Milei’s Signature Reform Frozen by Court Order

The Rio Times, the Latin American financial news outlet, reports that Argentina’s labor reform — the centerpiece of President Javier Milei’s 2026 legislative agenda — has been paralyzed by a federal court ruling. Judge Raúl Ojeda of National Labor Court 63 suspended 82 of the law’s 218 articles on Monday, finding “serious and grave” indications of unconstitutionality and violations of union freedom and workers’ inalienable rights.

The injunction responds to a legal challenge filed by the CGT, Argentina’s most powerful labor federation and a historic bastion of Peronism. The government has announced it will appeal, but the reform remains frozen while courts examine whether it complies with the constitution and international labor treaties.

What Is Suspended

The suspended provisions include virtually every article that investors and employers had welcomed. Among them: restrictions on the right to strike and authorization of sanctions for union protests, changes to collective bargaining rules, modifications to probationary periods for new employees, and revised formulas for calculating seniority and severance pay.

The ruling also freezes the repeal of Argentina’s remote work law and suspends articles that reduced employer liability when using outsourced labor. These were among the most significant deregulatory measures in the package.

The so-called Ley de Modernización Laboral had been Milei’s most important legislative achievement of 2026. It flexibilized hiring conditions, made dismissals cheaper, allowed extended working hours, made overtime pay optional in certain cases, and reduced employer social security contributions.

A Pattern of Judicial Resistance

Monday’s ruling is the broadest judicial blow to the reform, but not the first. At least five courts across Argentina have already declared individual articles unconstitutional in separate first-instance rulings. The legal challenges have come from both individual plaintiffs and collective actors.

The CGT, led by Jorge Sola, Octavio Argüello, and Cristian Jerónimo, called the law a reduction in labor protections, a degradation of working conditions, and a weakening of union action that violates Argentina’s international human rights and labor commitments. The federation has opposed Milei‘s economic reforms since his inauguration.

What It Means for Markets

Labor flexibilization has been a core component of the investment thesis behind Argentine assets under Milei. The reform was designed to reduce the cost and legal risk of hiring, attracting formal employment and foreign direct investment into a labor market that has stagnated for over a decade.

The judicial suspension does not kill the law — the government will appeal and the constitutional debate could take months or years to resolve. But it introduces exactly the kind of institutional uncertainty that the 380-basis-point “reversal risk” premium on Argentina’s latest bond issuance was already pricing in.

Milei has argued that modernization is essential to unblock a stagnant job market. The courts are now testing whether that modernization can survive Argentina’s constitutional framework — and whether the country’s Peronist institutional infrastructure can be reformed by legislation alone.