Annual Leave After Argentina’s Labor Reform: A Guide for SMEs

An employer in Argentina may split an employee’s annual leave after the labor reform, but cannot impose the arrangement unilaterally. The employee must agree, every period must last at least seven days, and the total entitlement based on seniority remains unchanged. The employer must also give written notice at least 30 days in advance and, unless the parties agree otherwise, schedule the leave between October 1 and April 30.

What Argentina’s labor reform changed

Law 27,802 on Labor Modernization replaced Section 154 of Argentina’s Employment Contract Act, known locally as the Ley de Contrato de Trabajo or LCT. Its main change is an express option for employers and employees to agree on splitting statutory annual leave. The previous framework was built around a single continuous period; the amended rule recognizes that the rest period may be divided.

The agreement must be genuine. An employer cannot simply assign seven days in January and reserve the balance for a convenient time later in the year. A generic clause signed when the employee joins the company is also poor evidence of consent to specific dates. A safer process records the proposed distribution, the employee’s acceptance, the actual dates and any more favorable rule in the applicable collective bargaining agreement.

Continuous leave remains the default rule

The amendment must be read together with the rest of the updated Employment Contract Act. Section 150 still grants a minimum and continuous annual rest period, while the new Section 154 allows the parties to split it. The two provisions can operate together: continuous leave remains the default when there is no agreement, and splitting becomes an available exception when both sides accept it.

This distinction has practical consequences. An employee’s silence should not be treated as consent, and an internal company policy cannot replace individual agreement. If an employer announces several periods unilaterally, a dispute may concern more than a paperwork defect: the employee could argue that annual leave was never properly granted and that isolated days did not discharge the statutory entitlement.

The law does not prescribe one exclusive form for the agreement, but evidence matters. A written or digital record should make it possible to identify who accepted the arrangement, which dates were accepted and when acceptance took place. An ambiguous message or unsigned spreadsheet leaves the central fact open to challenge.

How many days employees receive

The reform did not change the general scale in Section 150. Employees receive 14 calendar days when their seniority does not exceed five years; 21 days when it exceeds five but not ten years; 28 days when it exceeds ten but not twenty years; and 35 days when it exceeds twenty years. Seniority is measured as of December 31 of the year to which the leave belongs.

If the employee did not work at least half of the business days in the year, the proportional rule applies: one day of annual leave for every twenty days of effective work. The applicable collective bargaining agreement should also be checked because it may grant a more favorable entitlement or different operational conditions.

Which split arrangements are possible?

The seven-day minimum applies to every period, not only the first. An employee entitled to 14 days could agree on two periods of seven days or keep all 14 days together. A 21-day entitlement could be divided into seven and fourteen days, or three seven-day periods. Twenty-eight days could be split into seven and twenty-one, fourteen and fourteen, or four periods of seven. In every case, the periods must add up to the employee’s full entitlement.

Arrangements of five and nine days would not meet the new rule. Nor should an employer create long weekends by charging isolated days as annual leave or create a remaining balance of fewer than seven days through its own proposed distribution. Annual leave continues to be counted in calendar days and retains its purpose as a period of rest, even when it is divided.

When leave must be taken and how notice works

As a general rule, the employer must grant annual leave between October 1 and April 30 of the following year. The amended Section 154 allows the parties to agree on dates outside that season. The employer must notify the dates in writing at least 30 days in advance, unless the applicable collective bargaining agreement establishes a different system.

When employees take leave in rotating groups, the company must organize the schedule so that each employee can enjoy leave during the summer at least once every three years. This makes informal conversations risky. An annual calendar and individual notices help prove that the company respected both the rotation and the notice period.

The employer retains the power to organize the schedule so the business can operate, but that power has limits. Operational needs should not become arbitrary treatment. Applying known criteria such as rotation, seniority, job responsibilities, requests received and minimum staffing reduces conflict and makes it possible to explain why one request was granted while another was declined.

Two decisions should also be kept separate. Agreeing to divide 21 days into periods of seven and fourteen days does not automatically allow either side to choose the dates later without coordination. The document should determine both the distribution and the dates, or establish a clear procedure for fixing them.

A practical example

Consider a six-person company whose busiest month is January. An employee entitled to 21 calendar days asks for seven days in November and fourteen in February. The employer can cover both absences and accepts. The arrangement is valid if the agreement and the dates are recorded in writing with the required advance notice.

