The Argentine government is advancing a labor reform law aimed at modifying extensive regulations governing the labor market. Critical changes include alterations to the contracts of employment laws and the introduction of a mandatory fund designed to finance severance payments. The reform also proposes the elimination of certain existing statutes while striving to reduce various taxes impacting both businesses and employees.

A significant component of the reform pertains to severance compensation, which will now exclude elements such as bonuses, vacation pay, and other non-regular income components from the calculation, reducing the final compensation amounts under the new scheme. Additionally, the creation of the Labor Assistance Fund (FAL) is intended to ensure funds are available for severance payments, financed through mandatory contributions managed by the National Social Security Administration (ANSES), with differentiated rates for large and small enterprises.

Labor lawsuits will also see changes, as the calculation of severance will be linked to an inflation index, aiming to provide more predictability in compensation. This comprehensive reform is positioned as a necessary measure to enhance labor market flexibility, although it has raised concerns among workers and unions regarding potential adverse effects on employment security and workers' rights, making it a focal point for debate in Congress as the government pursues approval of the legislation.