For Want of a Legal Reform, Companies Are Crossing Legal Limits

The promise of an integral, job-promoting labor reform was just that: an unfulfilled promise. Dante Sica said the reform is a goal for 2020, and this is coming from the head of a Ministry where they do not know what will happen with labor and employment next week.

Published in El Cronista on December 27, 2018
Anachronism has got hold of legislation, and case law has become a mirror reflecting the past.

In view of this bitter frustration, many companies are pushing the limits of the law and creating new rules of the game in a scenario that may be regarded as a “gap in the law”, i.e. the absence of a necessary specific rule, or the existing regulations that are not enough.

Suffice is to mention the examples of UBER, RAPPI, Pídalo or GLOVO, and the new horizons opened up by digital developers, entrepreneurs and professionals who can build their careers virtually.

As a matter of fact, the new formats of the so-called sharing economy or collaborative consumption have stripped labor law of its essential content, no less.

In fact, the main feature is to determine which kind of relationship develops in the framework of employment where the creative activity is conducted by a freelancer. For UBER, RAPPI, PIDALO and GLOVO, the typical employment relationship employee-employer does not apply here; on the contrary, there are contradictory elements of freelance work because those who render services work on their own behalf and at their own expense.

The virtual workday is an example of tech companies with flexible working hours that average 7 hours per day, with variable clock-in and clock-out times and on a part-time or full-time basis. There are on-call shifts for emergencies where they wait for an additional task for which they collect a pre-established amount, and then the on-call shifts become on-duty jobs if they are given a specific assignment for which they are paid for those extra hours 50% their hourly rate for business days, 100% their hourly rate for non-business days.

Those who telework providing IT services do not usually have pre-established workdays or rest periods, and their pay is calculated based on targets, so the paradigms of the past are changing, now the clock-in time recording hours and minutes, the clock-out time and the end of the workday are no longer important.

It is worth mentioning that the general employment scheme under the collective bargaining agreement for restaurant workers, fast food workers and patissiers include exceptions that have filled in the gap in the law with bordering rules that cover legislative gaps with collective bargaining provisions.

Just consider split workdays, vacation periods that may be taken in separate weeks, vacant job positions to be filled in, average working hours during which workers can do up to twelve (12) hours without overtime, observing the 8-hour limit per day and 48 hours per week in average, and so forth.

The labor reform is still essential to overcome the serious stagnation we are undergoing today more than ever before. Investment is the key to Vaca Muerta, and to growth and job promotion at all levels. Argentina has the highest labor costs in the region, the highest payroll taxes, and the most regulated and strict model in emerging countries.

In other words, our cost structure can only be reverted by changing the industrial relation model, altering the relationship of power imposed today by many unions wishing to keep the retrograde model unchanged and preserve their current position, and opening the doors to new forms of organizing work thanks to new technologies.

We all know the challenge we have ahead of us: governing leaders, unions, companies and workers as well, but we need a leader that can take the responsibility of the change and in this case, a significant change according to the available rules and regulations.

The winners in labor and employment in 2018, a year with so much frustration, have been those innovators who challenged a bland, outdated model simply because it was created for a world that does not exist anymore.

By Julian A. de Diego
Director of the postgraduate course on Human Resources at the School of Business at UCA.