By The Rio Times | Created at 2026-10-01 13:42:18 | Updated at 2026-10-01 14:47:31
2 hours ago
ARGENTINA · LABOUR
Key Facts
- —The country Argentina has 46 million people, and about 45 percent of its workers held informal jobs in mid-2026.
- —The law Law 27,802, the Labour Modernisation Law, cleared Congress in February 2026 and was published on 6 March.
- —What changes Cheaper and more predictable dismissals, flexible hours, pay in foreign currency and tighter limits on strikes.
- —Where it stands Fully in force since a federal judge lifted a union injunction on 8 May 2026, though constitutionality is undecided.
- —The catch Registered private employment kept falling after the law passed, and unions call it a rollback of rights.
What Javier Milei’s Labour Modernisation Law changes, how it survived the courts and what it has done so far. Milei presents it as the end of employment rules written half a century ago.
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Milei’s government argues that Argentina’s labour rules have long discouraged formal hiring. Law 27,802 is President Milei’s answer, and as of September 2026 it is in force while unions fight it in court.
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Why Argentina Rewrote Its Labour Rules
Argentina is the world’s eighth-largest country by area, with 46 million people according to the 2022 census. The peso traded at about 1,522 pesos per US dollar on 29 September 2026, according to the Central Bank (BCRA).
Javier Milei, a libertarian economist, has been president since 10 December 2023. He argues that the old labour code kept millions of Argentines in off-the-books jobs.
The numbers behind that argument are large. The national statistics agency INDEC found that 45 percent of employed people worked informally in the second quarter of 2026.
Informal workers lack pension contributions and the legal protections of a registered job. INDEC put the share of wage earners without pension contributions at 37.9 percent in the same survey.
The government also argues that dismissals in Argentina have been too costly and unpredictable. The Presidency said the law would end what it calls the “lawsuit industry” and make hiring easier.
Opening Congress on 1 March, Milei said the law would sweep away a “delirium” sanctioned 50 years ago, Chile’s El Desconcierto reported. The Presidency promised “creation of registered work, less informality” and labour standards “adapted to the 21st century”.
How the Law Got Through Congress
Milei has tried to change these rules since his first weeks in office. His emergency decree of December 2023, known as DNU 70/2023, rewrote labour rules without a vote in Congress.
In January 2024 a court suspended that labour chapter after a challenge by the CGT, Argentina’s largest union federation. The judges wrote that the government could have used Congress instead of an emergency order, the Buenos Aires Times reported.
A narrower set of changes then passed inside the so-called Ley Bases, an omnibus law published on 8 July 2024. It extended the trial period for new hires from three to six months and scrapped fines for unregistered employment.
The full overhaul came after the government drafted a new bill in late 2025. The Senate approved it first on 12 February 2026, by 42 votes to 30, amid street protests outside Congress.
The lower house followed on 20 February with 135 votes in favour, a day after the fourth general strike of Milei’s presidency. That strike grounded more than 400 flights and stopped buses, banks and schools.
To win votes, the government dropped an article that would have cut sick pay to as little as half of salary. The Senate accepted the amended text at the end of February by 42 votes to 28, with two abstentions.
Milei signed the law, and it was published in the Official Gazette on 6 March 2026. It has 218 articles and amends the core Employment Contract Law as well as union and collective bargaining rules.
What Changes for Workers and Employers
Severance and the new dismissal fund
Severance for dismissal without cause is still one month of pay per year of service. The base now excludes non-monthly items such as the annual bonus and holiday pay, which lowers the bill for many employers.
Court awards in dismissal cases are adjusted by consumer price inflation plus 3 percent a year. Large companies may pay judgments in up to six monthly instalments, and small and medium firms in up to twelve.
The law also creates a Labour Assistance Fund (FAL), an account that employers pay into each month to cover future severance. Large firms pay 1 percent of payroll and smaller ones 2.5 percent, according to the law firm DLA Piper.
Employers get a matching cut in social-security contributions, so the fund is meant to cost little extra. Decree 408/2026, published on 1 June 2026, moved its start date to 1 November 2026.
Hours, holidays and pay
Employers and workers may now agree an “hours bank”, trading overtime pay for time off. Days of up to 12 hours are allowed, provided there are 12 hours of rest between shifts and weekly limits are respected.
Critics call this a 12-hour working day, while law firms note that the 48-hour weekly ceiling stays. Holidays may be split into blocks of at least seven days, with a summer holiday guaranteed at least once every three years.
Wages may be paid in pesos or in a foreign currency, such as US dollars. The separate remote-work law was repealed, and home working now follows the general code and collective agreements.
Hiring incentives
A hiring incentive called RIFL cuts employer contributions on qualifying new hires to 5 percent for up to 48 months. Decree 315/2026 set the details, with a hiring window from 1 May 2026 to 30 April 2027.
It covers people who had no registered job, came off the self-employed monotributo scheme, or left the public sector. The government page for the scheme describes the cut as a reduction of more than 85 percent in employer contributions.
What Changes for Unions and Strikes
The law reshapes collective bargaining between unions and employers. Company-level agreements now take priority over broader ones, and expired agreements no longer stay in force automatically, a rule known as “ultra-activity”.
Strikes face new floors in services classed as essential. Health, energy, telecommunications, aviation and education must keep 75 percent of normal service running during a strike.
Activities of “transcendental importance”, such as passenger and freight transport, construction and food production, must keep 50 percent. Workplace assemblies now need prior employer approval, and employers need not pay wages for the time they take.
