The bill was recently presented for discussion by the Mexican Senate, so it is still subject to the legislative process and is not yet legally binding. However, Senator Napoleón Gómez who, in addition to being the leader of the Miners’ Union, has been one of the main detractors of the outsourcing structure so his bill has great significance and may proof to have significant weight.

Some items of the bill may directly impact the organizational structures of companies hence it is important to know the bill and monitor its progress. The following items in the bill stand out:

• It widens the scenarios prohibiting outsourcing and deeming such scenarios as simulations for all legal purposes including for criminal and tax purposes.

• Among the new scenarios, the bill provides that outsourcing will be prohibited «…when the contractor has a direct professional, labor or economic relationship with the contracting party or is part of the same company, entity or economic group».

• In connection with the prior point, it is intended that the beneficiaries of the service pay the corresponding PTU (profit sharing) to outsourced personnel.

• It provides that the agreements between contracting parties or beneficiaries and the outsourcing company shall be in writing and a copy thereof shall be delivered to the outsourced personnel.

• The outsourced personnel will have the right to receive the same working conditions as those employed by the contracting party or beneficiary.

• It contemplates the creation of a National Outsourcing Companies’ Registry (Registro Nacional de Empresas de Subcontratación), including the requirements for admission and permanence.

• It gives authority to STPS, IMSS and INFONAVIT to conduct preventive, ordinary and extraordinary inspections to guarantee the performance of employer-employee obligations.

• Article 1004 of the Federal Labor Law is amended to provide for penalties that will range from 250 to 5000 measurement units against those who undertake outsourcing simulations.

• Surprisingly, the transitional provisions of the bill seek to impose sanctions retroactively those who incurred in outsourcing simulations.

• In contrast to the prior point, the transitional provisions will give a 180-day deadline to the contracting parties that failed to pay PTU to the personnel that were illegally outsourced (i.e., in simulation) to pay it, as well as to voluntarily pay to SHCP the omitted tax contributions, among others. Once such cure period expires, the prosecutor may initiate criminal actions for any criminal and tax matters that may have resulted -independently from any other sanctions that may apply from a labor perspective.

About the author: Juan Tejedo is a partner at García Mingo & Tejedo, S.C. with broad experience representing international and domestic clients in labor and collective matters. Juan may be contacted at: juan.tejedo@gmt.mx

On June 4, 2019 a Decree was published in the Official Gazette of the Federation adding various provisions to the Social Security Law and the Federal Labor Law. Such amendment entered into force on June 5, 2019.

Section 140 Bis was added to the Social Security Law, providing that insured employees with children up to the sixteen years who are diagnosed with cancer by the Mexican Social Security Institute (“IMSS”, for its acronym in Spanish), may obtain a leave of absence from work to take care of them.

Such leave of absence will entitle employees to periods from one to twenty-eight days of leave, which may be re-granted as many times as required, during a maximum term of three years, without exceeding a total of 364 days.

The leave of absence will cease when (i) the minor does not require hospitalization or medical rest; (ii) the minor dies; (iii) turns sixteen years old; or (iv) the employee is hired by a new employer.

Employees with at least 52 weeks of immediate contributions prior to the start of the leave, will be granted a subsidy equivalent to 60% of the last daily salary recorded by the employer, which will be covered by the IMSS.

In line with the above, Section 42 of the Federal Labor Law was amended to include the abovementioned leave as a cause for temporary suspension of the employment relationship; therefore, the obligation to provide services and pay salaries are suspended.

Section 132 of the Federal Labor Law is added to provide the obligation of the employer to allow employees to obtain the leave issued by the IMSS.

juan.tejedo@gmt.mx

a.garciamingo@gmt.mx

regina.delafuente@gmt.mx

Background

On February 24, 2017, a decree was published by means of which Articles 107 and 123 of the Mexican Constitution were amended.

In order to comply with the amendments made to the Constitution, labor legislation in Mexico had to be amended.

On April 29, 2019 the Mexican Senate approved the decree which amends the Federal Labor Law and such amendment was published on May 1, 2019 in the Federal Official Gazette in Mexico

Main Changes

1. Collective Bargaining Agreements and Unions

Union leaders, union committees and negotiations of collective bargaining agreements will be decided through free, secret, personal and direct vote of the union members.

Unions leaderships will have to provide full and detailed information on fund, use and management.

Employers will have to provide employees with a printed copy of the collective bargaining agreement within 15 days following its filing.

Employees may refuse deductions of union dues.

In order to register a collective bargaining agreement or the revision of a collective bargaining agreement, unions will have to attach a Proof of Representativeness issued by the Centro de Conciliación y Registro Laboral (a new labor authority where all collective bargaining agreements must be registered).

