prevents duplication of costs.

22. Right to strike in essential activities 

Change: Mandatory minimum services of 50% and 75%.

Impact: Ensures operational continuity in strategic sectors with a strong economic impact.

23. Digital platforms

Change: Delivery drivers and app workers are excluded from the dependency regime.

Impact: Provides legal certainty to a key sector of the digital economy, which is currently the subject of intense litigation.

24. Ultra-activity of agreements 

Change: Automatic extension is eliminated.

Impact: Promotes periodic collective bargaining in line with the economic reality of each company.

25. Trade union assemblies

Change: Advance notice is required and no wages are paid.

Impact: Reduces unexpected operational interruptions and indirect costs.

26. Union guardianship

Change: Made more flexible in the face of reorganisation processes.

Impact: Facilitates corporate restructuring and workforce downsizing.

27. Employment Termination Fund (FAL)

Change: Monthly employer contribution of 3%.

Impact: Transforms severance pay into a predictable monthly cost, reducing the financial impact of dismissals.

28. Conceptual changes

Change: Traditional principles such as 'social justice', 'creative activity' and 'customs and practices' are eliminated.

Impact: Reorients the system towards a more contractual model, with less room for judicial interpretation.

29. Promotion of Registered Employment (PER)

A chapter is devoted to the possibility of regularising unregistered employment relationships, eliminating penalties, debts and criminal proceedings. Partial forgiveness of principal and interest is provided for, and parameters for payment plans are set.

30. Reduction of employer contributions 

A reduction in social security contributions from 6% to 5% is envisaged, as well as a reduction in employer contributions to the INSSJ Social Security Subsystems, the National Employment Fund, SIPA and the Family Allowance Scheme for employers in the "services" and "commerce" sectors, subject to certain requirements.

31. Procedural changes 

The bill includes a series of modifications to labour proceedings, including: Modifying the procedural impetus of cases from the current ex officio system to a party-driven system, enabling the recusal of magistrates without cause, and proposing that labour courts be bound by the precedents established by the Supreme Court. It proposes an adjustment rate for labour credits through the application of the CPI plus an annual interest rate of 3%.

Conclusion 

The bill represents a structural change in Argentine labour law, aimed at:

• Greater cost predictability
• Reduction of legal contingencies
• More flexible hiring schemes
• Promotion of formal outsourcing
• Encouraging investment and job creation

Information note prepared by Federico Villarino, partner in the Labour Law Department at ECIJA Argentina.