Argentina presents compelling reasons for engaging in business, providing access to a large market, a skilled workforce, innovation, natural resources, infrastructure, and tourism. However, before setting up a local company or a branch office, many companies like to ‘test’ the local market. Setting up a Professional Employer Organization, or PEO in Argentina is a great way to understand the legal nuances of the country before you form a company.
A PEO in Argentina will undertake the fundamental, but time-consuming HR tasks, allowing companies to focus their attention on the growth and success of their business. This will allow you to concentrate on what you do best: growing your business. Of course, as time goes on you may decide to consider company incorporation in Argentina as well, and a Professional Employer Organization – PEO in Argentina can help you with that.
Below, we delve into the main reasons why Argentina is a popular destination for conducting business and how a Professional Employer Organization – PEO in Argentina can help you mitigate risks and take full advantage of the opportunities offered within the region. At Biz Latin Hub, no one knows Latin America and the Caribbean quite like we do. With 18 dedicated local offices across the region, our array of back office services can help you operate anywhere in the area.
Why invest in Argentina?
Argentina offers several advantages to foreign investors. Firstly, it has a diversified economy with strengths in various sectors. Key industries include agriculture, manufacturing, services, energy, and technology.
Secondly, Argentina’s vast market offers much potential. Argentina is one of the largest economies in Latin America, with a GDP of over USD$630 billion and a population of over 45 million people, offering a sizable consumer market for businesses. It also provides access to the larger Mercosur trade bloc, which includes Brazil, Paraguay, and Uruguay, expanding the market reach.
In addition, Argentina has a highly educated and skilled workforce. The government puts a strong emphasis on education, and the literacy rate is over 99%. Argentina produces a significant number of graduates in fields such as engineering, technology, and business. A quality Professional Employer Organization – PEO in Argentina will be able to connect your business to the highly skilled talent pool offered in the country.
Innovation and entrepreneurship is ripe in Argentina, which has a vibrant startup ecosystem and is home to numerous tech startups. Cities like Buenos Aires are hubs for entrepreneurship, attracting venture capital investment and fostering a culture of innovation.
Argentina is known for its abundance of natural resources and agricultural production. It is a leading exporter of agricultural products such as soybeans, corn, wheat, and beef. The agricultural sector offers opportunities for businesses involved in agribusiness, food processing, and related industries. Those looking to integrate a business into these sectors can utilize a Professional Employer Organization – PEO in Argentina to handle and simplify back-office duties.
Argentina has been investing in infrastructure development, including transportation, energy, and telecommunications. The country has an extensive road network, modern airports, and ports that facilitate domestic and international trade.
Lastly, Argentina is a popular tourist destination, known for its natural wonders, vibrant culture, and rich heritage. The tourism sector offers opportunities for businesses in hospitality, travel, and related services. A Professional Employer Organization – PEO in Argentina can help you streamline business operations and payroll management, making it easier to integrate into popular industries such as tourism.
Establishing a business in the region comes with plentiful benefits, and allowing a Professional Employer Organization in Argentina to take over back-office operations will allow you to focus solely on more important tasks. Consider partnering with a PEO in Argentina, to help you expand your business.
What is a Professional Employer Organization – PEO in Argentina?
A Professional Employer Organization (PEO), otherwise known as an ‘Employer of Record’ is an organization that provides and supports companies with their HR functions – from the very first stages of recruitment to the payments of taxes and benefits. By undertaking these time consuming tasks, the PEO makes it easier for the company to focus on growing their business. The services of a PEO are particularly useful when companies are seeking to hire a local workforce but do not want to set up a local legal entity.
Real Life Example: A British company wants to hire a bilingual engineer to join their team. They decide they want to hire an employee from Argentina (due to the highly educated workforce and the economic benefits of hiring foreign staff). The UK company knows the time and costs involved with setting up a local entity in Argentina and so they look at other, more cost-effective options. After some research, they decide to form a co-employment relationship with a Professional Employer Organization – PEO in Argentina. This enables the company to hire the Argentine employee without the need to have a fully incorporated company in Argentina. The PEO assists the company in finding the most suitable employee and then it deals with the administrative and legislative aspects of employing this chosen candidate. The individual is technically employed by the PEO, who ensures that all employment laws regulation is met, but the candidate is directed by the UK company.
Why use a Professional Employer Organization – PEO in Argentina?
