Executive Order 633/2018: “Non-wage” items no longer applicable in salary agreements. Reinstatement of additional employer’s payments established in special labor regimes

Agreements including “non-wage” items will no longer be confirmed by the Ministry of Labor, whether on an express or implied basis, and the public sector’s compensation structures will be analyzed for the purpose of adjusting them to this new resolution. Furthermore, as from September 2018, additional employer’s contributions set forth in the rules governing special labor regimes will be restated.

On July 10, 2018, Executive Order 633/2018 was published in the Official Gazette, ruling that the Ministry of Labor will not approve, confirm or record Collective Bargaining Agreements and/or agreements including wage amounts or items that the parties have agreed to consider of a non-wage nature.

The non-wage items below are exempt as set forth in:

• Section 103 bis of Employment Contract Law 20,744 (“ECL”): Reimbursement of lunch services; reimbursement of medicines, medical and dental expenses of employees and their family; provision of clothing, apparel and tools for employees to use exclusively for fulfilling their work duties; reimbursement of daycare and/or nursery expenses; provision of school supplies; training courses or seminars; funeral expenses of the employees’ relatives under their care.   
• Section 106 of the ECL: Reimbursement of travel expenses evidenced in their corresponding receipts.
• Section 223 bis of the ECL and Sections 98 to 105 of the National Employment Law No. 24,013: Allowances granted in compensation for cancelling work benefits on grounds of lack or reduction of work not attributable to the employer or due to force majeure, which have been individually or collectively agreed and confirmed by the Ministry of Labor under the Crisis Prevention Procedure (Procedimiento Preventivo de Crisis) (allowances are only affected by payments to the Argentine Healthcare System and the Argentine Health Insurance System).

The decision made is consistent with the comprehensive criterion established in Section 1 of Treaty No. 95 of the International Labor Organization (ratified by Argentina) and Section 103 of the ECL, as well as Sections 6 and 7 of the Retirement and Pensions Law to the extent that it sets forth the “wage” items subject to employee’s contributions and employer’s payments made to the Health Insurance System, as well as the “non-wage” items.

Such comprehensive criterion has been ratified by the Argentine Supreme Court in different decisions under which it declared the unconstitutionality of the “no-wage” nature of money-based benefits attributed through a law (in re “Pérez, Aníbal c/ Disco S.A.” dated September 1, 2009), a decree (in re “González, Martín c/ Polimat S.A. y otro” dated May 19, 2010) and a collective bargaining agreement confirmed by the Argentine Ministry of Labor (in re “Díaz, Paulo c/ Cervecería y Maltería Quilmes S.A.” dated June 4, 2013).

The Collective Bargaining Agreement Law sets forth that the Ministry of Labor must confirm the agreement, and if it fails to do so within a term of 30 days, the agreement will be impliedly confirmed. The impossibility to discuss or confirm agreements under which certain “wage” items are deemed of a “non-wage” nature, established by Decree 633/2018, is also applicable to administrative claims requesting an implied confirmation.

The Ministry of Treasury, the Ministry of Employment and the Ministry of Modernization, with the intervention of the Advisory Technical Committee of the Public Sector’s Salary Policy, will analyze the compensation structures of the national public sector to adjust them to the provisions of Executive Order 633/2018.

In addition, Executive Order 633/2018 amends the percentages of additional employers’ contributions made to the Social Security System of those employees comprised within the “special regimes”.

Insalubrious activities or those from which an early aging arises are subject to different special labor regimes, establishing, for example, early retirement and “non-wage” items. The special regime’s provisions provide for certain additional percentages of the employee’s contributions and the employer’s payments. Several laws and executive orders has removed the additional employee’s contributions and amended the percentage of the additional employer’s payments.

Executive Order 633/2018 states that as from September 2018 the additional employer’s payment percentages set forth in the original rules governing each special regime will be restated.

The Executive Order 633/2018 empowers the Argentine Tax Office and the Social Security Office to issue the necessary supplementary and explanatory rules on this matter.