Marval, O Farrell & Mairal

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1 Lex Mundi Labor and Employment Desk Book Marval, O Farrell & Mairal CONTACT INFORMATION: Javier E Patron Mail: jep@marval.com.ar Tel: (54) Fax : (54) Alem 928, piso 7 Buenos Aires, Argentina Argentina 1. Do you have a plant closing law in your jurisdiction and if so, what does it require? As regards to mass labor terminations, Argentine law, pursuant to certain emergency regulations, provides that whenever terminations by dismissal without cause or suspensions affect a certain number of employees, a Crisis Prevention Procedure ( CPP ) before the Labor, Employment and Social Security Ministry must be followed, at the request of either the employer or the trade union. The CPP is allegedly devised at trying that the employer and the trade union reach an agreement whereby the employer will be able to take any necessary measures to overcome the crisis, while minimizing the effects on employees as much as possible. During the negotiation, neither the employer nor the union may take any measures. Any breach will enable t0he workers to maintain their labor relationship and entitle them to collect unpaid salaries. Currently, the CPP must be followed even in the absence of any crisis, but provided dismissals are in excess of certain percentages, including cases of closing of companies. 2. Are there special rules on releases/waivers in your jurisdiction? According to section 12 of the Labor Contract Law ( LCL ), all agreements between the parties suppressing or reducing the rights foreseen in the LCL, the professional statutes or the collective agreements shall be considered null and void. Therefore, waivers of rights or other releases, either during the labor relationship or even upon termination, are in principle invalid, unless granted before the labor administrative authority or a court

2 3. What are the equal employment opportunity/non-discrimination categories in your jurisdiction? Alike Title VII, Argentine law protects employees from discrimination. In the first place, the Argentine Constitution provides in sections 14 bis and 16 that all individuals must receive a similar treatment, as well as similar remuneration for a similar job performed. Similar provisions exist under Argentine Labor Law, according to which the employer must supply similar treatment to all employees under similar circumstances with each other. Under Argentine Labor Law, provisions regarding discrimination can be found concerning the following areas: sex, race, nationality, religion, politics, trade unions, age, marital status, maternity, pregnancy, marriage and illnesses. Nevertheless, legal authors consider that the enumeration of law is enunciate and not restrictive and that the law contemplates any kind of discrimination that nullifies or alters the equality of opportunities, or provides an arbitrary treatment to a worker. Additionally, we can find provisions regarding discrimination in the International Treaties and other discrimination laws, applicable to the labor relationships. Although the concept of discriminatory dismissal existed but has been recently abolished, some authors consider that a discriminatory dismissal can still be punished according to a so called Anti-Discriminatory Law, which in principle applies to civil matters. 4. What are the minimum wage and overtime rules (and exemptions) in your jurisdiction? In Argentina the minimum wage is regulated by Decree No. 750/2005. Wages cannot be less than pesos 630 (about US$ 210) per month, and pesos $3.15 (about US$ 1.05) per hour. In addition, as regards to unionized employees, collective bargaining agreements stipulate minimum salaries per category or work position, which must be complied with as well. The legal workday in Argentina is of 8 hours per day or 48 hours per week. Hours of work in excess of the basic working day are payable at overtime rates equivalent to a 50% (time and a half) surcharge on the normal wage. However, after 13:00 hours on Saturdays, Sundays and holidays, the surcharge is 100% (double time). According to Decree No. 2882/1979, and Resolution No. 484/2000, overtime cannot exceed 3 hours per day, 30 per month and 200 per year. Night shift workers do not receive overtime pay for night work and may not work more than 7 hours per day. Part time workers cannot work more than two thirds of the normal working schedule and are not able to work overtime hours. 5. Is there employment-at-will, or some other rule, in your jurisdiction? What are the exceptions? Under Argentine law there is no at will employment contracts. Although the rule in Argentina is that in principle all employment contracts are executed for an undetermined period of time, if the employer decides to terminate the relationship without just cause, severance payment must be paid. On the other hand, if the employee decides to leave his/her employment, no compensation is payable to the employer and no cause is required. Regardless of the fact that the employment contract for an undetermined period of time is the rule, Argentine labor law also contemplates fixed term and temporary employment agreements. However, it is expressly provided in law that these labor modalities may only be used to cover extraordinary circumstances and for limited (certain or uncertain) periods of time. Abusive use of these modalities may result in their considering as undetermined term labor agreements

3 6. What are the legal obligations upon terminating an employee in your jurisdiction? An employer can terminate a labor relationship with or without just cause. However, dismissals with cause should be restrictively interpreted and analyzed on a case-by-case basis since the labor courts tend to be generally protective of employees. If there is good cause for termination, the employer will only have to pay to the employee outstanding pay, vacation entitlement and any proportional entitlement to the mandatory semiannual bonus. In the case of a dismissal without cause, the employer must also include payment for any prior notice, if prior notice was not granted, and a severance depending upon the employee s best monthly, normal and regular salary and seniority ( antigüedad ) with the company. This severance is limited to a certain cap, which, nevertheless, has recently been held unconstitutional under certain circumstances in specific cases. This amount will be increased if the employee also occupies a public office, is a union representative, is just about to marry or has just been married or, in the case of female employees, is pregnant. These severance payments will also be increased if the labor contract is not properly registered. Finally, according to certain emergency regulations, the severance payment may be increased in 50% until unemployment rate is lower than 10% or otherwise decided by the Executive Branch. Finally, the worker may consider him/herself constructively dismissed due to actions or adverse changes by the employer. If the employee can prove the actual existence of a cause for such dismissal, he/she would be entitled to the same severance as that indicated for dismissals without cause. 7. Are there any family and/or medical leave laws in your jurisdiction, and if so, what do they require? Yes, under the LCL and applicable collective bargaining agreements, employees are authorized to be absent from work without adverse effect on their remunerations, for family, medical, educational and other personal reasons. The number of vacation days to which an employee is entitled to increases in accordance with the period of employment, and ranges from 14 to 35 calendar days, although vacation days may be granted in excess by the provisions of a collective bargaining or the employer s will. Section 177 of the LCL states that, it is forbidden for pregnant employees to work 45 days before and after birth. If the employee decides to work past the first 45 days, then the proportional days are added to the last 45 days. During this period the employee receives her salary and keeps her position reserved. Workers are authorized to be absent in the following cases as well: marriage, birth of son or daughter, decease of significant other, such as husband, wife, parents, sons and brothers or sisters, and school or university exams. Collective bargaining agreements may state other leaves of absence or periods, provided they are more favorable than the LCL. Medical absences are considered on an illness-by-illness or accident-by-accident case (i.e. terms are not collectively considered from one illness or accident to another). The maximum authorized paid periods, per illness or accident, range from 3 to 12 months. 8. Please list any miscellaneous, interesting or oddball laws in your jurisdiction, and state under what circumstances they pertain. a) According to Section 3 of the LCL, any employment contract meant to be performed in the territory of the Republic of Argentina shall be governed by the LCL, regardless of its place of execution. This is called principle of territoriality and applies to labor, social security and tax issues

