President Milei Submits Labor Reform Project to Argentine Congress for Debate

Milei Pushes Forward with Labor Modernization Agenda

President Javier Milei has formally submitted a significant labor reform project to the Argentine Congress, marking a critical step in his administration's efforts to overhaul the country's employment legislation. The initiative, described as a 'Labour Modernisation Bill,' is slated for debate during extraordinary legislative sessions convened from December 10 to December 30, 2025. This move follows the President's return to Argentina and underscores his commitment to introducing substantial changes to the nation's labor framework.

Background and Evolution of the Reforms

This latest legislative push comes after earlier attempts by the Milei administration to enact labor reforms through a Decree of Necessity and Urgency (DNU) 70/2023, issued shortly after his inauguration in December 2023. That DNU, which contained over 300 articles, aimed at broad economic deregulation, including significant modifications to labor laws. However, key aspects of the labor reforms within the DNU faced strong opposition from trade unions, notably the General Confederation of Labor (CGT), and were subsequently suspended by Argentine courts in early 2024 due to legal challenges regarding their constitutionality and the urgency claimed for bypassing Congress.

Learning from these judicial setbacks, the government has now opted for the traditional legislative route, leveraging its strengthened position in Congress following the October 2025 midterm elections. The current project is part of a broader legislative agenda that includes fiscal, criminal, and environmental reforms, with the 2026 Budget bill also high on the priority list for the special sessions.

Key Provisions of the Proposed Labor Reforms

The proposed 'Labour Modernisation Bill' seeks to introduce several key changes, aiming to foster job creation and reduce labor costs for businesses. Among the significant provisions are:

• Extended Trial Periods: The reform proposes extending trial periods for employment contracts, potentially to six months, and up to eight months for employers with 100 or fewer employees, or even one year for those with five or fewer employees.
• Changes to Severance Pay: The project aims to modify the calculation of statutory severance, potentially introducing a system of layoff funds financed by monthly employer contributions, replacing the traditional lump-sum payment.
• Elimination of Penalties: Penalties for employers who fail to register employees or misrepresent salaries are targeted for elimination, a measure intended to encourage the formalization of informal workers.
• Increased Working Hour Flexibility: Proposals include allowing for extensions of the working day up to 12 hours, with extra hours potentially compensated as time off rather than overtime pay.
• Restrictions on Strike Rights: The reforms seek to define 'essential services' more broadly and establish minimum service requirements (e.g., 75% for essential services, 50% for transcendental importance) during strikes, limiting the impact of industrial action.
• Union Funding Mechanisms: Changes are proposed to union funding, such as releasing employers from withholding union dues without explicit employee consent, potentially impacting unions' financial structures.
• Simplified Employee Registration: The bill includes measures to simplify the registration process for new employees, particularly for small businesses.

Congressional Debate and Outlook

The submission of the labor reform project initiates what is expected to be a contentious debate in Congress. While President Milei's La Libertad Avanza party has significantly strengthened its representation in both the Chamber of Deputies and the Senate after the midterm elections, it still lacks an absolute majority, necessitating alliances to secure approval. The reforms are anticipated to face stiff resistance from powerful trade unions and opposition parties, who argue that the changes could erode worker protections.

The government, however, maintains that these reforms are essential to 'modernize a contractual framework over 70 years old,' stimulate economic growth, attract investment, and address Argentina's high rates of informal employment. The outcome of the congressional debate during these special sessions will be a crucial indicator of the Milei administration's ability to implement its ambitious economic agenda.