Because of Argentina’s complicated labor laws, it’s useful to keep standard compensation and benefits in mind when negotiating a contract. Employers can then stay compliant and be in an excellent position to offer additional benefits to attract top talent. If you don’t have the time or resources to learn all the intricacies of Argentina’s law or administer benefits, G-P can support as an employer of record (EOR) in Argentina while you keep your company growing.
Argentina compensation laws
Argentina’s compensation laws dictate a minimum wage of ARS 69.500 per month (as of March 2023), which a company pays to employees 13 times a year. The 13th-month payment is a bonus known as Aguinaldo. Local law states all employees must receive this bonus — which is payable in 2 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 employees’ salaries regularly according to the inflation of the period.
Guaranteed benefits in Argentina
Employees in Argentina must receive certain benefits, including paid time off, sick leave, and parental leave. The country also has at least 15 public holidays on which all employees receive a day off.
Employees have 14 days of annual vacation leave. This amount increases according to the seniority of the employee in the company. For example, once they have 5 to 10 years’ seniority, they will have 21 days of annual vacation leave; from 10 to 20 years’ seniority, they get 28 of annual vacation leave; and when exceeding 20 years of seniority, they have 35 days of annual vacation leave. Annual leave payment is higher than normal daily salary due to specific requirements that local law imposes over the calculation that should be considered – that is, a monthly salary divided by 25 resulting into what is locally known as Plus Vacacional.
Employers are required to provide health insurance to all employees through the public healthcare 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.
The health insurance includes pregnancy and childcare plans, dental plans, 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 the same medical insurance to their primary family members, which includes their spouse and children or people for which the employee is legally responsible for.
Argentina benefits management
Opening a subsidiary in Argentina means arranging benefits packages for all employees and dispersing them according to Argentina’s compensation laws. Some Argentina benefits management tips to keep in mind include the following:
- 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’s benefits management. For example, employees cannot work more than 30 hours of overtime per month or more than 200 hours per year. If an employee doesn’t take a vacation, the vacation days cannot be compensated unless that employee is terminated.
Argentina employee benefits plans
For employers, the benefits plan is an valuable tool for success. While specific benefits are essential for compliance, supplemental provisions also prove how much employees are valued. When employees feel supported at the company, they’re more likely to contribute their best efforts and continue to work with the company.
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
- Telework (Home office) allowance for 100% remote employees
- 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 an employee serves an employer. Employees start with 14 days of leave and can work their way up to 35 days after 20 years of service.
Designing employee benefits plans in Argentina
Planning benefits packages takes careful consideration. The main goal of the planning stage is finding a balance between employees’ needs and company resources. While employers want to support their employees, employers need to work within a budget to keep the enterprise up and running. Companies 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 employees in the area. You can also create personas, or fictional characters based on the age groups and lifestyles of the people you’ll hire, to help you better understand what employees might need in terms of benefits. Do they need childcare? 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 employees’ 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 the designing process, companies should evaluate their income and determine the best budget for expenses and earnings.
How to calculate benefits
Calculations will depend on the benefits provided, but labor laws in Argentina offer some guidance for calculating required provisions. For example, required health insurance includes a 6% contribution from employers and a 3% 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.
Partner with G-P to build your everywhere workforce.
As your partner in global expansion, G-P will handle payroll and compliance, so you can focus on growing your team and scaling your business. Our market-leading Global Growth Platform™ is powered by the first fully customizable suite of global employment products and backed by the industry’s largest team of in-country HR and legal experts to streamline payroll management and help you offer competitive, compliant local benefits.
Learn more about our platform and request a proposal today.