In this post we will analyze the regulation on Regularization and Promotion of Registered Employment (Regularization of Labor Relations) which falls under the scope of the Labor Reform Package and, therefore, it is a complementary article to our post “Ley Bases”: Regulation of the Labor Reform published on September 27, 2024. So, on this opportunity, we will focus on Annex I of Decree 847/2024 which was published in the Official Gazette on September 26, 2024.
Before going deeper into this post, we suggest reading our article on Ley Bases which is the source of this new post.
Here below we will analyze the key aspects of this new regime proposed by the Ley Bases:
ACCESS TO THE REGULARIZATION OF LABOR RELATIONS’ REGIME
Only labor relations of the private sector are included in the rule excluding Domestic Workers’ Regime. Labor relations included in the regime must have commenced before the enactment of the Ley Bases, that is to say, July 8, 2024, and be active as of the date of accessing the regularization regime. The rule applies to unregistered or under-registered labor relations in terms of date of entry and/or wages and salaries. The provisions of Section 223 bis of the Labor Law (LCT) are excluded regarding “non-remunerative” benefits in case of suspension of the labor relationship due to economic causes or force majeure. So, the homologation of agreements by the Enforcement Authority covered by said regulation is really an urgent matter, especially those celebrated during the pandemics.
Adhesion to the regularization regime must take place by December 24, 2024.
APPLICATION OF THE REGULARIZATION REGIME
The provisions of the Regularization Regime shall apply to debts for capital and interest arising from the lack of payment of social security contributions incurred up to July 31, 2024 (we recommend to seek legal and/or accounting advice for a proper implementation of this regime in each particular case). Debts accrued after mentioned date are excluded from the regime and shall be settled accordingly.
WAIVER OF PAYMENT OBLIGATION
This waiver includes the condonation of debts for capital and interest stipulated in Section 77 Sub-Section C of the Ley Bases, excluding debts arising from the non-payment of contributions due to the application of additional rates set under special pension schemes.
The percentages are listed here below:
– Condonation of debts will be equal to 100% (one-hundred per cent) for the contributions to the National Health Insurance System and for contributions to the Work Risk System. For other sub-systems of the Social Security, condonation of capital and interest shall apply.
– Condonation of 90% (ninety per cent) for Micro and Small-sized Enterprises and for non-profit organizations.
– Condonation of 80% (eighty per cent) for Medium-sized Enterprises (tiers 1 and 2).
– Condonation of 70% (seventy per cent) for other employers.
APPLICATION OF THE DEBT CONDONATION
The benefits afore mentioned shall apply subject to payment by employer of the non-condoned amounts as follows:
A) Cash payment. In this case, non-condoned debt for capital accrued up to July 31, 2024 and interest accrued up to the adhesion date to the Regularization Regime shall have a reduction of 50% (fifty per cent).
B) Through the Payment Facility Plan set out by AFIP (Argentine Tax Authority) according to the type of employer at the time of adhesion. According to the provisions of General Resolution 5577/24 issued by AFIP, facilities and the percentage of payments on account shall be set out depending on the type of employer, as follows:
B.1) MICRO AND SMALL-SIZED ENTERPRISES AND NON-PROFIT ORGANIZATIONS: 28 installments are allowed as maximum with a 15% (fifteen per cent) payment on account.
B.2) MEDIUM-SIZED ENTERPRISES TIERS 1 AND 2. A maximum of 16 installments are allowed with a 20% (twenty per cent) payment on account.
B.3) OTHER EMPLOYERS. A maximum of 12 installments are allowed with a 25% (twenty-five per cent) payment on account.
As regards the interest rate of the Facility Plan, it shall be calculated based on the interest rate set by the Banco de la Nación Argentina for commercial discounts (general portfolio interest rate) on the 20th. day of the month prior to the adhesion to the Facility Plan. For small-sized enterprises, the 90% (ninety per cent) of such interest rate shall be applied; for medium-sized enterprises tiers 1 and 2, 100% (one-hundred per cent) of such interest rate shall be applied and for the rest of the employers, 1.3 (one point three) times of such rate.
REGULARIZATION CALCULATION
The calculation for each regularized worker shall be based on the Minimum Living and Mobile Wage applicable at the time of adhesion to the Regularization Regime, except in case of under-registered labor relation with respect to the worker’s actual remuneration, in which case calculation shall be made based on such declared remuneration as long as it is higher than the Minimum Living and Mobile Wage priorly mentioned.
OTHER EFFECTS OF THE ADHESION TO THE REGULARIZATION REGIME
Amont the many benefits for employers adhering to the regularization regime, we can mention waiver of criminal action for tax offenses provided it has connection with tax evasions regularized within the framework of the regularization regime. Waiver includes any action in progress provided that there is no final ruling at the time of adhesion.
Those employers included within the Registry of Labor Offenders could request to be excluded from such registry subject to their employees’ regularization and the payment of the administrative fines, if any.
To conclude, adhesion to the regularization regime shall include the condonation of capital and interest connected to unpaid social security contributions destinated to the sub-systems detailed in Section 77 sub-section C of the Ley Bases, complemented by the regimes mentioned in Section 5, Annex I of Decree 847/2024.
