Milei signs labour reform introducing new rules on contracts, strikes and severance

President Javier Milei on Friday formally enacted his controversial Labour Modernisation Law (Law No. 27,802), approved by Congress on February 27, through Decree 137/2026, published in Argentina's Official Gazette.

Milei’s flagship reform introduces far-reaching changes to Argentina’s labour laws, affecting everything from the Labour Contract Law (Law No. 20,744) to collective-bargaining arrangements, minimum service requirements during labour disputes and the creation of new contingency funds.

The promulgation was also signed by Cabinet Chief Manuel Adorni and Human Capital Minister Sandra Pettovello.

Below a final look at the details of the sweeping reform.

Changes to employment contracts

The law modifies the scope of existing Labour Contract Law, explicitly excluding self-employed workers, service providers working through digital platforms and people deprived of their liberty. It also redefines work as “any lawful activity performed for the benefit of a party who has the authority to direct it, in exchange for remuneration,” and limits the presumption of an employment relationship when invoices are issued or bank payments can be verified.

Severance and dismissal

Under the revised Article 245, severance pay for dismissal without cause will amount to one month’s salary for each year of service, calculated on the basis of the employee’s highest normal and regular monthly remuneration during the previous year. The law defines “regular” earnings as those accrued for at least six months during the last calendar year. It also establishes that severance compensation “constitutes the sole applicable remedy in cases of termination without just cause,” preventing parallel civil or extra-contractual claims except in cases involving criminal offences.

Labour Assistance Fund

One of the central pillars of the reform is the creation of Labour Assistance Funds (FAL), separate financial reserves that employers must establish to cover severance obligations. Mandatory monthly contributions will amount to one percent for large companies and 2.5 percent for micro, small and medium-sized enterprises (MiPyMEs), calculated on the basis of wages registered in the Argentine Integrated Pension System (SIPA). The funds will be managed by entities authorised by the National Securities Commission (CNV) and will come into force on June 1, 2026, with the possibility of a six-month extension by the national executive branch. Employers participating in the FAL will receive an equivalent reduction in their employer contributions to the social security system.

Digital platforms

Law 27,802 establishes a specific regulatory framework for providers of ride-hailing and delivery services through digital platforms, defining them as independent workers rather than employees. Platforms must provide personal accident insurance, access to training and digital complaint-handling mechanisms. Service providers will retain freedom over their schedules, connection times and the ability to refuse requests.

Minimum services during labour disputes

The legislation raises the mandatory minimum service threshold during strikes affecting essential services to 75 percent of normal operations, and to 50 percent in activities considered of “critical importance.” The list of essential services is expanded to include telecommunications, waste collection, commercial aviation and private security. Activities deemed of critical importance now include land transport, the food industry across its entire value chain, banking and financial services and export-related activities.

Collective agreements and unions

For collective-bargaining talks, Milei’s law amends Law No. 14,250 to establish that expired agreements will maintain only their normative clauses until a new agreement is signed. Obligational clauses will only be extended by agreement between the parties. The legislation also limits contributions to trade union and employer organisations set out in collective agreements. Payments to business chambers may not exceed 0.5 percent of wages, while contributions to workers’ associations are capped at 2 percent, excluding union membership dues.

Labour formalisation and tax incentives

The law creates the Labour Formalisation Incentive Regime (RIFL), which will remain in force for one year starting from the second month after promulgation. Employers who hire previously undeclared or unemployed workers will pay a reduced employer contribution rate of two percent for the first four years of the new employment relationship. The reform also establishes the Registered Employment Promotion Programme (PER), allowing existing employment relationships to be regularised with debt forgiveness of up to 70 percent of outstanding social security liabilities. On the tax side, the law introduces the Incentive Regime for Medium-Scale Investment (RIMI in its Spanish-language acronym), enabling accelerated depreciation under income tax and early reimbursement of VAT tax credits for productive investments by micro, small and medium-sized companies.

Repeals and judicial transfer

From January 1, 2027, several special labour statutes will be repealed, including those covering travelling sales representatives (Law 14,546), journalists (Law 12,908) and glass industry workers, who will instead fall under the general labour regime. The law also approves the agreement transferring the National Labour Court system to the labour jurisdiction of the City of Buenos Aires, signed between the national government and the Buenos Aires City administration on February 9, 2026. Cases currently under way will continue under the existing legal framework until the transfer process is completed.

– TIMES/NA