Utilizing a Professional Employer Organization – PEO in Argentina offers numerous benefits for your company. By outsourcing HR burdens to a PEO in Argentina, your company can concentrate on core business activities and direct employee management, allowing for increased focus on business growth and development.
Hiring a PEO also reduces recruitment and administrative expenses, providing cost savings, particularly if you want to hire local staff but do not have a fully incorporated company or branch office in Argentina.
Additionally, a PEO assists in the recruitment process by sourcing and selecting the most suitable and qualified candidates for your company’s specific needs. This saves you time and effort in finding the right staff.
By outsourcing payroll processing and other HR administrative tasks to a PEO, your company eliminates time-consuming responsibilities. This enables you to allocate your time and resources more effectively towards strategic business activities.
Lastly, a Professional Employer Organization – PEO in Argentina will ensure that your company complies with all Argentine employment laws and regulations. Their local expertise ensures that your employment relationships are established in full compliance with legal requirements, minimizing the risk of penalties or legal complications.
Foreign nationals aiming to register a business in Argentina must be aware of the essential employment laws and regulations. Companies must prioritize 100% compliance with legal requirements before engaging in an employment relationship in Argentina. A PEO can provide the necessary guidance and support in ensuring compliance with these regulations, as well as offering your company many other advantages, as listed above.
How can I hire staff with a Professional Employer Organization – PEO in Argentina?
A quality Professional Employer Organization – PEO in Argentina will be able to navigate and sort through the various employment contracts available in the country. The most relevant aspects of the Argentine labor law, determined by the Constitution and as stated in the Labor Contract Law (Act 20,744) are summarized below:
Employment Contracts
There are three types of employment contracts in Argentina:
- Indefinite-term contracts – No legal requirement to have a written agreement. However, it is still recommended to sign a contract for the purpose of clarification regarding the terms and conditions of the employment relationship.
- Fixed-term contracts – It is mandatory to have a written contract of employment. The period of service cannot exceed five years.
- Part-time / temporary contracts – A written contract of employment is required.
Foreign workers
There are no restrictions on hiring foreign employees to join a company’s workforce.
Employment Termination
Employment contracts with an indefinite-term have an initial 3-month probationary period and 15 days notice is required from either party if they wish to terminate the contract. For all employment contracts, the same 15 days notice is required if the employee wishes to terminate the contract.
However, if the employer wishes to terminate the contract, the notice period increases with the employee’s length of service. For example, employees who have worked for less than three months are only required to be given 15 days notice. Employees who have worked for over five years must be given two months’ notice by their employer. The maximum notice period that small businesses are required to give employees is one month.
Regardless of the type of employment contract, if no prior notice is given, the employee is entitled to compensation. A Professional Employer Organization in Argentina will handle the various complexities of going through a termination.
Employee benefits and rights in Argentina
In Argentina, workers have a comprehensive level of benefits. It is important that companies are aware of them and understand how to remain in compliance. Working with a PEO can simplify the process. If you choose to outsource back-office operations, payroll tasks will be handled by the PEO. The most important benefits workers in Argentina are entitled to are summarized below.
- Working Hours: In Argentina, the maximum working week is 48 hours, with a limit of eight hours per day. Payroll tasks will be handled by a Professional Employer Organization in Argentina if you choose to outsource back-office operations.
- Overtime: With the exception of managers and directors, employees are eligible for overtime pay. Any additional hours worked beyond the maximum daily limit qualify for overtime compensation. Weekday overtime is paid at a rate of the employee’s salary plus an extra 50%, while weekend overtime is compensated at a rate of the employee’s salary plus an additional 100%. Overtime hours cannot exceed 30 hours per month or 200 hours per year.
- Paid Vacation: Paid vacation duration varies based on the employee’s length of service. Employees who have worked for more than six months are entitled to 14 consecutive days of paid vacation. The number of vacation days increases with the number of years of service. For instance, employees who have completed five to ten years of service are granted 21 consecutive days of paid vacation. Complexities within payroll, such as vacation grants, can be effectively handled by a Professional Employer Organization in Argentina.
- Bonuses: Employees receive two installments of an annual bonus known as the 13th salary or Aguinaldo. This bonus is equivalent to 50% of the employee’s highest monthly salary within the previous six months. The first installment is paid on June 30th, and the second installment is paid on December 18th.