The result would be different if the employer announced that the employee must take three seven-day periods selected exclusively by management. The periods meet the minimum, but the agreement required by law is missing. The reform offers flexibility to coordinate rest and business needs; it does not turn annual leave into separate days controlled by the employer.

A third variation arises if the employee asks to take all 21 days in May, outside the statutory season. The employer may agree and reorganize coverage. If it does not agree, the request alone does not displace the October-to-April rule. The reform expanded the scope for negotiation, but did not give either party a unilateral right to change the statutory season.

When and how annual leave is paid

Annual leave is paid and the corresponding remuneration must be paid when the rest period begins. For employees on a monthly salary, Section 155 divides the salary by 25 to determine the daily value. For variable remuneration, the calculation uses the annual average or, at the employee’s option, the average for the previous six months. Additional remuneration covered by the statute must also be included.

Splitting creates an operational question that the new Section 154 does not expressly resolve: how each period should be paid. A prudent approach is to identify and pay the remuneration for each period before that period starts, using payslips that connect the amount to the relevant dates. The company should coordinate the method with its payroll adviser and check the collective agreement, particularly when allowances or more favorable rules apply.

Annual leave cannot be exchanged for cash while employment continues. Even if the employee requests it, paying the entitlement while requiring the employee to keep working defeats the purpose of statutory rest. The position changes when employment ends: the final settlement must include compensation for the proportional annual leave accrued during that year.

What happens if the employee becomes ill?

The reform now expressly addresses illness during annual leave. If the employee reports the illness promptly and allows the employer’s medical examination, the leave is interrupted. The employee returns when the originally scheduled period ends or when medically fit if the illness continues beyond that date. The unused annual leave balance must be rescheduled.

This creates two separate calendars. The original leave period keeps its scheduled end date and, if the illness continues, the employee remains under the sick-leave rules. The unused annual leave does not disappear and is not automatically added immediately after medical clearance. It must be rescheduled. For a small company, that new period may overlap with another employee’s approved leave, so replacement plans and balance records matter.

What if the employer fails to grant leave?

The omission has a specific consequence. If the employer allows the statutory period for communicating the start date to expire, Section 157 permits the employee to exercise the right after giving formal notice, provided the leave ends before May 31. Delaying the schedule can therefore cause the company to lose control over the timing and face an absence chosen by the employee within that legal framework.

The 30-day notice requirement is more than an administrative courtesy. It shows whether the employer exercised its scheduling authority on time and may become significant evidence in a dispute. A verbal conversation, a late entry in an internal system or an email whose receipt cannot be established creates avoidable risk.

Splitting, carrying over leave and other absences

Splitting the current year’s entitlement differs from carrying over unused days from an earlier year. Section 164 permits up to one third of an unused period to be carried over, but also requires agreement. This mechanism does not authorize indefinite postponement or an open-ended bank of unused days.

The same provision addresses special situations. At the employee’s request, annual leave must be combined with marriage leave. When both spouses work for the same employer, their annual leave must be granted at the same time unless that would seriously affect operations. Seasonal employees, meanwhile, receive a proportional entitlement at the end of each work cycle.

Consequences for SMEs operating in Argentina

Splitting leave can improve business continuity, spread absences through the year and let employees rest at different times. It also multiplies administrative work: more start dates, advance payments, temporary replacements, balance checks and potential overlaps. Flexibility saves operational cost only when the company maintains accurate records.

There is also a risk of unequal treatment. If some requests are accepted and others rejected without an explainable criterion, the company may face internal complaints and allegations of discrimination or abuse of managerial authority. An employer does not have to grant every request, but it should decide for reasons connected to the operation and apply its criteria consistently.

The reform changes the conversation with the team as well. A voluntary proposal must allow an employee to reject splitting without adverse consequences. Presenting the arrangement as a benefit while linking it to shifts, bonuses or continued employment undermines real consent and weakens the document’s evidentiary value.

How employers can prevent disputes

Good practice is to begin planning early, use predictable criteria and retain five items for every employee: the entitlement calculation, the employee’s request or the employer’s proposal, the splitting agreement, notice of the dates and proof of payment. Companies expanding their teams can include this process in the broader compliance structure described in our guide on how to hire your first employee in Argentina.

The reform gives employers and employees more options, but the flexibility depends on orderly administration. A clear agreement prevents a useful arrangement from later being challenged as an imposed schedule, a reduction of rest or late notice.

Frequently asked questions