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FOREIGN EMPLOYEES Migratory, labor and social security aspects The hiring of foreign employees usually carries different queries for the Argentine companies. Such queries relate, among others, to issues such as labor visas, registration of the foreign employee in the company’s payroll and the payment of social security contributions. Therefore, it is convenient to be properly informed on the matter so as to avoid or prevent claims whether from authorities or employees. This report details the main aspects of the currently applicable Migratory Law as well as of the different categories on the basis of which a labor visa may be required in 1. The foreign employee must be granted a labor visa by the Argentine Migrations Office (Dirección Nacional de Migraciones - “DNM”) in order to work in our country. 2. The tourist visa with which the foreigner usually enters the country does not allow him to work within the frame of an employment contract with a local company. Consequently, he shall be considered by our law as a non-registered employee. The employer could be imposed fines, and could be subject to claims from the employee and from the administrative authorities in charge of controlling the fulfillment of labor and social security obligations. 3. There are basically three categories for the grating of a labor visa: - temporary residence by virtue of a contract entered into by the foreign employee with an Argentine company, - temporary residence by virtue of the transfer of a foreign company´s employee to a related Argentine company, and - provisional residence. (i) Temporary residence by virtue of a contract entered into by the foreign employee with an Argentine company. The hiring local company must file before the DNM the request of the admission of the foreign employee and the issuance of the pertinent “entrance permit”. Documents related to the Argentine company and the employment agreement which will govern the labor relationship with the foreign employee, shall be required by the DNM. Once the entrance permit has been granted, the immigration file will be sent to the Argentine Consulate of the foreigner’s origin country. Said Consulate will grant him the temporary residence permit by stamping the pertinent labor visa in his passport. The temporary residence will be in force as from the moment the foreign employee enters The temporary residence permit is granted for a maximum term of one year, which may be extended for equal or shorter periods. After three consecutive years of temporary residence, the foreigner will be able to file for a permanent residence permit. (ii) Temporary residence by virtue of the transfer of a foreign company´s employee to a related Argentine company. This category foresees the event that the foreigner is assigned by his foreign employer to an Argentine company. In technical language, these workers are called “transfer officers” (funcionarios de traslado). As in the abovementioned case, the filing shall be commenced by the Argentine company. The document (letter or statement) whereby the foreign company formally assigns the employee to its branch, affiliate or related company in The remaining aspects of the procedure are similar to the one described above. The residence term and the possibility of obtaining a permanent residence permit also apply to this case. Even though the employee continues his labor relationship with the foreign company and does not formalize any employment contract with the Argentine company, the employment relationship could be governed by the Argentine labor Law (Ley de Contrato de Trabajo – “LCT”), since the LCT is applicable when the tasks are performed within the Argentine territory . Notwithstanding the fact that this migratory category represents a common practice, each particular case should be analyzed in order to evaluate potential labor risks. (iii) Provisional residence. Provisional residents may perform paid tasks provided that they were hired in order to develop artistic, religious or cultural activities. As an exemption -though subject to the wide criterion of the DNM when granting said exemption- this category is also used to employ foreign personnel who shall develop technical and professional activities. The provisional residence permit is granted for a fifteen days term, which may be extended only once for an equal term. Once a month has elapsed and should the employee continue rendering services in Argentina, he shall leave the country and re-enter so as to file for a new fifteen days term provisional residence permit, which may be extended for another fifteen days. The granting of consecutive extensions exceeds the scope of the legislation and therefore fines may be imposed. Especially as we pointed out above, since the provisional residence for the rendering of professional and technical activities is granted as an exemption. The Argentine company is in charge of filing the applications for provisional residence permits before the DNM. The fee charged amounts to $ 500 (approximately US$ 170) for each fifteen days authorization, as well as for each renewal. However, some Argentine Consulates grant this provisional residence directly to the foreign employee in his country of origin (this is called “employment authorization granted by the Consulate”) upon payment of a fee of approximately US$ 50. When requiring before the DNM the renewal of the authorization granted by the Consulate for another fifteen days, the fee will be of $ 100 (approximately US$ 35). From the precedent considerations we may conclude that the provisional residence is appropriate for those cases in which the foreign employee must join the Argentine company for a short term or when he needs to join it immediately. On the contrary, if the residence term in our country shall be longer, it is advisable to use any of the first two alternatives mentioned. 4. Another issue to bear in mind is the one related to the payment of the foreign employee’s social security contributions. Although as a general rule the Argentine legislation is applicable, the possible application of treaties entered into with some countries regarding social security (for example, Spain and Italy), as well as the exemption foreseen by Section 4 of Act Nbr. 24,241 for professionals, investigators, scientists and technicians hired to render services in Argentina for a maximum term of two years, should be analyzed in each case. 5. Finally, we point out that on January 21, 2004 the new Migration Act Nbr. 25,871 was published in the Official Gazette. Said Act will be effective once the pertinent regulations are issued by the DNM. Even though it abolishes the previous regime governed by Act Nbr. 22,439 and its regulatory executive order Nbr. 1023/94, it substantially provides for the legal institutions mentioned in this report. At the time the pertinent regulation of the new Migration Act is published in the Official Gazette, we will inform you of its most relevant aspects. ********** Should you require any further information on this matter, please do not hesitate to contact Federico M. Basile (federico.basile@bomchil.com), Brenda I. Puig (brenda.puig@bomchil.com) or Alejo H. Chiessa (alejo.chiessa@bomchil.com).
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