Argentina Employment Laws: A Guide for US Companies Hiring Abroad
With a strong tech industry, Argentina is a great place for US companies to hire remote engineers and other tech workers. We walk through the labor laws you need to keep in mind when hiring there.
Caitlin MacDougall
Published on March 4, 2022
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Read Story →If you're building a remote team and are interested in establishing a presence in South America, Argentina is a great place to start. In Buenos Aires, which makes up 39% of the country's entire population, remote engineers and other tech workers abound. In fact, tech is the only major industry in Argentina's private sector that has gained new employers since a three-year recession began in 2018.Some of the developments in the tech industry are thanks to policy. After a financial crisis from 2001 to 2002, the Argentine government requested financial backing to support its science, technology and innovation (STI) agenda, resulting in the Unleashing Productive Innovation Project. The project included support for startups, research, and developing skills for entrepreneurs.While the startup culture may be ideal for a US tech company hiring abroad, there are some complex legal requirements and tax obligations that can make hiring in Argentina a challenge. In this article, we will review labor laws, working conditions, minimum paid holiday entitlement for employees, and statutory leave such as sick leave and parental leave. We will also review the independent contractor relationship, and the labor laws therein.Let's start with employment contracts and the requirements for maintaining an employment relationship.
Employment contracts 📑
There are several different types of employment contracts in Argentina that you will need to familiarize yourself with in order to determine which type of worker best suits your company's needs.Full-time workers
Full-time workers are hired for an indefinite period. A written employment contract is not required for a permanent, full-time employment relationship, but it is recommended.Part-time workers
Part-time workers work less than full-time, or fewer than 48 hours a week. These contracts are considered long-term.Fixed-term contract workers
In fixed-term contracts, workers perform work for a specific period of time, which cannot exceed five years. The employers must be able to justify hiring fixed-term workers instead of full-time or part-time ones.Temporary workers
These workers do not work longer than six months, and it is typically to replace an absent employee temporarily (e.g. if a worker is on maternity leave and the position must be occupied for a short period of time).Employers may hire temporary workers directly or through an employment agency. Just as an employer must justify applying fixed-term contracts, they must justify hiring temporary and agency workers as well.Seasonal workers
Seasonal workers work during certain periods of the year; for example, an agricultural worker would be a seasonal worker.Collective bargaining agreements in an employment contract
Collective bargaining agreements are quite common in employment contracts in Argentina. Most of these agreements apply across the country to a particular industry, but sometimes a collective bargaining agreement will pertain to a particular company or group of companies. For a company to have a collective agreement included in employee contracts, the agreement must be signed by at least four union representatives at the company, and ultimately must be approved by the trade union.Working conditions ⛑
In Argentina, the minimum wage is currently 32,616 Argentine pesos a month. Employees cannot work more than 48 hours a week, or eight hours a day, and they must have 12-hour rest periods between working days. They are also entitled to 35 continuous hours of rest a week.Overtime pay
Employees' overtime payment scheme is set at 50% of their salary on top of their normal wages, but they may not work more than 30 hours of overtime a week, or 200 hours in a year. If an employee works during their weekly rest period or during a holiday, an employer must pay 100% of their employee's wages in addition to their normal wages.Some working conditions may be deemed unhealthy by the Ministry of Labour, Employment and Social Security (Ministerio de Trabajo, Empleo y Seguridad Social de la Nación), or by the local labor authorities. For example, work that occurs underground, such as mining, is considered an unhealthy work setting. Sometimes employees in these settings are entitled to more rest periods. They may not work more than six hours a day and cannot work overtime.Minimum holiday entitlement 🏝
Argentinian employees' holiday entitlement will vary based on the length of their employment. An employee may be entitled to a maximum of five weeks of annual vacation leave, or 35 days of paid annual vacation. Their salary payment during their vacation period is calculated by dividing the employee's salary by 25 and then multiplying it by the number of holidays or days off to which the employee is entitled.Parental leave 🤰
Female employees are allowed 45 days of maternity leave before childbirth as well as 45 days after childbirth. Male employees who are fathers are limited to two days of paternity leave. The female employee may also request additional unpaid leave for three to six months.An employee receives family allowances if they have children. In this circumstance, employers contribute 4.57% of the employee's compensation to the social security system of Argentina, known as the National Social Security Administration (Administración Nacional de la Seguridad Social, or SSA). Large companies pay 5.48% in contributions.Sick leave 🤒
Periods of continuous employment create sick leave benefits for employees. Employment law in Argentina grants an employee a paid sick leave period of up to three months per year if they have been employed by the same employer for five years or less. Employees are entitled to a paid sick leave period for up to six months if their employment relationship has lasted for more than five years. If an employee is injured or becomes sick because of a work-related task, their rehabilitation for the injury and their sick pay are covered by compulsory employment risk insurance, or labor risk insurance, for up to one year.Termination of employment
