Quick overview

---

Just over a month after its approval, the Labor Modernization Law promoted by President Javier Milei suffered a setback after a labor court provisionally suspended 82 of its 218 articles.

The ruling was issued following a legal challenge filed by the Confederación General del Trabajo (CGT), which argued that the reform introduced regressive and permanent changes that undermined key labor protections, including safeguards against dismissal and freedom of association.

The union questioned the constitutionality of several provisions in the legislation, claiming they violated fundamental principles such as labor progressivity, union freedom, and the broader legal framework designed to protect workers.

Labor judge Raúl Ojeda accepted the union’s arguments and granted a precautionary injunction.

The ruling also suspended other measures included in Milei’s reform package, such as provisions aimed at repealing the country’s telework law, reducing corporate liability in subcontracting arrangements, and classifying gig economy workers as “independent service providers.”

Following the decision, Argentina’s Ministry of Human Capital of Argentina announced that the government will appeal the ruling. “All necessary legal avenues will be pursued to guarantee the full implementation of the new law,” the ministry said.

Additional hurdles ahead

The court’s decision represents one of the most significant challenges faced so far by the labor reform proposed by the administration of Javier Milei. The legislation is also expected to face further scrutiny in Congress.

In the Senate of Argentina, lawmakers are seeking to repeal the proposed Labor Assistance Fund (FAL), arguing that it does not constitute a genuine social security system but rather an individual capitalization scheme indirectly financed with public resources.

The fund, included in the reform, was designed as an alternative to the traditional severance payment system. Instead of a single payout upon dismissal, employers would make monthly contributions to a fund that workers could access in the event of job termination.

Under the proposal, large companies would contribute 1% of payroll, while small and medium-sized enterprises would contribute roughly 2.5%.

Despite the setback, local media report that the government—through the Procuración del Tesoro de la Nación—is preparing a legal appeal to overturn the decision. Officials argue that the reform is key to economic recovery and to attracting new investment into the country.