Senate Greenlights Milei's Labor Overhaul
Argentina's Senate has given its initial approval to President Javier Milei's comprehensive labor reform bill, marking a significant legislative victory for the libertarian leader's economic agenda. The bill passed in the early hours of Thursday, February 12, 2026, following a marathon debate that lasted over 12 hours. The vote concluded with 42 senators in favor and 30 against, sending the legislation to the lower house, the Chamber of Deputies, for final consideration.
President Milei's administration has championed the reform as a 'historic' and 'profound transformation' aimed at modernizing Argentina's labor laws, reducing bureaucracy, stimulating investment, and fostering formal employment. The government argues that the existing labor framework is 'obsolete' and hinders job creation, pointing to the fact that approximately 40% of Argentine workers operate in the informal economy.
Key Provisions of the Reform
The approved bill introduces several substantial changes to Argentina's labor landscape:
- Extended Workdays: The reform authorizes 12-hour workdays, allowing employees to 'voluntarily' agree to work additional hours in exchange for compensatory time off, rather than overtime pay. A minimum 12-hour rest period between shifts is to be maintained.
- Strike Restrictions: It restricts the right to strike by establishing new limits and requiring minimum service levels to be maintained during work stoppages.
- Severance Pay Modifications: The legislation aims to reduce severance payments and simplify the process for companies to dismiss employees. Severance calculations will exclude additional income such as bonuses and paid vacation, and the base for calculation cannot exceed three times the average salary for the position. A new Labor Assistance Fund (FAL) will be created, financed by employer contributions (1% for large companies, 2.5% for small and medium-sized enterprises), to cover dismissal costs.
- Decentralized Negotiations: Companies will be permitted to conduct labor and wage negotiations directly with their workers, potentially overriding broader sector-wide agreements.
- Other Changes: The bill also allows for vacation time to be taken in installments throughout the year and permits salaries to be paid in kind or in foreign currency. Furthermore, it repeals special labor regimes for various professions, including journalists and traveling salespeople, effective January 1, 2027, bringing them under the common Labor Contract Law. The Telework Law (Law 27,555) will also be eliminated.
Concessions and Opposition
To secure the bill's passage, Milei's administration made 28 concessions. These included removing a proposed income tax cut for employers, which would have impacted provincial revenues, and dropping a clause that would have allowed salaries to be paid into virtual wallets. A provision requiring employers to automatically collect union dues was retained.
The reform has been met with strong opposition from Peronist senators, labor unions, and social organizations, who argue it undermines long-standing worker protections. During the Senate debate, significant protests erupted outside Congress in Buenos Aires, leading to clashes between demonstrators and police. Reports indicate the use of tear gas, water cannons, and Molotov cocktails, with at least 31 people arrested and numerous injuries. Opponents, including the General Confederation of Labor (CGT), have labeled the reforms as 'regressive' and a move to transform Argentina into a 'cheap labor hub.'
Next Steps
The bill now proceeds to the Chamber of Deputies for its final debate and vote. President Milei's administration is pushing for its ultimate approval by March 1. The outcome in the lower house will be closely watched as a key indicator of the administration's ability to implement its broader pro-market economic reforms.
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