- Maternity Leave: Female employees are entitled to 90 days of maternity leave, with 45 days before and 45 days after childbirth.
- Sick Leave: Employees who have worked for up to five years are entitled to full compensation, equivalent to their salary, for a maximum of three months of sick leave per year. The duration of sick leave increases with the employee’s years of service.
How to use a payroll calculator to understand the costs of a Professional Employer Organization – PEO in Argentina
If you want to get an idea of the possible costs involved in payroll outsourcing in Argentina, using a payroll calculator is one way to get a good estimate.
Although a payroll calculator won’t be completely accurate, it will give you the opportunity to look at costs while varying the salary, the number of employees, the country you want to enter, and the currency you wish to work in. As such, you will be able to understand your likely costs across a range of salaries, while also being able to compare other countries as potential alternative destinations.
You can find the BLH payroll calculator at the bottom of our Hiring & PEO Services page. The calculator will allow you to make good estimations of the costs involved in hiring in Latin America and the Caribbean based on country, currency, and salary, with the calculator factoring in local statutory deductions.
To use the BLH payroll calculator, you will need to undertake the following steps:
Step 1: Select the country
Choose the country where you are doing business, or planning to launch. This feature will be useful when it comes to comparing potential alternative markets.
Step 2: Select the currency you wish to deal in
You can choose between US dollars (USD), British Sterling (GBP) and Euros, as well as the local currency for the country you are looking at, compared to what is most convenient to you. Note that for Ecuador, El Salvador, and Panama, the local currency is also USD, as they have dollarized economies.
Step 3: Indicate an employees monthly income
Here you can indicate the expected salary you will be paying an employee, in the currency of your choice.
Step 4: Calculate your estimated costs
Based on all of the information you have provided, you will receive results indicating your estimated costs, including a breakdown for estimated statutory benefits you will be liable for.
Step 5: Compare your costs to other options
With a good estimate at hand of how much your staff in Argentina would cost, if you are flexible about your expansion into Latin America and the Caribbean, you can use the BLH payroll calculator to compare those costs to other jurisdictions.
FAQs for a Professional Employer Organization – PEO in Argentina
Based on our extensive experience these are the common questions and doubts of our clients on hiring through a Professional Employer Organization – PEO in Argentina:
You can hire an employee by incorporating your own legal entity in Argentina to hire employees. Alternatively, you can hire through an Employer of Record (EOR), which is a third party organization that allows you to hire employees in Argentina. With an EOR you do not need an Argentinian legal entity to hire local employees.
A standard Argentinian employment contract must be written in Spanish (and can also be in English) and contain the following information:
– ID number and Cuil.
– City and date.
– Start date of the employment relationship.
– Relationship rules between superior and subordinate.
– The location where the service will be provided.
– Remuneration and bonifications/commissions.
– Method payment frequency.
– Duration of the contract.
– Social work.
– Penalties for non-compliance for both employer and employee.
– Main tasks.
– Probation Period.
– Cases of termination of contract
The mandatory employment benefits in Argentina are the following:
– Working tools necessary to carry out the work.
– Payment of social security contributions (health, pension, and labor risks).
– Social benefits (service premium, severance pay, and interest on severance pay).
– Paid time off (vacation and weekend off) always depends on the kind of work you have.
– Disabilities (common or labor origin).
– Extra salary called aguinaldo. The last best remuneration is taken and divided into two payments, one in July and one in December.
The best decision depends on the needs of your company. Forming a legal entity has the following characteristics:
Slower to establish.
Permanent presence in the country.
All costs deductible through a local entity.
Ability to sign contracts and agreements locally.
Ability to invoice through local entity.
Legal entity compliance support required.
Hire employees directly.
A PEO works with your company as a co-employer, while a EOR is the legal employer of your employees. An EOR can provide more services than a PEO.
Biz Latin Hub can help with a Professional Employer Organization – PEO in Argentina
Argentina is a country where business opportunities are plentiful which makes it an increasingly appealing jurisdiction to do business in. The Argentine workforce is competitive, educated and qualified.
If you want to hire local employees, but do not have an incorporated local entity and want to avoid the administrative burden of HR, then a Professional Employer Organization in Argentina may be the perfect solution, both from a business-growth perspective and a financial one.
Contact our team of experts today and how we can support you throughout the hiring and recruitment process in Argentina.
