The 2024 "Ley de Bases": Understanding Argentina's New Labor Reform (Law 27,742)

Introduction to Law 27,742: The 2024 Labor Reform

The enactment of the "Ley de Bases" (Law No. 27,742), approved by the National Congress in 2024, introduces substantial changes to the legal framework of labor law in the Argentine Republic. Popularly known as the "2024 Labor Reform," this law alters historic pillars of the Employment Contract Law (LCT) No. 20,744 and other complementary labor regulations. Its impact extends to various fundamental areas: from the extension of the probationary period and the creation of a new optional severance fund system, to the controversial elimination of aggravated severance pay for unregistered employment originally established in Law 24,013.

The stated goal of this reform is to promote "labor modernization," facilitate formal hiring, and grant greater predictability to employers, especially Small and Medium-sized Enterprises (SMEs). However, from the perspective of labor rights, these measures represent a significant flexibilization of historic worker protections, transferring business risk to the employee in many cases and disincentivizing judicial claims by eliminating pecuniary fines. Below, we comprehensively analyze the main pillars of this regulation and its practical implications for both workers and employers.

Extension of the Probationary Period (Modification of Art. 92 bis LCT)

One of the most notable and immediate changes of Law 27,742 is the modification of the length of the probationary period. Historically, Article 92 bis of the LCT established a general period of three (3) months, during which either party could terminate the employment relationship without the obligation to pay seniority severance pay, requiring only a 15-day notice.

With the new "Ley de Bases," the probationary period is extended by default to six (6) months as the general rule. Furthermore, the regulation introduces a progressive scale that further extends this term depending on the size and economic capacity of the contracting company, under the premise of encouraging employment in the SME sector. The scales set by the law are as follows:

• Companies with over 100 employees: The probationary period is six (6) months. This is the new general standard.
• Companies with 6 to 100 employees: Through collective bargaining agreements, the probationary period can be extended up to a maximum of eight (8) months.
• Small companies with up to 5 employees: Through collective bargaining, the period can be extended up to a maximum of twelve (12) months (a full year).

It is important to note that during this period, the worker maintains all union rights, health insurance coverage, retirement contributions, and workers' compensation protection through the Workers' Compensation Insurer (ART). Nevertheless, the possibility of being dismissed without severance after one year of work (in small companies) represents a paradigm shift in the notion of entry-level job stability.

Creation of the Optional Labor Severance Fund

Law 27,742 introduces a capitalization mechanism called the Labor Severance Fund (Fondo de Cese Laboral), inspired by the model that has governed the construction industry for decades (Law 22,250, regulated by UOCRA). This reform substantially modifies the severance regime for dismissals without cause provided for in Article 245 of the LCT, but not on a mandatory or automatic basis.

For the Severance Fund to be applicable, it must be negotiated and approved through the Collective Bargaining Agreement (CCT) of each specific activity. If business chambers and the representative union agree, employers in that sector may choose to substitute the payment of seniority severance (one month's salary per year of service) with this new system.

How does the Severance Fund work? The employer makes a monthly contribution equivalent to a percentage of the worker's remuneration (whose cap will be set by regulation and the CCT) which is deposited in a special account or trust. Upon termination of employment—whether by resignation, mutual agreement, or dismissal without cause—the worker receives the funds accumulated in said account. Proponents of the system argue that it eliminates litigation and ensures quick payment. Detractors point out that it denatures the protection against arbitrary dismissal enshrined in Article 14 bis of the National Constitution, making dismissals cheaper and incentivizing permanent labor turnover.

Elimination of Fines for Unregistered Employment (Law 24,013)

Perhaps the most controversial aspect of the new Ley de Bases is the repeal of fines in favor of the worker originating from deficiencies in labor registration. For over 30 years, the National Employment Law (Law No. 24,013) and later Law No. 25,323 established aggravated severance payments—colloquially known as "fines"—for employers who kept their workers "off the books" (completely clandestine), with a false start date (late registration), or with a registered salary lower than the actual one (underreporting of remuneration).

Law 27,742 completely eliminates these compensatory fines collected by the worker. Specifically, it repeals articles 8, 9, 10, 11, and 15 of Law 24,013, articles 1 and 2 of Law 25,323, and article 80 of the LCT which sanctioned the failure to deliver work certificates and contributions. It also eliminates sanctions for improper retention of contributions.

