Labour Reform Ruling Sparks Claims of Overreach

The interim injunction issued by the labour courts in favour of the CGT suspends the application of 83 sections of the Labour Modernisation Law governing matters relating to individual and collective labour law, but its extension to all workers is considered an “overreach” by legal experts.

What the ruling against the labour reform says

Guillermo Osorio, of Marval, highlights the following arguments made by the labour judge:

• “Any reforms that are introduced must respond to a criterion that is more favourable to those subjects with preferred constitutional protection, namely workers.” This was based on the principle of progressivity and non-retroactivity of labour law.
• The judge concludes that the sections of the Labour Modernisation Law whose suspension was requested by the CGT undermine labour rights and provide worse conditions for workers.
• “The effects of the challenged provisions must be suspended immediately, so that there is no exhaustion of rights that may seriously affect the persons and institutions involved.”

The decision is subject to appeal, and we assume that the State will appeal it, so it remains to be seen what the appellate court will decide. At the same time, it is possible that a jurisdictional conflict may arise because of other cases currently being heard before the federal administrative courts, which is another issue that could alter this complex judicial landscape surrounding the validity of the reform, Osorio notes.

Which key points have been suspended by the ruling

Javier Sabin, of EY Argentina, lists that the sections affected by the suspension (including sections 1, 3, 6, 9, 10, 13, 16, 17, 18, 19, 23, 24, 25, 26, 27, 28, 30, 31, 32, 33, 34, 41, 42, 43, 44, 46, 47, 48, 50, 51, 53, 55, 56 and 57) affect the following matters:

Hours bank: the changes that allowed greater flexibility in the distribution of working hours and rest-day schemes have been halted.
Severance and dismissals: the application of the changes to severance calculation and the creation of the new severance fund (FAL) has been suspended.
Fringe benefits: the rules changing the remunerative nature of certain benefits granted by employers have been suspended.

“The ruling holds that these sections could violate the principle of labour progressivity and rights guaranteed by international treaties,” summarises PASBBA.

Trade union rights

The courts blocked the sections limiting the collection of solidarity contributions.

They also blocked those restricting the right to strike in “essential” or “transcendentally important” services.

Restrictions on assemblies, trade union protection, union legal status and the regime governing unfair labour practices have also been suspended.

Why experts are criticising the ruling

Federico Basile, of Tavarone, Rovelli, Salim & Miani, believes that “the grounds are legally unsustainable and devoid of legal basis”.

“However, we must once again apply, at least temporarily but almost in full, the text of the Employment Contract Law (LCT) and the rest of the amended laws, according to their wording prior to 6 March 2026,” he explains.
“The judgment is subject to appeal before the National Labour Court of Appeals and then, in principle, before the Superior Court of Justice of the City of Buenos Aires,” he adds.

“The judgment constitutes an absolute overreach of judicial authority and, in that sense, the arbitrary attempt to extend its effects to all workers in the country governed by the Employment Contract Law is a very clear reflection of such abuse,” he underlines.

In turn, Hernán Cuenca Martínez, of PwC Argentina, maintains that “there is doubt as to the CGT’s standing to represent all trade unions or all workers under the Employment Contract Law”.

Daniel Pérez, of Pérez, Fiocco & Asociados, adds that “the judge seeks to ignore that the FAL does not replace or substitute the severance regime; it is an anti-cyclical self-insurance fund designed to help pay severance. The employer remains fully liable for those payments”.

“What evidence is the judge relying on to say that social security is being underfunded and that bad investments are not being ring-fenced, if the financial aspects have not even been regulated yet?” he asks, stressing that “this is a clear case of prejudgment”.

Pérez insists that “the judge contradicts his own reasoning and, when he details the sections covered by the injunction, enters into dangerous prejudgments”.

What may happen with the appeal

AZDR y Asociados comments that, under the rules governing interim measures in cases in which the National State is a party or intervenes:

• The interim measure should have a term of no more than 6 months (extendable for a similar period in special circumstances). In this case, no term of duration has been set.
• Any appeal filed by the State would have suspensive effect, so the sections affected by the measure would remain applicable despite it, until the appeal is resolved.
• However, these principles do not apply where the beneficiaries of the measure are socially vulnerable sectors or where a dignified life under the American Convention on Human Rights, health, or a food-related right is at stake.

“We will have to wait and see what the judicial authorities involved in the case decide,” concludes AZDR y Asociados.

“While the injunction remains in force, the provisions amended by Law 27,802 do not produce legal effects. Consequently,” PASBBA explains:

• Labour and trade union relations will continue to be governed by the previous wording of the Employment Contract Law and the rest of the amended laws.
• Expired collective bargaining agreements will continue to remain in force under ultra-activity.

The interim injunction granted in favour of the CGT, which halts the application of 83 sections of the Labour Modernisation Law, is provisional in nature and does not constitute a final judgment.

Link: https://www.iprofesional.com/impuestos/451393-polemica-judicial-denuncian-extralimitacion-fallo-reforma-laboral-cgt.amp