Companies typically use an Employer of Record for fast, inflation-aware entry, payroll management once an Argentine entity exists, and entity setup for firms with a genuine long-term commitment. Argentina's mandatory aguinaldo (13th-month bonus), high social security contributions, and inflation-driven salary adjustment cycles are the features requiring the most careful planning.

Employer of Record in Argentina

An EOR allows a company to hire in Argentina without registering with AFIP (the federal tax authority) or navigating the social security and union contribution systems. It suits companies making early technology hires, testing the Argentine market, or hiring before a longer-term entity decision. It is particularly valuable in Argentina given the complexity of inflation-driven salary adjustments and the need for specialist local expertise to keep payroll compliant in a fast-changing macroeconomic environment. It is less suited to companies with an existing Argentine entity.

How payroll works in Argentina

Argentine payroll withholds income tax (Impuesto a las Ganancias) at progressive rates and requires both employer and employee contributions to the social security system (SIPA), covering pension, healthcare, and related benefits. Payroll is monthly, and a mandatory aguinaldo (13th-month bonus), equivalent to half the highest monthly salary earned in each six-month period, is paid in June and December. High inflation has historically required frequent salary adjustments, often driven by collective bargaining agreements (convenios colectivos de trabajo) that set minimum pay scales for most sectors.

Payroll frequency and reporting obligations

Monthly payroll is standard, with income tax withholding and social security contributions remitted monthly to AFIP. The aguinaldo is paid in two instalments in June and December, calculated on the highest monthly salary in each six-month period. Annual income tax reconciliation is required for employees above the income tax threshold. Collective bargaining agreement compliance requires tracking the applicable convenio for each role and applying any agreed salary increases, which in high-inflation periods can be quarterly or more frequent.

Key payroll nuances

High inflation is the defining macroeconomic feature of Argentine payroll planning: salary levels need to be reviewed and adjusted frequently to maintain real purchasing power, and collective bargaining agreements in most sectors mandate periodic increases that track inflation. The aguinaldo is a firm statutory requirement and must be budgeted as certain annual cost. Severance on termination without cause (indemnización por despido) is calculated based on the best monthly salary and years of service, and can be substantial for long-tenured employees. Union membership and collective agreement coverage is widespread, and the applicable convenio affects minimum pay, working conditions, and additional benefits for most roles.

Pay components and employer costs

Typical pay components include base salary and the aguinaldo. Employer social security contributions typically add around 27 percent on top of gross salary. When the aguinaldo and the potential for inflation-driven salary increases are factored in, total employer cost planning requires a dynamic model rather than a fixed annual budget, particularly in high-inflation periods.

Benefits and leave entitlements

Statutory annual leave starts at 14 calendar days after less than five years of service, rising with tenure to a maximum of 35 days. Sick leave is employer-funded for an initial period, then covered by the social security system. Maternity leave is a statutory 90-day entitlement (45 days before and 45 days after birth). Paternity leave is a separate statutory entitlement. Public holidays number around 15 to 19 per year, including both fixed and moveable observances. The social security system provides pension, healthcare, and family allowance coverage.

Hiring and employment contracts

Written employment contracts are standard practice and required for fixed-term arrangements. Probation periods are capped at three months. Fixed-term contracts are permitted only for genuinely temporary work and are capped in duration. Termination without just cause requires a statutory severance payment (indemnización por despido) calculated on the best monthly salary and years of service, plus notice pay. The severance calculation and the applicable collective agreement's specific rules need specialist local advice rather than a simple formula.

Entity setup in Argentina

A Sociedad de Responsabilidad Limitada (SRL) or Sociedad Anónima (SA) is the standard vehicle for foreign employers, registered through the Inspección General de Justicia (IGJ) in Buenos Aires or the equivalent provincial authority. Post-incorporation, the entity registers with AFIP for tax and social security before hiring. End-to-end setup typically takes six to ten weeks, with IGJ registration and bank account opening often the pacing items.

EOR vs Payroll Management vs Entity Setup — Argentina

Frequently asked questions