The final passage of President Javier Milei\u2019s Labour Modernisation bill is imminent. During legislative debate, in both chambers of Congress, the government has argued in favour of the need to reduce labour litigation and end the so-called labour \u201ctrial industry.\u201d However, various labour lawyers warn that it could have the inverse effect.<\/p>\n
Lower legal costs, reduced severance, modified trial periods and easier conditions for firing workers are some of the key objectives that La Libertad Avanza wants to fulfill with its bill being debated in Congress, which comes amid a context of high labour conflict and plunging\u00a0registered employment.<\/p>\n
Here\u2019s a look at some of the key issues in President Milei\u2019s reform package:<\/p>\n
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Cheaper to fire<\/strong><\/p>\n One of the bill\u2019s central changes has to do with the cost of dismissals without justification. As explained by\u00a0Lucas Battiston, a labour lawyer at the offices of the PASBBA legal firm, \u201cthe formula for firing without due cause stays the same, one salary for every year worked,\u201d but the reform introduces key details as to how hat severance is calculated.<\/p>\n Battiston detailed that a reformed Article 245 establishes that \u201cneither vacations nor midyear or Christmas bonuses nor anything not part of monthly pay should be considered.\u201d While this criterion has already been applied by national labour courts, he pointed out that in other jurisdictions, like Buenos Aires Provinces, those bonuses form part of the calculation, further citing the so-called \u201cVizzoti ruling,\u201d which forbids any reduction of the severance base superior to 33 percent.<\/p>\n From a more critical outlook, labour lawyer\u00a0Nahuel Altieri\u00a0considered that dismissals are made cheaper by two additional routes.<\/p>\n \u201cThe extras previously forming part of the severance now become social benefits and cease to be computed,\u201d he maintained while warning that part of the compensation will be financed by the new FAL (Fondo de Asistencia Laboral) fund \u201cusing money which today goes to pensions,\u201d which could trigger future court disputes.<\/p>\n \u00a0<\/p>\n Trial periods: what changes and what not<\/strong><\/p>\n Regarding trial per\u00edods, Battiston was categorical:\u00a0\u201cThey are not expanded by this law.\u201d\u00a0<\/p>\n As the lawyer explained, the span continues to be six months, as established by the \u2018Ley de Bases<\/em>\u2019 with the possibility of extending it to eight or 12 months only via collective bargaining in small companies, something hardly ever applied in practice, he affirmed.<\/p>\n The concrete change, he explained, lies in prior notice.<\/p>\n \u201cUntil 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,\u201d he detailed, reducing the cost of early termination.<\/p>\n Altieri agreed that the trial period had been previously extended but warned that the combination of longer periods with lower costs could impact the dynamics of employment.<\/p>\n \u201cThere 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,\u201d he pointed out, while explaining that the phenomenon also responds to generational changes and difficulties in retaining talent.<\/p>\n Battiston, in contrast, saw that impact as relative, expressing a critical personal opinion regarding the extension of the period.<\/p>\n \u201cSix months seems excessive to me;\u00a0three months used to suffice to evaluate whether a worker was any good or not,\u201d he maintained, remarking that the aim of trial periods is exclusively to evaluate.<\/p>\n \u00a0<\/p>\n Labour trials, interest rates and payment in instalments<\/strong><\/p>\n In its judicial chapter, the bill introduces two heavyweight changes. One is to unify the criteria for interest rates, now to be calculated as \u201cinflation plus three percent.\u201d Battiston finds this measure reasonable because it \u201cavoids the worker losing purchasing power\u201d and eliminates the disparity of criteria between provinces.<\/p>\n The other point is the possibility of paying labour sentences in instalments: up to six for major companies and up to 12 for PyME small and medium-sized companies. Battiston considered that this novelty could relieve companies in financial difficulties but questioned it from a legalistic viewpoint.<\/p>\n \u201cIt is difficult to defend a debtor imposing on the creditor how a sentence should be collected,\u201d\u00a0he warned.<\/p>\n In a more cautious reading of the bill, labour lawyer Gast\u00f3n Ferretti maintained that the reform does not imply, in reality, cheaper dismissals.<\/p>\n \u201cThe cost of dismissal is neither cheaper nor costlier; what the reform does is to establish clearer rules,\u201d he affirmed, underlining that the severance r\u00e9gime \u201ccontinues exactly the same as now,\u201d\u00a0with one month\u2019s salary per year plus the corresponding prior notice.<\/p>\n Ferretti also agreed with Battiston that there are no additional changes in the trial periods, rejecting that the reform drives greater job rotation.<\/p>\n \u201cThe cost of dismissal remains the same as today,\u201d he maintained, defining the FAL as \u201ca mechanism of financial foresight which neither replaces nor reduces rights but facilitates compliance with severance obligations,\u201d an outlook contrasting with Altieri\u2019s warnings about its impact on pensions and possibly being taken to court.<\/p>\n \t\t\t\t\t\t\t\t<\/p>\nrelated news<\/h6>\n<\/p>\n<\/section>\n