At People2.0, keeping our partners informed and prepared is our top priority. With this in mind, we are bringing to your attention a recent legislative update in Argentina, the Decree of Necessity and Urgency, which has significant implications for businesses operating in the country.
Under the new presidency of Javier Gerardo Milei, who took office in December 2023, several legislative proposals have been introduced, particularly concerning labor laws. The changes highlighted below are the first approved reforms from a broader legislative package presented by the new administration. Additional reforms are expected in the future, and our team remains vigilant to keep you updated.
Understanding the Legislation
Overview
The Decree of Necessity and Urgency introduces sweeping changes to Argentina’s labor laws affecting various aspects of employment from probation periods to severance pay and employee registration.
Key Provisions
- Income Tax: The 2023 law changing income tax withholdings has been overturned, with a new scheme applying from July.
- Probation Periods: Extended from 3 months to 6-12 months, depending on the employer’s company size.
- Discrimination: Introduces penalties of 50-100% for discriminatory dismissals.
- Severance: Companies can now create voluntary severance funds.
- Employee Registration: Simplifies registration for small businesses and eliminates certain fines for unregistered work.
- Maternity Leave: Allows for more flexible maternity leave arrangements.
- Independent Contractors: Permits hiring of up to 5 independent workers without establishing a labor relationship under certain grounds.
What It Means for You
Impact Analysis
These changes significantly alter the employment landscape in Argentina, affecting everything from hiring practices to dismissal procedures and payroll management.
Requirements
- Adjust payroll systems to accommodate new income tax withholding schemes from July.
- Update probation period policies based on the number of company staff.
- Review and potentially revise discrimination policies and dismissal procedures.
- Consider establishing a voluntary severance fund.
- For smaller businesses, explore the new simplified registration regime.
Opportunities
The extended probation periods and simplified registration for small businesses may offer more flexibility in workforce management. However, these must be balanced against increased vigilance against discriminatory practices.
People2.0’s Support and Solutions
Strategies
We’re committed to helping you navigate these changes seamlessly. Our team is ready to offer compliant employment in the country, assuring all employment contracts, payroll systems, and other employment aspects comply with current legislation. We also provide comprehensive guidance to our clients, mitigating risks and ensuring all employees are managed appropriately.
Resources
We offer a compliant employment structure in Argentina, always staying up-to-date with new legislation and best practices. Our team of experts provides comprehensive guidance to ensure smooth navigation through the employment process.
Benefits of Partnership
By partnering with People2.0, you gain access to our local expertise and global experience. We’ll help you not only comply with these new regulations but also leverage them to optimize your operations in Argentina.
Next Steps and Action Plan
Immediate Actions
- Review your current employment practices in light of the new legislation.
- Prepare for the implementation of the new income tax withholding scheme.
- Assess your company size and adjust probation periods accordingly.
Long-Term Strategies
- Develop a robust anti-discrimination policy and training program.
- Evaluate the benefits of creating a voluntary severance fund.
- For smaller businesses, explore transitioning to the simplified registration regime.
Personalized Assistance
Reach out to your People2.0 representative for tailored guidance on implementing these changes in your specific business context.
Navigating Compliance Together
Our commitment to your success extends beyond just providing services; we are your partner in navigating the complexities of the evolving global talent marketplace. By staying proactive and informed about legislative changes like Argentina’s Decree of Necessity and Urgency, we can collaboratively ensure that your business not only remains compliant but also thrives. Together, let’s continue to shape the future of work responsibly.
For more information, see Decree 70/2023.
