Por 10 febrero, 2022 No Comments

As already explained in our previous article Wages and Salaries in Dollars as a way to retain Talent Pools, some sectors need to resort to new strategies in order to keep talented workers in their payrolls. Argentine qualified workers are renowned in the region as well as in worldwide markets. In very competitive activities, home – office and remote activities allow good workers to start labor relationships with foreign companies with salaries in foreign currencies (protecting themselves from the constant depreciation of the Argentine peso). This situation emerges as a serious threat for the local productive environment, totally unable to prevent the migration of talented business people, entrepreneurs and skilled workers due to attractive foreign proposals.

As already pointed out in mentioned article, pursuant to the Labor Contract Law (“LCT”) payment of wages and salaries can be made “in kind” up to 20% of the total remuneration amount (Section 107). In our system, only the Argentine peso is considered as “money”; hence, any payment made with goods, gift cards, in dollars and/or cryptocurrencies is considered as “payment in kind”. This situation has troubling implications for local companies: they are legally limited to compensate their workers as they would like and workers are legally limited to be paid in dollars or cryptocurrencies.

In July 2021, a bill was submitted to the Chamber of Deputies seeking to improve this situation, at least partially. Although this bill is not so ambitious as the one presented at El Salvador (making Bitcoin legal tender same as their official currency Salvadorean Condor), it aims to allow remunerative concepts to be paid out in cryptocurrencies. Some years ago, it seemed unreasonable, but crypto today is gaining more and more markets as an investment tool and as a payment method as well.

This proposal stands for as a healthy balance between releasing payments in dollars (adding pressure on the exchange rate and subject to current exchange limitations) and maintaining the existing system where organizations lack instruments attractive to their payroll.

Small service exporters are also included within the scope of this bill. If passed, they could choose this payment method (protecting themselves from the differences in conversion rates when converting their proceeds from dollars to Argentine pesos).

The author of the bill has stated as follows: “This bill is intended to allow workers and physical persons engaged in services exports to be paid in cryptocurrencies”. This initiative arose from the need to reach an agreement between the parties involved, promoting governance and autonomy of wages and salaries and, at the same time, discouraging currency conversion.

This bill includes a definition of “cryptocurrency” different to the definition given in prior bills. So, notwithstanding which bill will be passed first, it paves the way to the first legal definition of “cryptocurrency” (foundation stone of any legal framework intended for cryptoassets).

However, this bill has some negative aspects. It states that workers will be entitled to decide if they want to be paid in cryptocurrencies, but no mention is made to the acceptance by the employer (though no worker can impose the type of compensation without the employer’s consent).Organizations could be seriously troubled should workers elect to be compensated in cryptocurrencies considering the lack of availability of crypto for many companies.

Pursuant to this bill, workers would also be entitled to elect, terminate or amend their option to be paid out in crypto. They could elect which cryptocurrency they prefer (even when some cryptocurrencies cannot be operated from Argentina nor with the available platforms and all transaction charges are to be borne by the employer; just as an example, during some months of 2021 the cost per transaction with ETH was above 200 dollars), the portion of remuneration in crypto, etc. This can be calculated in two different ways: part of the salary due is converted in cryptoassets at the rate of payment day or a partial payment of remuneration in cryptocurrency is agreed upon (in which case a contract is required between the parties).

Other troubling issue is the calculation of social security contributions (which must be calculated in pesos). Even though Section 6 of the bill imposes said contributions on the employer, the text is not clear enough. For the purposes of calculating social security contributions, conversion rates should be evaluated. In the absence of an official market, the Enforcement Authority should determine an “official conversion rate” for reference and declaration purposes on Form 931.

The item “workers’ anticipated instructions” also deserves attention. In case crypto quotation be negative to workers’ interests, they can request to suspend payment in cryptocurrencies.

Even though payment of wages in cryptocurrencies must be agreed upon by both employers and employees, some unreasonable limitations go beyond this agreement. At the beginning of the labor relationship, remuneration cannot be less than 3 minimum salaries but, if the value in pesos is reduced to 2 minimum salaries or to the 75% of the amount approved by the labor collective bargaining, in any of these events, the declaration of the parties whereby they assume the economic increases and losses will be suspended. So, workers would be entitled to receive a higher salary (due to currency quotation) than his/her salary in pesos but, upon adverse crypto pricing, he/she can request to be paid in pesos adjusted by the applicable collective bargaining or by the Coefficient of Wages and Salaries Variation (the most beneficial amount).

To conclude the labor aspects of the bill, the initiative appears as a healthy one but, in our opinion, it turns to be unapplicable like the bills previously analyzed for the following reasons: i) the possible obligation imposed on the employer to pay in cryptocurrencies even if not consented by the employer; ii) high operation costs of some currencies (being the company unable to select type of currency), the unfeasibility to operate with all platforms and the fact that some currencies cannot be purchased in pesos nor from Argentina, iii) the crypto market is not available to all employers and iv) lack of legal framework to calculate severance payments with wages in cryptoassets.

This bill seems to have been intended for the Knowledge Economy system even though it was drafted to be applied to all labor markets. In any case, all obstacles could be sorted out by stating that payment in cryptocurrencies must be expressly agreed upon between employer and employee.

Services export

Pursuant to the provisions of Chapter III, small services exporters (less than 100,000 Adjustable Units Value per year; estimation ARS 5.5 million) would be allowed to get paid in cryptoassets and are released from the obligation of liquidating their earnings in the local exchange market subject to compliance with certain requirements. This is very attractive for some industries (specially for software producers) due to the quotation gap between current exchange rates.

Some of the requirements are: that the value declared in crypto be “for same value received” (we assume it refers to invoice amount) or that export proceeds be received in cryptocurrencies; purchase of crypto and all transaction details must be declared within 10 working days from receipt of export proceeds; within an additional 5 working-days’ period, exporters shall declare and liquidate export proceeds not allocated to crypto purchase; individuals with alimony debts or pending seizures are excluded from the scope of this legislation.

Finally, we can conclude that the initiative is very positive for services exporters even though it lacks technical accuracy and legal practice in labor jurisdiction to fulfill its potential. With some minor changes like limiting the scope to those companies included in the Knowledge Economy register and/or requiring the company’s consent, this project could evolve into a worldwide leading legislation to govern and protect workers’ wages and an as innovative tool for retaining talent pools.