Sunday, August 1, 2010


Extension of overtime eligible employees in Argentina

By Javier E. Patrón
Marval O’Farrell & Mairal

The Argentine Government has introduced a major amendment to the Argentine labor framework, as it has extensively broadened the universe of employees that, as of the current month and onwards, will be eligible to collect overtime.

Until such amendment, introduced by Law No. 26,597, published in the Official Gazette on 11 June 2010 and effective as of 20 June 2010, any employee who fell under the generic definition of“personnel of direction and supervision” was not entitled to collect overtime because such an employee was exempt from workday limitations.

Case law used to favor the defences made by companies on grounds of the broad concept of “personnel of direction and supervision” and the examples of exempt positions that emerged from applicable law (e.g. management assistants, team leads, inspectors and professionals, among others).
However, the amendment has minimized the scope of workday limitation exempt employees, and has limited them to those employees who render services as “Directors” or “Managers”. Any other employee would in the majority of the cases be entitled to overtime payments.

In Argentina, overtime is closely related to workday limitations, as it has been repeatedly held that only employees subject to workday limitations are entitled to overtime payments when they are required to work overtime. Under Argentine law, workday is limited to 8 hours per day or 48 hours per week.
Consequently, since the commencement date of the amendment, all employees are entitled to collect overtime when they exceed statutory shift limitations with the exception of directors and managers who perform actual duties as such. Other exemptions include team work and urgent needs.

The most critical part of the amendment is focused on the intermediate positions. Whereas directors and managers continue to be overtime exempt, and as low-rank employees always have been overtime eligible; intermediate positions - such as supervisors, team leads and similar positions such as those mentioned above - were arguably overtime exempt in the past and will now transfer into the overtime eligible category.

While the new wording of the law increases the costs of the employer because it broadens the number of employees subject to overtime, it may be noted that, as an advantageous aspect of the amendment, it allows a clearer definition of exempt and non-exempt employees.

In that context, employers would be in a better position to avoid doubtful scenarios that, under Argentine labor law, are required to be interpreted and decided by judges in favor of the employees.