Explainer: Key points of Milei’s newly passed labour reform package

President Javier Milei’s controversial labour reform, which aims to loosen Argentina’s current employment framework, is now law following congressional approval.

The so-called ‘Labour Modernisation Law’ is presented by the government as a tool to promote formal employment, ease new hiring and reduce litigation. 

Trade unions, however, describe it as “regressive” and “unconstitutional.” They have protested against it in the streets and are preparing to challenge it in the courts.

Below are some key aspects of the reform promoted by Milei and his La Libertad Avanza party.

Working hours and holidays

Milei’s Labour Modernisation Law amends Employment Contract Law and other regulatory regimes.

It allows the working day to be extended from eight to up to 12 hours without overtime pay, provided the additional hours are compensated with time off agreed through a “bank of hours” system or with compensatory leave.

Annual leave may now be split into periods of seven days, instead of the previous minimum of 14 consecutive days.

Although the bill stipulates that these changes must be agreed by mutual consent, trade unions argue that the imbalance of power between employer and employee will operate to the detriment of workers.

Severance pay

The law reduces severance payments in cases of dismissal and allows employers to finance them through a fund supported by monthly contributions deducted from pension payments.

It also sets out explicit criteria for updating compensation amounts in labour lawsuits – previously left to the discretion of individual judges – and permits employers to pay court-ordered awards in up to 12 instalments.

Milei’s government maintains that the reform will “standardise criteria,” curb labour litigation and provide relief to small and medium-sized enterprises.

Matías Cremonte, president of the Asociación Latinoamericana de Abogados y Abogadas Laboralistas, said that the changes breach “the State’s duty to protect employment” by removing the “deterrent effect” that severance pay has on dismissals without cause.

Opposition figures have warned that the measure could result in the underfunding of pension schemes.

Wages and collective-bargaining agreements

Under the new law, employers may pay wages in foreign currency or partially in kind – that is, through food, accommodation or other goods and services.

It also allows contracts to be renegotiated to adjust pay according to productivity metrics, target fulfilment or performance.

Company-level or regional collective agreements will take precedence over sector-wide agreements.

In addition, certain professional statutes are repealed – including rules governing journalists and the rules around firing them.

The Foro de Periodismo Argentino (FOPEA) press association and unions rejected the repeal, describing it as “a serious setback for institutional quality and the independence of Argentine journalism.”

Right to strike

The law introduces minimum service requirements during strikes of 75 percent in sectors such as telecommunications, commercial aviation and education, with 50 percent across a broad range of industries including pharmaceuticals, steel, food production, construction, mining and e-commerce.

Staff assemblies and delegates’ congresses must also receive authorisation from the employer, and workers will not be paid for the time spent attending them.

For Cremonte, “the restriction of the right to strike is patently contrary to all regulations of the International Labour Organisation (ILO) and the American Convention on Human Rights.”

The lawyer, who advises several local unions, explained that constitutional review in Argentina is “diffuse,” meaning “it may take years before case law consolidates around a determination of unconstitutionality.”