With some delay, Decree 847/2024 was finally published in the Official Gazette on September 26th., 2024 regulating key aspects of the labor reform package of Law 27,742 (the so-called “Ley Bases”). Even though regulation is still pending by some governmental agencies (AFIP, SRT, CNV, etc.), the Decree brings some light on some relevant issues to be developed here below. In this article we will analyze Annex II regarding “Labor Modernization” (also called “Labor Reform”), meanwhile Annex I (Regularization of Labor Relations) will be developed in a separate post. We recommend to read our article on “Ley Bases” before going deeper into this post (which is the base of the regulation developed here below).
Amendments to Law 24,013
Regulation starts with section 83 of the “Ley Bases”(requirements for labor relation registration). Registration of a labor relation is deemed fulfilled once registered on a platform to be decided by AFIP (up to date, the early enrollment). The obligation to keep the payroll book is also deemed fulfilled with such registration (section 52 of the Labor Contract Law).
Besides it is expressly stated that, as long as any of the companies in an outsourcing chain has registered workers and/or employees, this requirement (section 7 and subsequent sections of Law 24,013) is deemed fulfilled. This means that, for instance, a cleaning worker could be registered by the cleaning company, the final user, the owner of the user company, etc. So, registration is valid whether made by human or legal employers or by any third party as final user of the worker’s services.
In case of labor litigation, if a court order rules on an unregistered (or under-registered) labor relation, the judge shall inform the social security collecting agency accordingly. Clarification pursuant to section 2 of the Decree is quite relevant, since section 7 of Law 24,013 (added by the “Ley Bases”) sets forth that all contributions made by employers shall be considered as payments on account in any claim made by the State. Now, the Decree makes clear that said contributions shall not be redirected (if contributions were made to a certain union and the court order sets forth that such worker had to be framed within another one, for example).
Amendments to Labor Contract Law (LCT)
The presumption of the existence of a labor relation (Section 23 LCT) does not apply in case of an agreement for the supply of services, works, trades, etc. payable through invoices. The Decree makes clear that this rule shall apply regardless of the number of invoices issued by the service provider and by the number of customers it has.
Regarding the trial period, it is made clear that the six months’ trial period shall only apply to those labor relationships commencing after the “Ley Bases” effective date (July 9, 2024).
The power of the outsourced services’ user company to withhold the debt the contractor has with its workers and with the social security system for unpaid contributions shall not exceed the debt the contractor has with all of them and a proportional calculation is set forth when the contractor works for many user companies. Such withholding shall be made through a special AFIP system.
Besides, user companies are also entitled to withhold wages in arrears and unpaid salaries. This wages’ withholding should be made, in our opinion, with prior notice to the main contractor employer in charge of confirming or crediting payments.
Employment Severance Fund
A lot of regulation is still pending on this matter since it is a legal innovation. In this context, we can mention UOCRA (the trade union representing building workers) that has a severance fund for its affiliates, though the system proposed by the “Ley Bases” is broader and more flexible. This system provides a general framework that grants freedom to the representatives of both workers and employers to negotiate the particular conditions of these funds.
We’d like to point out that severance funds are an option (not an obligation) available to the collective bargaining parties (representatives of employers and employees/workers) embracing all aspects of labor termination. The scope of application is, but not limited to, section 183, sub-section b (termination of a pregnant worker after maternity leave of absence), section 212 (impossibility of rehiring disabled workers), section 245 (seniority), section 246 (indirect dismissal), section 247 (force majeure/lack of work), section 248 (worker’s death), section 250 (term expiration), section 251 (employer’s bankruptcy) and section 253 (retirement).
The severance fund system to be agreed within the framework of the Collective Bargaining Agreements shall define the particular conditions of each case and, in all cases, differential treatment shall be given to wrongful dismissal. This new regime brings some fresh air to labor compensation since it determines different payments for different cases as opposed to the prior regime where the same amount was paid in case of an employee resignation or for wrongful dismissal. The Severance Fund system to be agreed upon shall define the facts and conditions under which a compensation shall be paid.
The Decree includes termination by mutual agreement (section 241) to the Alternative Severance Fund notwithstanding the payment of other complementary amounts.
Severance Funds apply automatically only to new REGISTRATIONS (from their signature in Applicable Collective Bargaining Agreements).
In order to enable Severance Funds to be applicable to a labor relationship, the option must be made by both employer and employee upon registration of the labor relationship; otherwise, it shall be governed by traditional compensation systems. Compensation regimes may only be modified by mutual agreement of the parties.
Different Severance Fund systems may apply simultaneously, and, in addition, distinct Severance Funds may be created according to the type of activity.
Seeking transparency and as a fight against corruption, no rate or fee shall be collected by representatives of employers and employees within the framework of this new alternative system.
The Decree also provides that those labor relationships existing prior to the effective date of the Alternative Severance Fund may elect a special system through the Collective Bargaining Agreement mutually agreed upon between the parties.
Severance Fund Systems contemplated by the Decree
Even though this is rather technical matter and regulation is still weak, we aim to provide a general idea of the systems foreseen in the Decree. The first option is the Individual Cancellation System: a direct payment from employer to worker/employee is foreseen (likely to have a subsequent repayment). The second option is the Individual or Collective Severance Fund System: it provides the creation of severance fund accounts, trusts or mutual funds according to three categories: activity, company or employee. Employees can make individual contributions and differentiated contributions can be agreed to be made by employers. Severance fund accounts are not subject to seizure. The third option would be Severance Fund Banking Accounts governed and regulated by the Central Bank.
Among other innovations, Severance Fund Systems are entitled to generate their own special mutual funds to be governed and regulated by the Comisión Nacional de Valores (CNV) (National Securities Commission); these mutual funds should have no connection with unions or business chambers. Individual contributions can be made, and quotas are received. If the contribution is made by THE COMPANY, quotas are assigned subject to a condition precedent to workers or employees belonging to the company or sector, as defined by the corresponding Collective Bargaining Agreement. In this line, Financial Trusts are also contemplated by the Decree (regulation pending by the CNV).
Finally, we can mention the Severance Fund Insurance (regulation pending by the Superintendencia de Seguros de la Nación) (National Insurance Superintendence). This option would enable employers to hire an insurance policy covering the payable severance amount pursuant to the Labor Contract Law.
Independent workers
This new category emerged from the “Ley Bases” enabling a self-employed worker to have the collaboration of up to three (3) self-employed collaborators who will issue invoices for the supply of services to carry on a business activity. All of them shall be registered with the AFIP for tax purposes and the provisions of Decree 661 effective as of July 23rd. 2024 shall apply.
The self-employed collaborator will be free to work with other contractors and this non-labor relationship or partnership may be terminated at any moment. It is advisable for all self-employed workers (and it is foreseen in the Decree) to hire an accident insurance.
This regime allows a maximum of three (3) self-employed collaborators. If a “concealed” labor relationship is disclosed to benefit from this new regime, worker shall be excluded from this category and the provisions of the Labor Contract Law (LCT) shall apply.
Unregulated topics
In the middle of these free-market reforms, some topics have been sidelined such as agricultural work or dismissal for cause due to blockades, among others.
