Keys to the Argentine Labor Reform: everything that changes in the world of work starting in 2026

The labor reform enacted by the Government this week marks a turning point in Argentine labor legislation. With the publication of Decree 137/2026 and the enactment of Law 27.802, signed by President Javier Milei, Chief of Staff Manuel Adorni, and Minister Sandra Pettovello, one of the most ambitious changes by the ruling party begins to unfold. This labor reform represents a profound transformation affecting everything from the structure of daily working hours to hiring methods, including severance pay, vacations, and worker registration.

Flexible Work Hours: from 8 to 12 hours by agreement

The standard workday remains at eight hours per day or 48 hours per week, but the reform introduces radical flexibility. Parties can negotiate an uneven distribution of weekly hours, provided no single day exceeds nine hours.

The most disruptive change is the possibility of agreeing on up to 12-hour workdays through written agreement, with a regime for compensating overtime hours. Daily rest periods of at least 12 hours and the mandatory 35 hours of days off per week are maintained. To regulate these extended hours, hour banks were created, allowing days with higher workloads to be compensated with lighter days, without exceeding legal weekly limits.

In terms of professional training, workers have the right to access training and equal treatment. For domestic workers, the probation period is set at six months for indefinite contracts. Part-time workers can voluntarily perform additional hours, but overtime hours are excluded.

Vacations: less rigidity, more negotiation

The reform flexibilizes vacation policies by introducing the concept of mutual agreement between worker and employer. While maintaining the obligation to grant rest periods at least once every three years during the summer season (October to April), it allows for vacations outside this window through direct negotiation.

The most notable change is that vacations no longer need to be taken in full and consecutive periods. Workers and employers can agree to split vacations into segments of at least seven days each, providing greater flexibility and better adapting to operational needs and personal preferences.

Severance pay: new calculation basis and the Labor Assistance Fund

A key pillar of this reform is redefining the severance pay system. The calculation is now based on the best monthly, normal, and habitual remuneration of the last year, excluding bonuses, vacations, and non-monthly awards.

Caps have been established: severance pay cannot exceed three times the applicable average salary, with a minimum of 67% of the calculated remuneration without caps. Importantly, this severance pay is the only applicable remedy, excluding claims for damages under the Civil Code, significantly reducing potential litigation.

To fund these severance payments, the Labor Assistance Fund (FAL) was created, a separate and unseizable patrimony managed by entities authorized by the National Securities Commission (CNV). Mandatory monthly contributions vary by company size:

• Large companies: 1% of gross remuneration, potentially increasing to 1.5%
• SMEs: 2.5% of gross remuneration, up to a maximum of 3%

The FAL system will come into effect on June 1, 2026, but will only respond for severance payments once the employer has made at least six monthly contributions.

Dynamic salaries and new remuneration structures

This reform incorporates a concept the Government states already existed in practice: dynamic salaries. It allows structuring compensation with variable components based on merit, productivity, or work organization, negotiable through collective agreements or individual arrangements. These variable components do not generate rights by custom or ultra-activity.

This means that on top of mandatory wages set by agreement, transitory bonuses—fixed or variable—can be added, adapting income based on performance factors without rigid structures. A crucial clarification: tips are not considered remunerative under this reform, regardless of customs, and do not impact severance, bonuses, or SAC.

Finally, wages must be paid exclusively into bank accounts or official savings institutions (Salary Account), prohibiting virtual wallets.

Simplified registration: centralized in ARCA

The reform centralizes labor registration with the Revenue and Customs Agency (ARCA), eliminating multiple previous requirements and penalties for non-compliance. Registering with ARCA is now sufficient for all purposes, and additional requirements from other authorities are prohibited.

Digitalizing labor books is permitted with full legal validity, although original documents must be kept for 10 years. An employment contract is presumed when services are provided under dependency, but this presumption does not apply if invoices are issued for professional or craft services according to regulations.

Formalization: incentives and debt forgiveness

The reform establishes two regimes to promote formal employment. The Labor Formalization Incentive Regime (RIFL) reduces employer contributions for new hires, with rates as low as 2% of total contributions to the Argentine Integrated Pension System (SIPA) and related funds, plus 3% to the Social Security subsystem. These benefits apply during the first 48 months of employment.

The Registered Employment Promotion (PER) offers forgiveness of up to 70% of debts for contributions and sanctions for employers who regularize personnel within 180 days. Participants in the PER also benefit from the termination of criminal proceedings, forgiveness of infractions, fines, sanctions, and removal from the Employer Registry with Labor Sanctions (REPSAL).

Essential services: restrictions on strikes and protests

The reform imposes strict limits on the right to strike in critical sectors. Minimum coverage levels are established:

• Essential services (75% minimum): health, water, gas, electricity, telecommunications, commercial aviation, education, and private security
• Transcendental activities (50% minimum): transportation, customs, food industry, banking, hospitality, steel, and foreign trade

Any strike action in these sectors must be communicated five days in advance. Security forces are required to ensure 100% normal service. A guarantees commission can classify new activities as essential based on risk to life, health, or safety.

Changes to the labor judicial system

The reform introduces significant procedural changes to expedite litigation and protect business predictability. Interest for late payments will be updated with the Consumer Price Index plus 3% annually. Payment of judgments can be made in installments: up to six for large companies, up to twelve for SMEs.

Legal costs cannot exceed 25% of the judgment or settlement amount; if attorney fees surpass this limit, the judge must prorate them. The statute of limitations for first-instance cases is reduced to six months, and three months for appeals. Transfer of jurisdiction is approved: the National Labor Court will move to the jurisdiction of the Autonomous City of Buenos Aires.

Medical and psychological expert fees will no longer be linked to the case amount or disability percentage but will depend on the quality and scope of the technical work, aiming to reduce litigation and ensure predictability.

This labor reform represents a paradigm shift in how employment relationships are structured in Argentina, moving from rigid regulations toward greater negotiated flexibility between employers and workers, with new financing mechanisms and administrative simplifications that the Government hopes will accelerate formalization and growth of registered employment.