2. Procedural Changes

Currently, labor courts are administrative bodies which belong to the executive branch. With the amendment, labor courts will now belong to the judiciary branch as formal Courts.

A conciliation pre-trail stage is added and mandatory. The parties will present at the Conciliation Hearing, settlement proposals. If an agreement is reached, the parties will execute a settlement agreement. Otherwise, the complaint may start a trial with the corresponding Court. Only on exceptional cases the trial will begin without the pre-trial stage.

Regarding collective claims, and for the dispute of management and administration of collective bargaining agreements, new rules and procedures are added. Additionally, salaried employees may not intervene in voting hearings and inquiries regarding the execution or negotiation of collective bargaining agreements.

3. Employment Relationships in General

Employment agreements must now include the designation of beneficiaries for the payment of salary and accrued benefits in case of death or disappearance of an employee.

Employers must implement an action protocol to prevent discrimination and handle cases of violence, bullying and sexual harassment. It is required to guarantee a work environment free of discrimination and harassment.

If you have any questions about this Client Alert, please contact:

Juan I. Tejedo Moreira

juan.tejedo@gmt.mx

Alfonso García-Mingo

a.garciamingo@gmt.mx

Regina De la Fuente

regina.delafuente@gmt.mx

Client Alert is published by GarcíaMingo & Tejedo, S.C., as a news reporting service to clients and other friends. The information contained in this publication should not be construed as legal advice. Should further analysis or explanation of the subject matter be required, please contact the attorney with whom you normally consult.

(i) Whenever a union attempts to force an employer to enter into a Collective Bargaining Agreement, it must evidence that it has the employees’ representation. In the past, this legal requirement did not exist and it was only necessary for the union to file a request for a strike, even without the representation of any of the employees.

(ii) The resolution of disputes and controversies among employers and employees, will be in charge of labor courts (previously known as Conciliation and Arbitration Boards), which will now be part of the
Federal Judiciary. Currently, Conciliation and Arbitration Boards administratively depend in the Federal Jurisdiction from the Ministry of Labor (a part of the Federal Executive branch) and in the local jurisdiction from Local Governments (State Governors), their resolutions are adopted by the majority vote of their three representatives (government-employers-employees).

(iii) Rulings by Labor Courts must comply with principles of legality, impartiality, transparency, autonomy and independence.

(iv) Before appearing at the Labor Courts, employees and employers must attend a mandatory conciliation procedure, the basis of which will be established by applicable law and include a sole mandatory hearing.

(v) On collective negotiations, procedures and requirements shall be free and must guaranty the following principles:

• Representation of union organizations;

• Certainty on the execution, recording and registration of Collective Bargaining Agreements;

• For the resolutions of conflicts among unions, the request for entering into collective bargaining agreements and the election of union leaders, employees’ vote shall be personal, free and secret; and

• For the election of union leaders, the by-laws of the corresponding union may provide the procedure as long as it is in accordance to the law.

(vi) In addition to those existing today, the following matters shall be of competence of Federal Labor Authorities:

• The recording of unions and collective bargaining agreements;

• Participating in conflicts which impact two or more States;

• Collective Bargaining Agreements which have been declared mandatory in more than one State;

• Employers’ obligation on education matters; and

• Employers’ obligation on training and instruction; as well as safety and hygiene.

(vii) The Decree will enter into force on February 25, 2017. The Federal Congress and the Legislatures of each state must implement the necessary legislative changes to comply with the contents of the Decree within a year from February 25, 2017.

With respect to pending cases at the Conciliation and Arbitration Boards, all files and documents relating thereto must be transferred over to the Labor Courts and Conciliation Centers.

If you have any questions about this Client Alert, please contact

Juan I. Tejedo Moreira
juan.tejedo@gmt.mx

Client Alert is published by GarcíaMingo & Tejedo, S.C., as a news reporting service to clients and other friends. The information contained in this publication should not be construed as legal advice. Should further analysis or explanation of the subject matter be required, please contact the attorney with whom you normally consult.

Dear clients and friends,

As you may know, federal elections including the election of the new President of Mexico will take place this upcoming July 1st, 2018. Consequently, please be informed that such day will be a mandatory holiday for all employees.

Notwithstanding the foregoing, employees who are selected by their employer to work on such date will have an obligation to do so and; therefore, will be entitled to receive, in addition to their regular salary,
an additional double salary for their services.

Also, employers shall allow their employees working on such date, the necessary time to vote within working hours.

About the author: Juan Tejedo is a partner of GarcíaMingo & Tejedo, S.C. Mr. Tejedo is the head of the labor practice and has more than 20 years of experience representing employers in all aspects related to labor and employment matters including litigation, union matters, health & safety, discrimination and data protection. Mr. Tejedo can be contacted at juan.tejedo@gmt.mx.