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Special Edition: Labor Modernization Law

The Labor Modernization Law redefines the rules of employer-employees relations. Find here a detailed analysis of the changes.

February 27, 2026
Special Edition: Labor Modernization Law

The Argentine Congress enacted the so‑called Labor Modernization Law, which introduces substantial amendments to the labor contract regime, to procedures before Labor Courts, and to various institutions of collective labor law. The Law also creates the Labor Assistance Fund, a financing mechanism intended to assist employers with the payment of certain severance‑related compensations arising from the termination of employment.

The new Law redefines principles, regulates new modalities, and reformulates aspects related to remuneration, working hours, leaves of absence, dismissals, and the adjustment of labor credits. The reform is structured into separate titles that amend, among others, the Argentine Labor Law 20744, the Law on Organization and Procedure of the National Labor Courts, the Trade Union Associations Law 23551, the Collective Bargaining Law 23546, and the Collective Labor Agreements Law 14250.


New scope of the Argentine Labor Law

Among the initial changes, the Law redefines the scope of application of the Labor Law, extending exclusions to certain contractual arrangements governed by the Argentine Civil and Commercial Code, independent workers with collaborators, and platform‑based service providers under the specific regulation that the Law itself contemplates.

It also reformulates interpretative rules. The principle of the most favorable rule is maintained, but it is clarified that its application must consider the grouping by institutions. The non‑waivability of rights is reaffirmed while preserving individual agreements, and professional training under equal conditions is incorporated as a fundamental right.

Regarding the presumption of an employment relationship, the text strengthens its exclusion in all cases where services are rendered without subordination.


Registration and formalities

The reform centralizes labor registration with the Argentine Tax Authority (ARCA), establishing that this registration will be sufficient and that other agencies may not impose additional requirements. The Law expressly authorizes the digitalization of labor books and documentation and grants digital copies the same validity as originals.


Payment and benefits

The text clarifies that social benefits are not a remuneration in kind and expands the list of benefits included within this category. It also excludes more complementary benefits from payment status, whether granted in cash or in kind. The exclusions now include profit‑sharing systems, stock rights, dividend payments, and the exercise of shares or securities.

The Law establishes that wages may be paid in domestic or foreign currency, and allows issuing digital pay slips.

The Law introduces the notion of dynamic compensatory components, in addition to mandatory wages, which may be temporary and do not create implied continuity or ultra-activity.


Working hours and overtime compensation

Regarding working hours, the statute introduces the possibility of agreeing on overtime compensation systems, including hour banks and compensatory rest days, always respecting minimum statutory rest periods.


Leaves and illness

The statute amends the regime for leaves of absence due to non‑occupational illness. It requires submitting medical certificates including diagnosis, treatment, and days of rest, and issued by duly licensed professionals with digital signatures in accordance with applicable legislation. The employer’s authority to conduct medical verification is maintained, and the express possibility of seeking a medical board to resolve irreconcilable discrepancies between the employer’s and the employee’s doctors is incorporated.
 

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Termination of the labor contract

One of the central axes of the reform is the introduction of relevant clarifications to the severance regime for dismissal without just cause. The Law specifies criteria to determine which items are considered ordinary and regular, expressly excluding non‑monthly items such as the annual supplementary salary and vacation pay, thereby incorporating en banc rulings of the National Court of Appeals on Labor Matters (precedent “Tulosai”).

It also incorporates the doctrine of the well‑known “Vizzoti” ruling of the Argentine Supreme Court, which expressly established that the severance calculation base cannot be reduced by more than 33% due to applying the conventional cap.

The Law provides that severance for length of service constitutes the only remedy available upon termination of the employment contract without just cause, and that its collection extinguishes claims related to dismissal, except for actions based on criminal offenses.

The formalities for resignation are also modernized, enabling its execution through physical or digital telegraphic notice.
 

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Adjustment of labor credits

The reform establishes a new adjustment criterion for credits arising from individual employment relationships. It provides for adjustment by the Consumer Price Index (IPC) plus an annual interest rate of 3% from the date each amount becomes due until its effective payment.

The Law establishes a specific regime for proceedings pending upon the Law’s entry into force,  referring to the rate determined by the Argentine Central Bank, subject to limits tied to the CPI.

It also establishes guidelines for judicial payment and authorizes payment in installments.
 

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Labor assistance fund

The law creates the Labor Assistance Fund (FAL), intended to assist the employer in complying with certain severance‑related obligations arising from termination of employment.

Each employer must contribute to an individual account, as a separate and unseizable estate, in an entity authorized by the Argentine Securities Commission. The account must be funded with a mandatory monthly contribution, the percentage of which depends on the size of the company, using as a parameter the taxable base for calculating employer contributions to the pension system. The resources may be used for payments related to dismissal, notice, integration, and other statutory indemnities. If the funds are insufficient, the employer must pay the corresponding obligations in full.

The regime excludes unregistered workers and provides for a minimum contribution period before the fund may be used for terminations.


New labor procedure

The law introduces amendments to the Law on Organization and Procedure of the National Courts on Labor Matters. It incorporates the principle of party‑driven procedural progress and establishes time limits for lapse of proceedings. Jurisdictional rules are redefined, and provisions on medical and psychological experts are updated.

It also introduces a system of binding precedents so that criteria established by higher courts become mandatory for lower courts, to standardize legal interpretation and reduce jurisprudential discrepancies. Further, the deadlines for offering evidence are modified.


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Collective labor law

In the field of collective labor law, the reform introduces changes to the structure of bargaining and the representation regime. It establishes a new hierarchy of collective agreements, according to which agreements of a lower scope may prevail over those of a higher scope. Likewise, it limits the ultra-activity of collective agreements, establishing that once their term expires, only their normative clauses remain in effect until a new agreement is executed or an express extension is agreed to.

The Law also redefines the treatment of unfair labor practices and certain conducts related to the exercise of trade union activity. It incorporates rules aimed at balancing the obligations of employers and trade unions and clarifies the scope of assemblies and collective measures within the workplace, including their impact on the performance of duties and wage accrual.


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Incentives for formal employment

The Law promotes labor registration by creating a Registered Employment Promotion Plan and a Labor Formalization Incentive Regime, which grant significant waivers.


Repeals
Effective January 2027, the reform repeals the telework regime established through Law 27555 and the traveling salespersons’ statute regulated through Law 14546, among others.
 

Final considerations

The Labor Modernization Law incorporates a new regulatory framework that redefines core institutions of the labor contract, judicial procedure, and collective relations, whose concrete scope will depend on practical implementation and the interpretation adopted by administrative and judicial entities.

This insight is a brief comment on legal news in Argentina; it does not purport to be an exhaustive analysis or to provide legal advice.