Employees have certain rights if they are to be terminated from their position. Prior notice periods will vary depending on the length of employment: an employee must be given a month's notice if they have been working for the same employer for less than five years. If the employee has been working for the same employer for more than five years, they must be given two months' notice. In some cases, an employee may be in a probationary or trial period of employment for up to three months. In the case of this trial period, the employee is entitled to 15 days' notice.Severance payment 💸
Severance payments are based on the employee's highest regular, normal monthly salary accrued over the last year, but payment is capped for companies with collective agreements. This cap cannot be more than 33% of the employee's normal salary.In the case of a termination without just cause, employers must pay an employee one month's salary for every year that they were employed. If their tenure includes an incomplete year (e.g. they were terminated three months into the current year), they are entitled to a fraction of a month's pay that's proportional to the amount of time they worked in the incomplete year. In the case of redundancy, a reduced severance payment is owed to the employee at 50% a normal severance payment.If an employee was dismissed with just cause, no severance payment is due, but the employee is owed any unused annual leave and contractual or discretionary bonuses. If an employee believes they were subject to unfair dismissal and they win their case in court, they may be owed 50% on the severance payment that would normally be due in a dismissal without cause.Independent contractors 👤
Independent contractors have contracts that last only for the duration of a project or task. When performing the work, the contractor manages their own schedule or provides their own tools needed to complete the project. A contractor may enjoy this level of independence, as they do not need to depend on one employer as a sole source of income. On the other hand, independent contractors do not enjoy the same benefits as an employer, such as paid leave or holidays.Working with independent contractors
While hiring a team of employees may suit many companies' needs, some companies may choose to hire an independent contractor instead. One reason for this is that an employer may not know how much work they can provide, or how long a certain project will take. With an independent contractor, an employer can offer work on a project-by-project basis, always with the option to hire full-time if need be.Another reason why employers may hire contractually is because it could be more cost-effective. In Argentina, contractors file their own taxes and make their own social security contributions, minimizing the burden placed on employers to withhold taxes from their employee's income.There is also no obligation to provide employee benefits to an independent contractor, which also cuts down on a company's cost. Under Argentina's employee benefits law, employees are entitled to paid leave, sick pay, and severance pay, should their contract be terminated.There are, however, benefits to hiring an employee instead of a contractor. In an employment relationship, an employer has a worker who is theoretically available during the company's working hours. Because of the worker's availability, communication with colleagues may be more fluid and consistent. Another reason an employer might prefer to hire an employee is that it saves them time they would otherwise spend onboarding multiple contractors for different projects.Before you hire an independent contractor, it's important that you distinguish that relationship from an employee relationship when you make the job offer. While there is no Argentinian law requiring a formal written contract for independent contractors, you can communicate to the new hire in an informal call or an email that they are being hired as a contractor.Tax obligations for employees versus independent contractors 🧮
If hiring a team of employees, an employer must manage their employees' income taxes. Income tax is collected when an employee's gross monthly salary is more than ARD150,000, and it is levied at progressive rates ranging from 5% to 35%.Other tax obligations for an employer include handling the employee's health insurance, social security contributions, and other deductions. Usually, all these taxes and contributions, including income tax, are withheld from an employee's salary in a PAYE (pay-as-you-earn) system. With this system, the company calculates and processes employees' taxes with each paycheck.With an independent contractor, they must register for your DNI (Documento Nacional de Identidad) with the Registro Nacional de las Personas that has jurisdiction over the area you live in.Compliance and the benefits of outsourcing payments and payroll
It's important that a company make compliance a priority when hiring a global team. When you invest in international compliance, you offset the risk of accidentally misclassifying a worker, or overlooking a critical employment contract law. There are also local laws and tax obligations to consider. A service that specializes in compliance, among other skills, is critical to staying organized.
Legal Disclaimer:
The information contained in this site is provided for informational purposes only, and should not be construed as legal advice on any subject matter.
How Pilot can help 🤝
Pilot can help you manage everything from HR to sending payments to your global team. It can be hard and time consuming for a foreign employer to navigate local laws, employment contracts, compensation, paid leave, and other benefits in another country. With Pilot, we provide you with the support you need to run a successful international company.Our platform enables businesses of all sizes--from small businesses to large--to pay contractors in 240+ countries and to use local currency payments and local bank transfers in over 70 countries. With Pilot, your workers' funds go straight to their bank accounts without pesky markups or high exchange rate fees. Contractors love Pilot because of our optimal exchange rates, and unlike some transfer services, we don't require that they use an e-wallet to access their funds. Getting paid through Pilot means that both company and contractor get the most out of their money.Want to hire foreign employees instead of contractors? Pilot can act as your employer of record and handle payroll, benefits, and compliance for your international employees. Let us help you stay compliant no matter where your employment relationships may reside. Country-specific employment contracts are double-reviewed by both US and local lawyers, so that employees receive pay and benefits that are compliant with the laws of their home country.Going global isn't daunting when you partner with Pilot. 🤝
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