Argentina’s labor landscape is undergoing a major transformation with the recent approval of President Javier Milei’s labor reform by the Senate. The reform, which passed in its final version after modifications in the lower house, touches nearly every aspect of work life—from salaries and severance to strikes, unions, and new protections for gig economy workers.
One of the most noticeable changes is how severance and sick leave are calculated. Workers who fall ill or have accidents unrelated to work will now receive 75% of their salary for a set period, replacing the previous system where employees earned 100% of their pay for up to six months, depending on seniority and family responsibilities.
Severance calculations have also been redefined: vacation pay, bonuses, and other non-regular payments are excluded, lowering the overall payouts. To ease the burden on employers, payments can now be made in installments—up to six months for large companies and twelve for smaller businesses. The reform also introduces the Labor Assistance Fund (FAL), a mandatory system funded by employers to ensure severances are covered.
The reform introduces new flexibility in salaries and work hours. Employers can now offer “dynamic salaries,” allowing pay adjustments based on productivity or individual merit. Daily work hours may extend from 8 to 12, with a mandatory 12-hour rest period, and overtime can be compensated through a “bank of hours” system rather than extra pay. Part-time contracts are officially recognized for periods shorter than the legal workday.
Strikes and essential services also see new rules. Essential sectors now cover not just health, energy, and water, but also education, telecommunications, aviation, commerce, customs, and ports, with security forces required to maintain full coverage. Workers’ assemblies must be approved by employers, and actions such as blocking or occupying workplaces are defined as serious violations.
Union regulations have shifted as well. Company-level agreements now take precedence over sectoral collective agreements, and expired agreements lose effect until renegotiated. Worker seniority is impacted if an employee leaves and returns to the same company after more than two years. Union solidarity contributions are capped, and employers remain responsible for withholding them.
The reform also embraces the realities of the modern workforce. Delivery and gig economy workers must register, pay social security and taxes, and are entitled to accident insurance, but their relationship with platforms is explicitly recognized as independent, not employment. Telework laws are repealed in favor of more flexible arrangements.
Finally, the reform incentivizes formal employment and investment. Programs like the Labor Formalization Incentive and the Medium Investment Incentive Regime (RIMI) encourage companies to hire workers and invest in production, with tax reductions and exemptions offered as rewards.
Overall, Milei’s labor reform represents a sweeping effort to modernize Argentina’s labor market, balancing flexibility for employers with protections for workers, while introducing incentives aimed at formalizing employment and stimulating investment. Critics caution that certain measures, like reduced severance and dynamic salaries, could weaken worker protections, but supporters argue it is a necessary step to make Argentina more competitive in the global economy.
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