These are the keys to labor reform

The government is promoting labor reform that speeds up hiring, simplifies compensation and aims to promote formal employment

12/14/2025 – 6:05 p.m

The board promotes a Labor reform which aims, among other things, to accelerate the Work and simplify the calculation of compensation. The project, which is expected to be approved by the Senate later this year, envisages changes to the salary structure, contract types and lengthening of the working day, with the aim of promoting formal employment and reducing court disputes.

Compensation: payment in installments and simplified calculation

One of the most notable changes in the reform concerns the calculation of severance pay. The project finds that concepts such as Bonus, vacation or exceptional prizes.

For variable positions, an average salary is used instead of the highest salary received. Aside from that, The maximum limits will be abolished and compensation can be paid in installments. Striving for greater predictability for employers and employees.

To ensure predictability in labor disputes, the law proposes to update compensation accordingly Consumer Price Index (CPI) plus 3% annually. The charging of interest on interest, known as anatozism, which previously depended on the interpretation of the respective judge, is also prohibited.

Job Aid Fund: a new financial instrument

The project replaces the failed Labor Termination Fund with the Working Aid Fund (FAL), financed with 3% of the employer contribution, which is no longer covered by the state.

The management of the fund is in the hands of National Securities Commissionmonitored by the Ministries of Economy and Human Capital. Critical sectors compare the initiative to the old AFJP and point out possible risks in management and profitability.

Formalization and simplified contract processing

The reform aims to make it easier to hire workers and reduce informal employment through various measures:

• Flexibility and deregulation: Regulations that are considered outdated, such as the Teleworking Act, will be abolished.
• Extended test phase: in certain industries up to six months, without any obligation to pay compensation.
• Tax incentives: Companies that employ unemployed or mono-tributary workers can receive reductions in employer contributions for four years.
• Uniform Labor Register (ARCA): a centralized digital system to register workers and simplify formalization.
• Company consent: Priority over industry agreements.
• Flexibility in working hours and salaries: Compensation for productivity, overtime and non-cash benefits.
• Freedom of trade unions: Employers are free to hire employees, even if the union nominates candidates.

Expected effects

Labor reform aims to do this They promote formal employment, reduce legal disputes and offer more flexibility to employers and employees. However, it triggers a debate about the protection of workers’ rights in the face of greater flexibility and the payment of compensation in installments.. Its approval will be a before and after on the Argentine labor market.