During the early hours of this Thursday, the government of Javier Milei managed to have the labor modernization bill approved in the Senate, an initiative that represents a deep change in the Argentine employment regime.
The bill aims to establish clear and predictable rules, reduce litigation, and create a more dynamic and modern framework for productive development, with the goal of promoting the creation of formal employment and new investments.
Among the central pillars, the amendments to Employment Contract Law 20.744 stand out. The initiative excludes from its application independent workers with collaborators and workers on technological platforms, defining the scope of the regulations with greater precision.
The principle of "most favorable rule for the worker" is also limited to strictly legal matters, and "social justice" is eliminated as an interpretive criterion, which introduces greater predictability and seriousness in the application of the law.
In addition, it is clearly established that severance pay for dismissal without cause will be the only applicable remedy, ruling out additional claims for damages, unless there is autonomous damage that is duly proven, seeking to reduce litigation. It also defines what must be understood as "normal and habitual" remuneration, limiting the inclusion of non-monthly items in the severance calculation base.
In terms of labor costs, the reform introduces Labor Assistance Funds (FAL), which will operate as a separate estate intended to guarantee the payment of severance. They will be financed with a monthly contribution of 3% of wages, but at the same time a reduction of employer contribution rates is envisaged.
