The Employment Accident and Occupational Disease Act
Law 27348 published on 24 February 2017, introduces several changes to the Employment Accident and Occupational Disease Acts (N° 24557 and N° 26773).
The main changes are as follows:
Adjustment to the National Minimum wage(Resolution (CNEPSMVM) 3-E/2017)
As of 1 July 2017, the general minimum wage was set at ARS 8,860 by the Committee for Minimum Wages (composed of government, employees and employee representatives). From 1 January 2018 it will be raised to ARS 9,500 and from 1 July 2018 a further increase to ARS 10,000 will take effect. The national minimum wage applies regardless of the worker’s age and experience.
Changes to the pension regime(Law 27426 modifying Section 252 of the Argentine Employment Law)
When a worker reaches 70 years of age and meets the necessary requirements (30 years of employee pension contributions) to access the Universal Basic Benefit (PBU), an employer may formally request that the employee start administrative pension procedures, issuing a certificate of service and other necessary documentation for this purpose. From that moment, the employer must continue to employ the worker until they receive the pension, up to a maximum period of one year. Under previous legislation, the employer could request the employee start this process from age 65. This change came into force on 29 December 2017.
The provisions in the preceding paragraph do not affect a worker’s right to apply for a pension before 70 years of age. Under current legislation men of 65 with 30 years of pension contributions, or women of 60 (this can be extended to 65) with 30 years of pension contributions can apply for a pension.
Once a pension has been granted, or the one-year period has expired, the employment contract can be terminated by the employer with no obligation to pay seniority compensation.
The new rule clarifies that once a worker meets the necessary requirements to access the PBU, the employer must withhold employee contributions to the social security system (17% of the employee’s monthly salary), and with respect to employer’s contributions, will only have to pay Health Insurance (6%) and Work Injury Insurance. The employer will not have to contribute to the pension system.
Section 253 of the Argentine Employment Law has also been modified. The new provision states that if an employee obtains retirement benefit and keep working without interruption for the same employer, only seniority acquired after the benefit was granted will count for seniority compensation purposes.
Income tax
Article 47 of Law 27430, published on 29 December 2017 and effective from 2 January 2018, modifies the Income Tax Law, establishing that the amount paid on termination to executive directors of public and private companies in excess of the statutory seniority compensation amount (one month per year of service), will be subject to income tax deductions.
Social security contributions
Law 27430 also modifies social security contributions to encourage greater investment, promote the creation of employment and fight against tax and labour evasion. One of the implemented measures is a gradual move towards a minimum non-taxable amount of ARS 12,000. As of 2018, the first ARS 2,400 of gross compensation will not be subject to employer pension contributions. By January 2022, this amount will reach ARS 12,000, and will be updated in accordance with the consumer price index and in line with inflation.
This measure seeks to discourage the unregistered hiring of lower-skilled workers, reducing the implicit incentive to operate outside the law through unregistered employment created by social charges.
At the same time, a gradual unification of the applicable rate of employer’s contributions to the social security system has been implemented, eliminating current differences relating to a firm’s size and its main activity. From January 2022 onwards, employers’ contributions to the pension system will be harmonised at 19.5%, replacing the previous 17% and 21% rates. In practice, this will increase pension contributions for companies whose main activity consists of primary and secondary production (currently 17%). It will decrease for those engaged in services (currently 21%).
This change will be gradually implemented according to the following table:
Employer’s contribution |
Until 31/12/2018 |
Until 31/12/2019 |
Until 31/12/2020 |
Until 31/12/2021& |
From 1/1/2022 |
Commercial and service activities > ARS 48 million |
20.7% |
20.4% |
20.1% |
18.8% |
19.5% |
All activities except commercial and service invoicing > ARS 48 million |
17.5% |
18% |
18.5% |
19% |
19.5% |