Emergency Decree No 27/2018: Amendment to Law No. 26,940 and Section 147 of the Labor Contract Law

Decree 27/2018 introduced amendments to Law No. 26,940, whereby the Public Registry of Employers with Labor Sanctions (REPSAL) was created. In Chapter XIV, under the title "Promotion of Labor", the Decree amends Sections 8 and 9 of Law 26,940, introduces Section 8 bis, and repeals Section 10 thereof.

The REPSAL is a public tool to address unregistered employment, promote the right to a decent job with a fair remuneration, access the social security system and union representation, and avoid unfair competition between companies. It was created in 2014 within the scope of the Ministry of Labor, Employment and Social Security ("MTESS"), in order to include employers with labor sanctions applied by the MTESS, the Argentine Tax Authority (AFIP), the provincial authorities, the authorities of the City of Buenos Aires (AGIP), the National Registry of Agricultural Workers and Employers (RENATEA) and the Labor Risk Superintendence (SRT). Additionally, such institution also publishes sanctions for obstruction of labor inspections, court rulings regarding labor relationships not recognized by the employer, sanctions for infractions in the prohibition of child employment, the protection of adolescent work and court rulings regarding the infringement of the Law for the Prevention and Punishment of Sexual Exploitation and Assistance to Victims.

The REPSAL publishes a list of sanctioned employers that is updated daily, and, as long as the sanctioned employers remain in the Registry, they cannot:  a) access programs, assistance or promotion actions, benefits or subsidies,  implemented or financed by the Argentine State, lines of credit granted by public banks;  nor b) enter into contracts of sale, supplies, services, leases, consultancy, rents with option to purchase, swaps, concessions for the use of public and private property of the Argentine State, to be concluded by the jurisdictions and entities included in its scope of application. Likewise, they are not allowed to participate in public work concessions or public services or licenses, or access the economic benefits of promoting the hiring provided in Sections 19 and following, and 24 and following of Law No.  26,940.

Before this Decree, employers had to comply with the payment of the fines and, in addition, proceed to regularize the situation that led to the sanction so that, after 90 days, they could be eliminated from the list.

Regarding the amendments to the Law, the Decree provides, in Section 144, a modification to the original wording of Section 8 of Law 26,940 and establishes that "[i]n cases in which the employer certifies the factual or legal impossibility of complying with the regularization of the conduct that generated the sanction, the offender will remain in the Registry for a period of thirty (30) calendar days counted from the date of payment of the fine", which modifies the original wording of the Law that included remaining on the registry for ninety (90) consecutive days counted from the date of payment of the fine.

Meanwhile, Section 146 orders a replacement to Section 9 of the Law, which will be as follows:

In all cases in which the employer regularizes registration or the employment relationship - if applicable - and pays the fines and their accessories, same will be included in the Public Registry of Employers with Labor Sanctions (REPSAL) until the date on which the fine was paid and/or regularized, and thirty (30) more calendar days from the last obligation of the aforementioned that is completed, in the cases that have been sanctioned for:

1) Infringement to the provisions set forth by paragraphs a) or b) of subsection 1 of Section 15 of the Law No. 17,250.

2) Lack of registration as an employer or by employing employees through an unrecorded or poorly registered employment relationship or contract, and failure to comply with the obligations contained in the section added with no number following Section 40 of Law No. 11,683 (t.o. 1998) and its modifications.

3) Infringement of the provisions set forth by Section 15 of Law No. 25,191 and its amendment.

4) Obstructing the work of the Labor Inspectorate provided for in Section 8 of Annex II of the Federal Labor Pact, imposed by the Ministry of Labor, Employment and Social Security.

 5) Breach of the provisions set forth by Section 7 of Law N ° 24,013 when the sanctions were imposed by the provincial authorities and the City of Buenos Aires.

Regarding the rules that are incorporated into the text of Law 26,940, Section 145 of the Decree orders the incorporation as Section 8 bis of Law No. 26,940, the following text: "SECTION 8 bis.- The competent agencies for the annotation in the REPSAL of the sanctions listed in Section 2, will have a maximum period of thirty (30) calendar days from when the sanction becomes final, for the registration. Upon expiration of said period, the period of permanence in the REPSAL will start automatically – in either case of those foreseen in the aforementioned sections-, and regardless of whether or not the sanction in the registry was included by the corresponding authorities". So, with said incorporation, a maximum term of thirty (30) days is set for the competent agencies to proceed with the inscription in the Register of the offending employer and, once that term has expired, the new term of permanence in the registration that, as ordered by the new Section 8 –previously mentioned- will be  thirty (30) days.

With regard to obstructions to the work performed by the Ministry of Labor, the inclusion of subsection 4 to Section 9 of the Law led to the repeal of Section 10 of Law 26,940, which established the inclusion in the REPSAL until the date of payment of the penalty and for one hundred and eighty (180) days after payment for those employers who have obstructed the work of the Labor Inspectorate provided for in the Federal Labor Pact.

Finally, and on the grounds that the unseizability of the salary account and not the salary reduces the credit rating of savers who only have a salary account and damages their access to credit, in Chapter XXII, under the title "Access to Credit - Financial Inclusion ", the Executive established, through Section 168 of Decree 27/2018, the modification of Section 147 of the Labor Contract Law, which, according to the new wording provides that: “[i]n order to make the provisions contained in this Section operative, prior to any preventive or executive seizure that affects the salary of employees,  the employer should be requested to make the relevant deductions according to the law. Once the seizure is stopped, within forty-eight (48) hours, the employer must inform the employee of the measure ordered, and must provide a copy of the court order. No seizures of any kind may block the balance of the salary account as they are amounts derived from an employment relationship and/or social security benefits, when such amount does not exceed the equivalent of three (3) times the amount of the remunerations and/or benefits accrued by the employees and/or beneficiaries in each monthly period, according to the average of the last six (6) months. In the event that the balance of the account resulting from an employment relationship and/or social security benefits exceeds such amount, the seizure will be effective on the amount that exceeds the limit set by this Section." Thus, the Decree eliminates the prohibition of seizures on salary accounts of the employees, and if the amounts in the salary accounts exceed three salaries of the employee, the sum exceeding this limit may be seized.