4 b) According to certain court precedents: i) Performance or otherwise discretionary bonuses shall be considered remunerative once granted on a regular basis; ii) Although there are no specific rules in such regards, financial benefits obtained under stock option or purchase plans have been considered part of the employee s remuneration by courts and tax authorities; iii) Company cars and cellular phones paid by the employer may be considered remuneration provided they are used for personal purposes by the employee. c) Argentine jurisdiction. Section 19 of Law No. 18,345 (Labor Justice Organization and Procedure) provides that the competence of Argentine labor courts, including territorial competence, may not be extended or otherwise waived by the parties. d) According to applicable law, employees are entitled to receive a thirteenth salary, known as semi-annual mandatory bonus, which equals the monthly salary and is paid in two installments, half in June and half in December. Temporary Assignment for Injured Workers Labor accidents. According to the Working Risks Law (Ley sobre Riesgos del Trabajo- LRT ), a system was established to prevent working risks and to compensate injured workers from workplace losses. Pursuant to the LRT generally all workers employed in the private sector (as well as certain other employees) are protected. Employers with workers included within the scope of the LRT must self-insure against the obligations imposed by the LRT or they must be insured by a Working Risk Insurer (Aseguradora de Riesgos del Trabajo- ART ). The ART must compensate the injured worker as mandated by the LRT, as well as provide medical and pharmaceutical attention, prosthesis and orthopedics, rehabilitation, occupational re-classification; and funeral service benefits. However, according to a recent court decision of the Argentine Supreme court, injured employees, or their heirs in the event of death, could also demand civil damages compensation directly from the employer. Although the Supreme Court decision was binding only for the specific case, it could be applied by lower courts. Meal or Rest Break There are two types of breaks during a day, one is given for lunch; and the other is given in between days. As an exception, some Collective Bargain Agreement regulated a paid lunch breaks. Breast feeding and Expressing Breast Milk Argentine law contemplates special considerations for childcare. Section 179 of the LCL states that for up to a year after the birth of a child, the mother is entitled to a half-hour break taken twice daily to breast-feed her child. In practice, in this situation either employees come to work an hour later or leave an hour earlier. Furthermore, collective bargaining agreements often contain clauses making it obligatory for the employer to establish a day-care centre for employee s children. Weekly Payment of Wages According to section 126 of the LCL, wages can be paid every week, every two weeks or once a month. The most used type is once a month, in which case they must be paid within the first four days of the following month. Criminal History in Job Applications 4-4 -

5 Regarding the protection of personal data, Section 7 of law , states that it is necessary to obtain the express and informed consent of the person, which must be granted in writing. Notice of Electronic Surveillance Although it has not been regulated up to date, legal experts have stated that the limits to employers control are dignity and privacy of the employees, and therefore electronic surveillance is forbidden if these limits are breached. 9. Does your jurisdiction have a law requiring employers to give employees access to, or a copy of, their personnel records? There is no express legal provision in this regard. However, if the personnel record contains general personal information of the employee that could affect his/her remuneration or working conditions, the employer could be obliged to show it to the employee upon request. 10. Does your jurisdiction outlaw or restrict drug tests, alcohol tests, genetic tests or any other kind of testing? No, Argentine labor law does not provide for drug tests, alcohol tests, genetic tests or any kind of similar testing. However, although no prohibition exists as well, if the employee refuses to submit to the performance of the tests, he/she could not be compelled to do so. Furthermore, if these kinds of tests are performed at the exclusive option of the employer, there may be some risks of being considered a discriminatory conduct. 11. Does your jurisdiction have any special rules on the payment of sales commissions? No, in Argentina there are no limitations or special requirements as regards payment of commissions, including sales commissions, provided compliance with the minimum salaries set forth under applicable law or collective bargaining agreements is not adversely affected by such payment scheme. 12. What are the basic rules on enforcing non-competes and related agreements in your jurisdiction? As a basic rule, an employee has a duty of loyalty towards the employer and is barred from engaging in competitive activities during the period of his employment. Key employees are normally required by their contracts to work exclusively and upon a full time basis for their employers. In Argentina non-compete clauses covering post-employment periods are of a doubtful enforceability, although the employer would be in a better enforceability position if a consideration (financial compensation) is agreed upon by the parties and provided it is limited in time and space. Non-compete clauses executed in countries other than Argentina are in principle unenforceable in Argentina, because they are said to contradict the constitutional right to work