The final passage of President Javier Milei’s Labour Modernisation bill is on the horizon. In the midst of legislative discussions across both chambers of Congress, the government has put forth arguments advocating for the necessity to diminish labour litigation and put an end to what is referred to as the labour “trial industry.” However, several labour attorneys caution that it might lead to the opposite outcome. Lower legal costs, reduced severance, modified trial periods, and easier conditions for firing workers are among the primary goals that La Libertad Avanza aims to achieve with its bill currently under debate in Congress. This initiative emerges in a context marked by significant labour conflict and a decline in registered employment. One of the bill’s central changes pertains to the expenses associated with unjustified dismissals. Lucas Battiston, a labour lawyer stated, “the formula for firing without due cause stays the same, one salary for every year worked,” but the reform introduces key details regarding the calculation of that severance. Battiston elaborated that a revised Article 245 states that “neither vacations nor midyear or Christmas bonuses nor anything not part of monthly pay should be considered.” While this criterion has already been applied by national labour courts, he pointed out that in other jurisdictions, such as Buenos Aires Provinces, those bonuses are included in the calculation. He further cited the so-called “Vizzoti ruling,” which prohibits any reduction of the severance base exceeding 33 percent.
In a more critical perspective, labour lawyer Nahuel Altieri pointed out that dismissals are being made more cost-effective through two additional avenues. “The extras previously forming part of the severance now become social benefits and cease to be computed,” he maintained while warning that part of the compensation will be financed by the new FAL (Fondo de Asistencia Laboral) fund “using money which today goes to pensions,” which could trigger future court disputes. On the subject of trial periods, Battiston stated unequivocally: “They are not expanded by this law.” The lawyer clarified that the duration remains at six months, as outlined by the ‘Ley de Bases,’ with the potential for extension to eight or 12 months solely through collective bargaining in small companies, a scenario that is rarely implemented in practice, he stated. The significant shift, he clarified, is rooted in advance notification. “Until now, if you dismiss somebody during a trial period, you would have to pay those 15 days of advance notice which would not be paid if this law is approved,” he detailed, highlighting the potential reduction in costs associated with early termination. Altieri acknowledged that the trial period had indeed been extended in the past, but cautioned that the interplay of extended durations with reduced costs might influence the employment landscape. “There is plenty of job rotation today and this could increase because it will be cheaper to fire both new workers and those with more seniority,” he noted, while elaborating that the phenomenon also responds to generational changes and challenges in retaining talent.
Battiston, on the other hand, perceived that impact as relative, articulating a critical personal viewpoint concerning the extension of the period. “Six months seems excessive to me; three months used to suffice to evaluate whether a worker was any good or not,” he asserted, emphasising that the purpose of trial periods is solely for assessment. The bill’s judicial chapter brings forth two significant changes. One objective is to standardise the criteria for interest rates, which will now be determined as “inflation plus three percent.” Battiston considers this measure to be sensible as it “avoids the worker losing purchasing power” and addresses the inconsistency of criteria across provinces. Another aspect to consider is the option for companies to pay labour sentences in installments: major companies can do so in up to six payments, while small and medium-sized enterprises have the flexibility to extend this to 12 installments. Battiston viewed this innovation as a potential lifeline for companies facing financial struggles, yet he raised concerns regarding its legal implications. “It is difficult to defend a debtor imposing on the creditor how a sentence should be collected,” he warned.
In a more cautious analysis of the bill, labour attorney Gastón Ferretti asserted that the reform does not actually lead to cheaper dismissals. “The cost of dismissal is neither cheaper nor costlier; what the reform does is to establish clearer rules,” he affirmed, emphasising that the severance régime “continues exactly the same as now,” with one month’s salary per year plus the corresponding prior notice. Ferretti concurred with Battiston, stating that there are no further modifications in the trial periods and dismissing the notion that the reform promotes increased job rotation. “The cost of dismissal remains the same as today,” he asserted, characterising the FAL as “a mechanism of financial foresight which neither replaces nor reduces rights but facilitates compliance with severance obligations.” This perspective stands in stark contrast to Altieri’s concerns regarding its implications for pensions and the potential for legal challenges.