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Legal Framework: Labor, Social Security and Trade Unions

Labor Regime

Employees working in the Republic of Argentina shall be subject to Argentine labor and social security laws.

Employment of personnel may be made on a temporary or permanent basis. The employment relationship may be terminated without cause by making severance payments.

Personnel employment shall be subject to the laws in force and the collective bargaining agreement corresponding to the employer’s activity. Application of such laws and agreements is mandatory.

There are minimum standards of working conditions that must be observed. Such standards include salaries, work day and personnel benefits.

The company shall be jointly and severally liable for labor and social security obligations with respect to its contractors’ personnel when they perform tasks related to the company’s main purpose. It is important to constantly check compliance with such obligations in order to avoid contingencies.

Argentina has an integrated system of work risks coverage, established by Work Risk Law (Ley de Riesgo de Trabajo). Such system obliges employers to take out a Work Risk Insurance Company (Aseguradora de Riesgo de Trabajo - ART). Work Risk Insurance Companies have the double function of a preventive work to avoid the occurrence of work accidents and occupational illnesses, and to indemnify and give medical and pharmaceutical treatment to those workers suffering any kind of labor accidents. After several judicial challenges and a marked increase of legal actions, in October 2012, the Argentine Congress passed certain amendments of the work risk regime, aimed at reducing the legal actions brought, improving the indemnification for labor accidents and occupational illnesses and helping companies to be able to foresee any such accidents and illnesses.

Trade Unions

The trade union structure in Argentina is arranged as a pyramid, and it consists of trade unions, federations (formed by a group of trade unions) and confederations (formed by a group of federations). In turn, union associations may group workers of the same activity, workers of the same profession or category even when performing different activities, or workers of the same company. The union association having the greatest representativity within its territorial and personal scope obtains the union standing (personería gremial), and thus it is enabled – on an exclusive basis – to represent workers, within such scope, in collective bargaining.

The main rules and regulations on this matter are Law No. 23551 (on Union Associations) and Law No. 14250 (on Collective Bargaining Agreements).

Social security and other costs

The social security and health care cost is paid both by the employer and by the employee. Approximately 23% to 33% (depending on the company’s activity) is paid by the employer and 17%, by the employee. Percentages are calculated on the employee’s gross remuneration.

There are additional costs provided for by the collective bargaining agreement applicable to each activity. Additional amounts shall be paid for overtime.

Members of the Board of Directors (or any other management body) of Argentine companies have an option not to pay contributions as employees of the company (with the relevant withholdings) but to pay taxes under the “independent workers” system (trabajadores autónomos). The amount payable depends on the Director’s annual gross income.

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