Because of Argentina’s complicated labor laws, it’s useful to keep standard compensation and benefits in mind when negotiating a contract. You can then stay compliant and be in a great position to offer additional benefits to attract top talent. If you don’t have the time or resources to learn all the intricacies of Argentine law or administer benefits, Argentina benefit outsourcing can help keep your company growing and free up your time.
Argentina Compensation Laws
Argentina’s compensation laws dictate a minimum wage of 51,600 Argentine pesos (ARS) per month (as of August 2022), which a company pays to employees 13 times a year. The 13th payment is a bonus known as Aguinaldo. Local law states all workers must receive this bonus — which is payable in two semiannual installments — each year.
The economic situation in the country is quite unstable, with monthly inflation rates of 5 to 10%, which is why it’s a good practice for a company to update their employee’s salaries quarterly according to the inflation of the period. Although this is something many companies do, it’s not stated nor regulated by local law, which makes it a “suggestion” or a “discretional practice”.
Guaranteed Benefits in Argentina
Every Argentine employee must receive certain benefits, including paid time off, sick leave, and maternity and paternity leave. The country also has at least 15 public holidays that all employees to receive a day off.
Employees who have worked for more than six months receive two weeks of annual vacation leave. This amount increases according to the seniority of the employee in the company, for example, once he turns 5 years seniority, he/she shall have 21 days of annual vacation leave. Annual leave payment is often higher than normal business days due to specific requirements that local law imposes over the calculation that should be considered. This is locally known as “Plus Vacacional”.
Employees’ mandatory health insurance is arranged by labor unions and covered by private companies. This health insurance maternity and child plans, dental plan, medication, medical appointments, exams, surgeries, and more. Employers contribute 6% to this plan, and employees give 3% on top of their base salary. Every employee has the right to provide his same medical insurance to his primary family members (husband/wife and children or people on which the Employee is legally in charge of).
Argentina Benefits Management
Opening a subsidiary in Argentina means arranging benefit packages for all your employees and dispersing them according to Argentina compensation laws. Some Argentina benefit management tips to keep in mind include:
Make sure employees meet statutory working hour requirements
Pay employees on time through bank-automated payroll deposits
Give paid leave at the appropriate times mandated by law
Restrictions for Benefits and Compensation
Making sure you are aware of and following all restrictions is another aspect of Argentina benefit management. For example, employees cannot work more than 30 hours of overtime per month or more than 200 hours per week. If an employee doesn’t take a vacation, the vacation days cannot be compensated unless that employee is terminated.
Argentina Competitive Benefits Planning
Expanding your business to another country can bring a wealth of new opportunities. When you take the leap, benefits planning will be one of many processes involved in your expansion.
Argentina Employee Benefits Plans
As an employer, your benefits plan is a valuable tool in your success. While specific benefits are essential for compliance, supplemental provisions also prove how much you value your employees. When your team members feel supported at your company, they’re more likely to contribute their best efforts and continue to work with you.
Possible supplemental provisions and perks include:
- Retirement insurance
- Flexible working hours
- Extended vacation annual leave
- Performance or gratification annual bonuses
- Commuting stipends
- Education opportunities
As an employer, you need to remain compliant with the country’s benefits requirements. Failing to offer these provisions can lead to government penalties. In Argentina, required benefits include:
- Social security contributions
- Health insurance
- Paid annual leave
- Days off on National holidays
There are at least 15 national holidays each year, and employees are entitled to a day off for each one. Annual leave allowances increase based on how long a worker serves your company. Employees start with 14 days of leave and can work their way up to 35 days after 20 years of service.
Designing Argentinian Employee Benefits Plans
Planning your benefits packages takes careful consideration. The main goal of your planning stage is finding a balance between your employees’ needs and your company’s resources. While you want to support your workers, you need to work within your budget to keep your enterprise up and running. You can achieve this balance by working through these basic steps.
1. Establish Company Goals
Evaluate your resources and create goals. Look through your company’s financial records and track expenses to understand your income and how much funding you can allocate to benefits.
It’s also helpful to consider your company goals and how benefits can help you achieve them. For example, if you want to improve retention, you might opt for a smaller team with more supplemental benefits.
2. Understand Employee Needs and Expectations
Once you understand what your business can handle, you’ll need to learn about the people who will receive your benefits. You can learn about employees’ needs by surveying workers in the area. You can also create personas based on the age groups and lifestyles of the people you’ll hire. Do they need child care? Are they looking for tuition reimbursement?
Researching companies similar to yours can help you create a competitive plan. When you learn what other businesses offer, you can meet employee expectations and stand out in the labor market.
3. Find the Balance and Create Your Plan
With all the information you’ve gathered, you can identify the balance between your capabilities and workers’ needs. Start by allocating funds to all the required benefits. You can dedicate your remaining budget to supplemental provisions and perks that stood out most during your research.
Average Cost of Benefits
The cost of benefits will vary between companies based on how much they provide to their employees. Many factors can affect the benefits an organization provides, including company size, location, and industry. During the initial step in your designing process, you should evaluate your income and determine the best budget for your expenses and earnings.
How to Calculate Benefits
Calculations will depend on the benefits you provide, but Argentinian labor laws offer some guidance for calculating required provisions. For example, required health insurance includes a 6 percent contribution from employers and a 3 percent portion from employees.
How Are Employee Benefits Taxed in Argentina?
The country imposes income tax on all forms of employment income. However, individuals are allowed to make deductions for certain benefits, including:
- Pension and social security contributions
- Life insurance
- Medical care contributions
- Other benefits like holiday bonuses, leave pay, allowances, and stipends should factor into taxable income.
Employee Health Benefits
Employers are required to provide health insurance to all employees through the public health care system in Argentina. This coverage supports many types of care, but private insurance is available to fill in the gaps. While employers do not have to provide supplemental insurance, many choose to do so.
At Globalization Partners, we help you manage compliance as you create your benefits plan and grow your business.
Get in touch today.