Argentina: Labor Reform Bill Approved by the Senate

In brief

On 12 February 2026, the Senate granted preliminary approval to the Labor Modernization Bill (“Bill"), which proposes substantial changes to Employment Contract Law No. 20,744 (ECL) and other labor regulations. The Bill aims to introduce greater flexibility, reduce litigation, and promote formalization and investment.

In focus

Key features of the Bill

• Redefinition of the scope of the ECL and exclusion of special regimes.
• Clarification of employment relationships versus independent services and limitation of the presumption of dependency.
• Organizational flexibility (ius variandi) and more adaptable contractual modalities.
• Digitalization of labor registration with the Revenue and Customs Control Agency (ARCA).
• New indemnification scheme and creation of the Labor Assistance Fund (FAL).
• Special regime for providers of technology platforms.
• Incentives for employment regularization.
• Scheduled repeal of certain professional statutes.

Analysis of key features

1. Scope of Application. The Bill redefines the scope of the ECL, excluding public employees, agricultural workers, domestic personnel (with exceptions), independent contractors, and platform providers, unless expressly included. Principles of legal certainty and predictability are reinforced, preserving essential rights and recognizing equal access to professional training as a fundamental right, thereby facilitating labor reconversion in the context of technological change.
2. Contract and Employment Relationship. The Bill modernizes the concepts of contract and employment relationship, limiting the presumption of dependency when independence is documented (contracts, invoicing, bank payments). It redefines joint liability in intermediation and subcontracting, exempting the principal employer if documentary controls required by law are fulfilled. Liability is restricted to obligations accrued during the effective period of service provision.
3. Registration and Evidence. Labor registration is centralized with the Revenue and Customs Control Agency (ARCA) and digitalization is enabled. Lack of registration creates a presumption in favor of the worker. This measure aims to simplify procedures, ensure traceability, and reduce litigation related to formal non‑compliance.
4. Organizational Flexibility. Employers may modify work modalities, internal organization, and methods, provided essential rights are not affected nor material or moral harm caused. If the change results in harm, the worker may demand compliance and consider themselves dismissed without cause. The use of digital certificates and notifications is permitted, and conditions for transfers, resignations, and agreements are regulated, which must be formalized by reliable means or before a competent authority.
5. Contractual Modalities and Remuneration. Voluntary overtime is allowed in part-time contracts, provided the maximum workday is not exceeded. The indemnification regime for fixed-term and temporary contracts is adjusted in the event of early dismissal. Regarding salaries, non‑remunerative benefits (canteen, health, daycare, education) are expanded and payment in foreign currency is permitted. A general cap of 20% is set for deductions and withholdings, except for legal exceptions.
6. Vacations and Leaves. Vacation periods may be split into minimum segments of seven days, ensuring summer leave every three years. This measure seeks to balance business needs with the worker’s right to rest.
7. Severance and Labor Assistance Fund (FAL). The basis for indemnification calculation is redefined, incorporating clear criteria for variable components, which will be averaged over six months or the last year, whichever is more favorable. The FAL is created, mandatory for private employers, with a monthly contribution of 1% for large companies and 2.5% for micro, small, and medium-sized enterprises, based on salaries subject to SIPA contributions. The fund is non‑seizable, exclusively for labor use, and intended to cover indemnifications and obligations arising from contract termination.
8. Technology Platforms. A special regime is established for independent providers of mobility and delivery services through platforms, eliminating the presumption of dependency. Minimum rights are guaranteed, such as clear information, training, personal accident insurance, full collection of tips, and mechanisms for claims against the platform.
9. Incentives and Tax Changes. An incentive regime is created for labor formalization, including reductions in contributions and cancellation of debts and penalties. Adjustments are introduced in employer contributions and benefits for productive investments, especially targeted at SMEs. Abrogation of Professional Statutes. Statutes containing more favorable provisions for employees than those established under the ECL will be repealed as of 1 January 2027. Among these are statutes for professional journalists, commercial travelers, administrative employees of journalistic companies, among other modifications and repeals.

*This document summarizes a pending legislative bill. The provisions will enter into force only upon enactment and regulation.

Download the Spanish version of Argentina: Labor Reform Bill Approved by the Senate.