An Argentine court has ruled that “serious and significant” indications point to some provisions Of President Javier Milei’s labor reform legislation may conflict with the Constitution. Photo by Juan Ignacio Roncoroni/EPA
A court in Argentina has temporarily suspended parts of a labor reform promoted by President Javier Milei and approved by Congress in February, dealing a setback to a cornerstone of his economic agenda aimed at making the labor market more flexible.
The decision Monday follows a legal challenge filed by the General Confederation of Labor, or CGT, the country’s largest labor union federation. Judge Raúl Horacio Ojeda granted the request and temporarily blocked 82 of the 218 articles included in the so-called Labor Modernization Law.
In the ruling, Ojeda said “serious and significant” indications are that some provisions may conflict with the Constitution. He pointed to potential risks to fundamental labor rights, including union freedom and protections for existing working conditions.
Based on that assessment, the court issued a precautionary measure that suspends enforcement of the affected provisions until a final decision on their constitutionality.
The labor reform is central to Milei’s strategy to reduce labor costs, ease hiring and firing rules and attract investment to Argentina. The initiative seeks to simplify regulations, lower litigation risks and promote formal job creation while improving economic competitiveness.
Milei’s administration argues the changes are necessary to revive growth and stabilize an economy marked by high inflation, low investment and stagnant employment.
“The precautionary measure effectively produces a temporary suspension of the validity or applicability of the affected articles. It does not repeal the law or declare it unconstitutional, but it prevents its immediate enforcement,” labor attorney Walter Mañko of Deloitte Legal told UPI.
He said the ruling aims to prevent potential harm while the law’s constitutionality is reviewed.
Mañko identified two broad groups of affected provisions: those regulating individual labor relations and those impacting collective labor dynamics.
Among the first, the ruling halts the implementation of so-called dynamic wages, a system that allows additional payments for exceptional tasks without incorporating them into a regular salary. It also suspends the possibility of splitting vacation days into separate periods.
Changes to labor outsourcing rules, which sought to reduce litigation tied to third-party contracting, also are on hold. The ruling further blocks the creation of a “bank of hours” system, which allows overtime to be compensated with time off, as well as updates to interest calculations in labor lawsuits.
In addition, the decision suspends efforts to establish a unified national standard for calculating severance pay. Instead, it restores a system in which each jurisdiction sets its own rules, increasing legal uncertainty, according to Mañko.
On the collective side, the ruling halts changes intended to regulate the right to strike.
“It is a setback and a nod to union authority, as it nullifies changes that limited the right to strike,” he said.
Mañko said the law introduced definitions for essential and key activities that would be required to maintain minimum operations during strikes. For example, critical sectors such as health care and transportation would have had to continue operating with reduced staff.
“This provided a response to strikes that paralyze broad sectors of the economy. Now the CGT regains the ability to halt services such as education, health care, transportation and banking,” he said.
Mañko noted that Argentina has about 10 million registered workers, but union membership has not exceeded 25% since 2010. The country also has some 1,300 unions, about 210 of which are affiliated with the CGT.
The government can still appeal the precautionary measure. The case will move to the National Chamber of Labor Appeals, which will review the initial decision.
At a later stage, the judge will rule on the merits of the case and determine whether the challenged provisions comply with the Constitution. That decision will be key in shaping the future of the reform.
