Labor Reform: Amnesty and Moratorium

The Bill provides a regime of regularization of unregistered employment whereby employers will be able to register employment relationships in the private sector, and rectify the actual remuneration or hiring date of the employment, with the exception of those related to domestic service, establishing the following benefits:

1. Termination of criminal action for tax evasion of social security obligations and the release of infractions, fines and penalties of any nature established in: a) the fiscal procedure law (Law No. 11,683); b) the system of withholdings and contributions to the Argentine pension funds (Law No. 17,250); c) the family allowance regime (Law No. 22,161); d) the Labor Risk Law (Law No. 24,557 and its amendments) regarding the breaches of self-insured employers, labor risk insurers and retirement insurance companies; e) the Federal Labor Pact (Law No. 25,212); f) the Rural Employees Regime (Law No. 25,191); and g) the Construction Employees Regime (Law No. 22,250).
2. De-registration for Employers from the Labor Penalties’ Registry (“Registro de Empleadores con Sanciones Laborales” or “REPSAL”), regarding infractions committed or verified until the effective date of the law.
3. Debt forgiveness for capital, interest, penalties and fines which originate from lack of payment of withholdings and contributions destined to the Social Security subsystems (Integrated Argentine Pension System or “Sistema Integrado Previsional Argentino”, Argentine Institute of Social Services for Retirees and Pensioners or “Instituto Nacional de Servicios Sociales para Jubilados y Pensionados”, Argentine Health Insurance Regime or “Régimen Nacional del Seguro de Salud”, Argentine Employment Fund or “Fondo Nacional de Empleo”, Argentine Family Allowances Regime or “Régimen Nacional de Asignaciones Familiares”, and Argentine Rural Employees and Employers Registry or “Registro Nacional de Trabajadores Rurales y Empleadores”). The forgiveness will be 100% when registration is made in the first 180 days of the regulation of the law; and 70% when it is made after the first 180 days. 
4. Exemption from the payment of severance for lack of registration of the employment relationship and/or deficient record of the remuneration or hiring date established in National Employment Law No. 24,013 (“NEL”), to the extent that such registration and/or rectification of the actual remuneration or hiring date of the employment is carried out in accordance with the terms provided in the Bill. Likewise, if the employee participates, the regularization may be approved by the competent administrative or judicial authority being competent such as the the Federal Social Security Court of the City of Buenos Aires or competent Federal Courts in the provinces.

The Bill establishes the opportunity, for those employees included within the registration, to compute up to sixty (60) months of services with contributions (depending on the registration), calculated on a monthly amount equivalent to the Minimum Mandatory Wage in force (currently, USD 500), to meet the relevant years of services for the benefit of retirement and obtain the Universal Basic Benefit (“Prestación Básica Universal”) and Unemployment Benefit (“Prestación por Desempleo”).

The benefits will apply, regarding non-condonable capital and interests, if the employers pay them: a) in full; or b) totally through the payment facility plan, which will consist of a payment equal to 6% of the debt and, the balance, in up to 60 monthly installments with a monthly interest rate of 0.75%.

Employers will have three hundred and sixty (360) days from the date of entry into force of the regulations of this law to regularize employment.

If the existence of undeclared or irregularly registered employees is verified after the adoption of the regime established in the Bill, the granted benefits will be withdrawn.

In addition, the Bill establishes the obligation of judges and administrative authorities of reporting to the Argentine Tax Authority (“AFIP”) those final judgments condemning the companies to pay compensation for failure to register the employment relationship and/or deficient registration of the actual remuneration or hiring date of the employment, as well as approval resolutions of conciliatory agreements acknowledging facts and law relating to said situations.

Regarding the settlement of withholdings and contributions omitted, the AFIP will include the compensatory interest, applying the appropriate penalties and require that the taxpayer present affidavits -original or rectifying. The debt settlement made by the AFIP will be legally sufficient to enable the tax execution.

The Bill proposes to modify the concept and scope of employment registration, as it provides that the employment relationship or contract is considered registered when the employer registers the employee in: a) the special record of section 52 of the Labor Contract Law No. 20,744 ("LCT") – libro de sueldo- or in labor documentation that takes its place, according to the particular regimes; and b) simplified AFIP registration systems.

On the other hand, the Bill proposes the modification of the sections of the NEL referred to the compensations for lack of registration, deficient registration of the hiring date of employment and actual salary, which will be turned into fines that must be paid to ANSES.

The amount of the fines is equivalent to twenty-five percent (25%) of the current Minimum Wage (Salario Minimo Vital y Móvil) for each period of lack of registration, the periods not registered from the hiring date until the incorrectly documented hiring date or the periods deficiently registered in the event of deficient registration of the remuneration.

The current duplication of compensations is eliminated for: a) cases in which the employer dismisses the employees without just cause within two years after the employees had requested the correct registration of the employment relationship or since the employee considers him/herself dismissed for that reason; and b) cases of labor relations that, at the time of dismissal, were not registered or were deficiently registered.

Finally, the Bill also proposes the elimination of the compensation in favor of the employee, equivalent to three (3) times his/her best normal and usual remuneration, for lack of delivery of work certificates to the employee.

For more information about the Labor Reform please see: "Labor Reform: Bill Submitted to the Argentine Congress"