Government removes controversial Article 44 to secure labour reform passage

President Javier Milei’s labour reform bill has been stripped of a controversial article that would have allowed firms to dramatically reduce wages paid to workers on sick leave.

The government’s Labour Modernisation Bill was debated in the Chamber of Deputies Thursday after clearing committee stage the previous day. Negotiations were icy from the start, but after last week’s Senate passage the discussions became more tense.

In last Wednesday’s committee meetings, guest speeches from trade unionists, labour lawyers and business representatives giving their opinions on the reform were heard out until 5pm. Then began the comments of the deputies, who were to later debate the bill on the house floor.

Apart from the notorious Article 44, whose elimination has been confirmed, there were still other points over which there is no full agreement.

Nevertheless, as majority at committee stage was achieved with 44 signatures coming from deputies representing La Libertad Avanza, Unión Cívica Radical, Innovación Federal, Producción y Trabajo and Independencia. Lawmakers from the PRO and MID, along with Sergio Capozzi (Provincias Unidas-Río Negro), also accompanied the bill but in dissidence due to their intention of incorporating the possibility of paying salaries via digital e-wallets.

There were also alternative versions of the labour reform – Unión por la Patria presented one with 29 signatures with others coming from Nicolás Massot of Encuentro Federal and Mónica Frade of Coalición Cívica. The leftist Frente de Izquierda voted for total rejection with the signature of Néstor Pitrola, its spokesman on the Labour Legislation Committee.

 

Article 44

One of the most contested areas was the aforementioned Article 44. Facing resistance, the ruling party decided to pull it from the bill.

Senator Patricia Bullrich, who chairs the La Libertad Avanza caucus in the upper house, midweek recognised the “error” in not differentiating between serious and minor illnesses in the bill, where the payment of sick leave or accidents is reduced.

Bullrich said that “the error lay in the original bill not distinguishing between illnesses” when ruling payment of 50 to 75 percent of the wage earned by each worker in the event of illness or accident beyond the workplace.

The amendment of that article will oblige the bill to return to the Senate since the moderate opposition has not accepted a complementary bill or correction via regulation of the law as sought by the government, said parliamentary sources.

In statements to TN television news channel, Bullrich said: “The error lay in not clarifying severe, degenerative or irreversible illnesses. We missed that and we’ll fix it.”

She pointed out: “That can happen when you have over 200 articles,” adding that the problem arose because the current law “does not distinguish between a sprain and cancer.”

As approved by the Senate, Article 44 established that only half the wage is paid in the event of sick leave or accidents beyond the workplace and three-quarters when responsible for family members.

One of the most questioned points which it failed to contemplate was serious illnesses like cancer, where leave for the different treatments or operations tends to be more extended.

Article 44 of the bill approved by the Senate stipulated that in the event of illness or an accident which is not a consequence of the performance of tasks as defined in their employment contracts, workers only have the right to collect half their pay.

Half pay was to be stipulated “if the impossibility of working is product of voluntary and deliberate activity on the part of the worker implying some risk to health for three months or six if responsible for a family member.”

That sum would have risen to 75 percent if the sick leave is a consequence of an unforeseen mishap like a domestic accident or pneumonía, for example, paying that leave for six months.

Chronic illnesses would not have been considered any different unless persisting beyond two years.

Workers would have had to present certificates “digitally signed” by a doctor and including "diagnosis, treatment and days of rest," although employers maintain the right to send their own doctors and, in case of a discrepancy, request a medical board from recognised institutions.

 

Severance, ‘hours bank’ and leave 

Another point highly questioned by the opposition is the new severance system. The government proposed an optional regime to replace the traditional severance upon dismissal – Instead of paying a lofty sum at the end of the job relationship, the employer would make periodic contributions to a fund during the life of the contract. 

The system aims at reducing the “cost of firing,” according to the government, and is similar to one already functioning at the UOCRA building workers union. Nevertheless, the trade unions point out that the final sum could be less than is currently paid, should the reform pass.

Furthermore, the government presented as a “modernisation” a bank of hours – a scheme of compensation whereby overtime is not paid apart but can be accumulated and compensated with days of rest, apart from permitting longer working days. The presumed aim is greater flexibility and adaptation to peaks of production. 

However, opposition voices warned that there could be imbalances in the negotiation of that extra time, which could place employees at risk of more extended days without being paid in retribution.

Senate Peronist caucus chairman José Mayans (Justicialist-Formosa) expressed that this measure “goes against the workers,” placing in doubt its compatibility with Article 14 bis of the Constitution in his speech on the house floor. The trade unions are also in disagreement with this article.

The chapter on leave was especially discussed. 

 

Right to strike, digital platforms, incentives

Milei’s Labour Modernisation bill also proposes new restrictions on strikes. For services considered essential, guarantees that a minimum of 50-75 percent during a strike are required. 

A communiqué issued by opposition Buenos Aires Province Governor Axel Kicillof and six of his colleagues repudiated this measure, underlining that it cut a constitutional right like the right to strike.

The labour reform seeks to define those working on apps of delivery or transport as autonomous workers with no relationship of direct dependence on their platform. The aim is to provide a legal framework for a sector which currently has none due to its recent emergence.

 “We at Rappi participate in regulatory debates because we believe that clear ground rules permit the development of the platform economy. The bill is positive since it establishes a standard for this activity,” was the opinion of Gabriel Buenos, Rappi’s Corporative Affairs director, at the committee meeting.

Trade unions maintain that this formalises precarious employment by excluding rights such as vacations, midyear bonuses or severance. The IUF (International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations) expressed its disagreement with this point in various communiqués.

Other criticisms have arisen against the changes regarding rules around home office working. 

Simplification of the registration and digitalisation of paperwork is also proposed, both where the labour world and ARCA (ex-AFIP) tax bureau are involved with the aim of reducing bureaucracy and administrative costs. Sanctions for not registering employment are also eliminated or reduced in certain cases. 

Both labour analysts and some opposition parliamentarians have questioned the idea of toning down the sanctions for not registering jobs, pointing it out as an incentive for informal employment instead of fighting it.

Another point under discussion is the creation of RIMI (Régimen de Incentivo a las Medianas Empresas) with tax benefits and reduction of social contributions for the creation of new jobs, fomenting employment and reducing the tax burden on the PyME small and medium-sized firms.

The trade unions warned reducing social contributions could make financing the pension and social security systems even more vulnerable.

 

– TIMES/NA/PERFIL