Union “solidarity contributions” charged to non-members are capped at 2 percent of pay. Deductions from wages for union dues now require the worker’s express consent.
App-based delivery and transport workers get a separate regime outside the Employment Contract Law. They are treated as independent workers with freedom to connect and refuse orders, and platforms must insure them against accidents.
The Court Fight
The CGT went to court within weeks, arguing that the law breaches Article 14 bis of the constitution, which protects workers. Its three co-leaders, Jorge Sola, Octavio Argüello and Cristian Jerónimo, signed the challenge.
On 30 March 2026, Judge Raúl Ojeda of National Labour Court 63 suspended more than 80 of the law’s 218 articles. He cited serious signs of unconstitutionality and conflicts with international labour treaties.
The Ministry of Human Capital, which handles labour policy under Minister Sandra Pettovello, promised to exhaust every appeal. It accused opponents of “prioritising corporate and sectional interests”, the left-leaning daily Tiempo Argentino reported.
The government then won a string of rulings. On 10 April a federal judge claimed the case for the federal administrative courts, which Infobae called a nod to the government.
On 23 April, Chamber VIII of the National Labour Appeals Court restored the suspended articles while the case continued. On 7 May the Supreme Court refused the government’s request to skip the lower courts, the Buenos Aires Herald reported.
The next day, federal administrative judge Macarena Marra Giménez lifted the injunction altogether. La Nación reported that she called the suspension of so many articles by interim order a “clear abuse”.
The CGT argued, La Nación reported, that a labour case must be decided by labour specialists. Nobody, it said, would take a car to a carpenter for repairs or a fracture to an eye doctor.
As of mid-September 2026, Judge Marra Giménez had not ruled on whether the law is constitutional. The Misiones daily Primera Edición quoted a lawyer estimating that a final ruling on validity could take over five years.
What the Numbers Show So Far
Six months in, the data do not yet show a hiring boom. INDEC reported unemployment of 7.9 percent in the second quarter of 2026, up from 7.8 percent in the first.
Informality reached 45 percent of the employed, up from 43.2 percent a year earlier. Perfil, citing the consultancy C-P, reported that formal jobs fell by 83,000 in a year while informal work grew by 348,000.
The business daily El Cronista found that registered private-sector employment had fallen for 13 months in a row to June 2026. Industry lost 4.5 percent of registered jobs over twelve months, while agriculture added 1 percent.
Some economists say the law needs time and stronger demand. Marcos Arazi of the economic institute IERAL told El Cronista the reform “can facilitate hiring if demand appears”.
Critics read the same figures as proof of failure. “This reform did not generate even one job,” the CGT’s Cristian Jerónimo said in June, according to the Mendoza daily MDZ.
The consultancy LCG said the incentives did not appear sufficient to offset weaker activity. Government officials, quoted by MercoPress, call the law a fundamental tool for formal jobs, competitiveness and legal certainty.
What It Means for Foreigners and Investors
For a foreign company, the biggest change is predictability. Dismissal costs are easier to estimate, court awards follow a published formula, and large judgments can be paid in instalments.
Payroll can now be set in US dollars, which helps firms that earn in hard currency. Company-level bargaining also lets a new investor negotiate terms that suit a single plant or office.
The RIFL discount makes new formal hires much cheaper until the window closes on 30 April 2027. Firms planning to expand in Argentina have a clear reason to time recruitment before that date.
Legal risk has not gone away. If a court eventually strikes down key articles, contracts and dismissals made under them could face new claims.
Industrial relations also remain tense, with at least four general strikes under Milei. Strike floors in essential services reduce disruption, but they are themselves part of the court challenge.
For foreign employees and expatriates, the core protections remain: paid holidays, sick pay at full salary and severance after dismissal. Anyone negotiating a contract should check which collective agreement applies, since that now matters more than before.
For a wider view of the economy behind these rules, see the Rio Times guide to Argentina’s economy in 2026. The labour reform is one piece of a broader programme of deregulation and fiscal austerity.
What to Watch
The first date to watch is 1 November 2026, when the Labour Assistance Fund is due to start. Its minimum coverage levels, set by joint resolution of the labour and finance secretariats, will show how much it really costs employers.
The second is the ruling on the merits by Judge Marra Giménez. Any decision will almost certainly be appealed, and the case is expected to end at the Supreme Court.
The third is the quarterly labour data from INDEC and the monthly registered employment figures. A sustained rise in formal hiring would support the government’s argument, while further declines would strengthen the unions.
Finally, watch the CGT. Its leaders have taken complaints to the International Labour Organization and said another general strike is not ruled out.
Frequently Asked Questions
Is Argentina’s labour reform in force?
Yes. Law 27,802 has applied in full since 8 May 2026, when a federal judge lifted the union injunction. The court has not yet ruled on whether the law is constitutional.
Does the reform allow 12-hour working days?
It allows days of up to 12 hours under an agreed hours bank, with at least 12 hours of rest between shifts. The weekly limit of 48 hours remains in place.
Can salaries in Argentina be paid in US dollars?
Yes. The law allows wages to be paid in pesos or in a foreign currency such as the US dollar.
What is the Labour Assistance Fund?
It is a fund that employers pay into each month to finance future severance payments. Large firms pay 1 percent of payroll and smaller ones 2.5 percent, from 1 November 2026.
Why do unions oppose the law?
The CGT says it weakens job protection, union action and the right to strike. It argues that the law breaches Article 14 bis of the constitution and international labour treaties.
