Argentina passes Milei’s labour reform

Argentina's Congress has passed President Javier Milei's labour reform. On February 27, 2026, the Senate gave final approval to the Ley de Modernización Laboral, the labour modernisation law, by 42 votes to 28, with 2 abstentions. It is one of the most significant pieces of legislation of Milei's presidency and one of the broadest changes to Argentine employment rules in decades.

The bill had already cleared the Senate once earlier in February. The Chamber of Deputies, the lower house, approved it in the early hours of February 20 by 135 votes to 115, but removed article 44, which would have reduced paid sick leave. Because of that change the bill returned to the Senate, which today accepted the Deputies' version. It now goes to the President to be signed and published in the Boletín Oficial, the official gazette.

What the law changes

Argentina's labour rules have long been seen by employers as rigid and costly, and the government argues they push workers into informal jobs with no contract or social security. Senator Patricia Bullrich, who leads the ruling party's bloc, described the old system as one where "nobody hires anybody" and said the reform leaves workers freer. The main changes are:

• Severance. Compensation for dismissal without cause will be calculated only on regular monthly pay, excluding items such as the year end bonus known as the aguinaldo and vacation pay. Labour claims will be updated by inflation plus 3% a year.
• A dismissal fund. A new Fondo de Asistencia Laboral, a labour assistance fund, will help employers meet severance costs. Large companies contribute 1% of payroll and small and medium sized businesses 2.5%, offset by an equivalent cut in employer social security contributions.
• Longer trial periods. The probation period extends to six months for most workers and up to eight months in businesses with five or fewer employees, with registration and contributions required from the first day.
• Flexible hours and holidays. Employers and workers can agree an hours bank, offsetting longer days against shorter ones within legal rest limits. Annual leave can be split into blocks of at least seven days.
• Collective bargaining. Company and regional agreements take priority over national ones, and expired collective agreements no longer stay in force automatically.
• Strikes. Essential services must keep at least 75% of operations running during a strike, and other services classed as important, including education, 50%.
• Formalisation. Fines for unregistered work are dropped, a partial amnesty covers old social security debts, and employers who register new workers get a reduction in contributions. Delivery app workers are classed as independent service providers.

Why it matters

Argentina's main union confederation and opposition parties opposed the reform, arguing it weakens workers' protections. Supporters say it will lower the cost and risk of hiring, encourage investment and bring part of the large informal workforce into the formal economy. Both sides agree it changes the basic economics of employing people in Argentina.

The vote also matters politically. It shows the government can assemble majorities in both chambers for structural reforms, which investors watch as a sign of whether Milei's broader program, from currency liberalisation to deregulation, can be sustained. Legal challenges remain possible, as they have been for other parts of the program.

What it means for business owners

For anyone planning to hire in Argentina, whether through a local subsidiary or a branch of a foreign company, the reform should make staffing more predictable: longer trial periods, a clearer formula for severance and a fund to help cover it. Employers should still take local legal advice, because parts of the law need implementing regulations and existing collective agreements will continue to shape many sectors. When clients need an operating presence in a country we do not structure companies in directly, we work with our local team, and we can advise on holding structures elsewhere that sit above an Argentine operation.

What it means if you are considering Argentina

Argentina created a citizenship by investment route by decree in 2025, but the government has not yet published the investment amount or opened applications. Reforms like this one are part of the backdrop that will shape how attractive that route becomes. A more flexible labour market, alongside a freer currency, makes Argentina a more practical place to live, invest and run a business. We are following the program closely and will publish the details once they are official.

If Argentina is part of your plan, our Argentina citizenship page sets out the route as it stands. For clients who want to do business in the region before then, our company structuring service can set up a company elsewhere, such as a US LLC, with banking that works across borders.

This article is general information, not legal, tax or investment advice.