Following the enactment of the reform, a worker who has provided clandestine services and is dismissed will only have the right to claim the standard tariffed severance (Art. 245 LCT), notice pay, integration of the dismissal month, proportional bonus, and vacation pay. Although they may demand recognition of actual seniority, the suppression of aggravated severance drastically reduces the contingent liability of the non-compliant employer and eliminates the main economic incentive the worker had to report lack of registration. In exchange, the government is implementing a social security debt forgiveness system and a new scheme of administrative fines, the amounts of which will go to the National State treasury and not into the pocket of the affected employee.

The New Concept of "Independent Workers with Collaborators"

Another structural pillar of the reform is the creation of a special regime for independent workers, specifically designed for micro-enterprises and trades. The law establishes that an autonomous or "monotributista" worker may hire up to three (3) other independent workers ("collaborators") to carry out a joint productive project or venture, without an employment relationship existing between them.

This provision legalizes a collaborative work figure that is expressly excluded from the Employment Contract Law. Those who adopt this format must adhere to a special unified regime to be determined by the AFIP (tax authority), where each participant will pay their own retirement contribution, health insurance, and accident insurance, issuing invoices for their work.

While it seeks to formalize small self-employed workers, in labor practice, this norm opens the door to potential fraud against the law (Art. 14 LCT). It is foreseeable that many companies will attempt to conceal genuine employment relationships by disguising the worker as an "independent collaborator." It will be a primary task for case law and labor courts to rigorously analyze the primacy of reality: if there is technical, economic, and legal subordination (compliance with schedules, use of the principal's tools, fixed and periodic payment), the relationship will be considered labor, regardless of the legal guise of "collaborators" attempted to be given.

Modification to the Presumption of an Employment Relationship (Art. 23 LCT)

Article 23 of the LCT historically established a presumption in favor of the worker: "the fact of rendering services creates a presumption of the existence of an employment contract," unless proven otherwise. This rule has been the main protective shield against "monotributo" (freelance tax status) fraud.

Law 27,742 introduces a fundamental exception to this rule: the presumption of an employment relationship will not apply when it concerns the contracting of works, professional services, or trades where the corresponding receipts or invoices are issued for such modalities, according to current regulations. In simple terms, the mere act of issuing invoices ("being a monotributista") within the framework of a contracted service provision reverses the burden of proof. Now, the burden falls on the worker to reliably demonstrate that the invoices concealed a fraudulent employment relationship, procedurally hindering claims for recognition of labor rights.

Discriminatory Dismissal: A New Legal Tariff

Finally, the law addresses the contentious issue of discriminatory dismissal (based on race, religion, politics, gender, sexual orientation, union activity, etc.). Historically, applying the Anti-Discrimination Law 23,592, courts used to order the immediate reinstatement of the worker to their position, declaring the dismissal null and void.

With the labor reform, a tariffed regime for discriminatory dismissal is created. If discrimination is reliably proven in court, the judge will grant the worker the ordinary seniority severance plus an aggravating factor that will range between 50% and 100% of said severance, depending on the severity of the act. However, the law expressly establishes that the dismissal will equally produce terminating effects and, under no circumstances, will the reinstatement of the worker to their position proceed. This measure consolidates tariffed severance as the legal system's only response to dismissal, closing off the avenue of nullifying the terminating act.

General Conclusion and Recommendations

Law 27,742 implies a profound transformation of Argentine labor law, tipping the scales toward deregulation, reduction of severance costs, and flexibilization of hiring forms. The elimination of fines for unregistered employment and the extension of the probationary period are the most immediate and drastic modifications for the common salaried worker.

In the face of this new scenario, having specialized legal advice is imperative. Workers must be extremely cautious before accepting "independent collaborator" modalities or signing termination agreements under the new severance fund. At Conti Abogados Laboralistas, we strongly recommend consulting a professional regarding any substantial modification of working conditions, registration irregularities, or dismissal during the probationary period, as the temporal application of this law (its non-retroactivity on pre-existing contracts in many cases) will be a matter of intense discussion in the courts in the coming years.