On November 1, 2021, a decree was published in the Official Gazette of the Federation that establishes the creation of the Voluntary Labor Verification Program (the “Program”) by the Ministry of Labor and Social Welfare (the “Ministry”). The Program’s main purposes consist of introducing alternative mechanisms to inspections and to incentivize compliance at workplaces for matters related to: (i) occupational health and safety and (ii) training. Regarding general work conditions, only workplaces for which their industrial or service branch falls under federal jurisdiction will be able to join the Program.

Through the Program, eligible employers will be able to voluntarily report to the authorities their level of compliance with their obligations as employers.

Employers who enroll and satisfy the Program’s requirements may be exempted from ordinary labor inspection visits provided however, that the authority will continue to have the authority to verify compliance and to conduct extraordinary inspections.

The Ministry has 60 days to publish the operation guidelines of the Program. The Program will be accessed through the webpage: http://pvlv.stps.gob.mx/.

Stay tuned for our follow-up analysis once the guidelines are released.

For more information, please contact:

Juan Tejedo, juan.tejedo@gmt.mx
Alfonso García-Mingo, a.garciamingo@gmt.mx
Carlos Acle, carlos.acle@gmt.mx

This 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.

As some people start looking at the pandemic from the rear-view mirror, many employers are now re-thinking their plans to return to the office in early 2022. But even if you are yet to announce a reopening date it is worth having a return-to-office plan for quickly deployment when the time comes.

You can either resume business as usual or take advantage of the unprecedented crisis to adapt and innovate. In any event, there are certain legal issues you must be ready to address. There are many aspects you might need to consider based on the specifics of your business but here we will focus on some legal tips that can get you started:

1. Before announcing any return-to-office plans, ask yourself:

• Can employees refuse to go back to the office?
• Can employees be ordered to wear facemasks and get randomly tested for Covid-19?
• Can employees be ordered to show evidence of vaccination as a condition to continued employment? Can they refuse to get vaccinated?
• Are there regulations in place that must be complied with as a condition to reopening the office?

2. You may also realize that work-at-home arrangements during the pandemic were more productive and climate friendly, so you might want to also consider the following:

• Assess if telecommuting can continue going forward. You can test the waters with a pilot program.
• Make sure your telecommuting/home office policies and arrangements are up to date.

We can work with your organization in creating legal content and strategies to implement a return-to-office plan tailormade to your specific needs.

For more information, please contact:

Juan Tejedo, juan.tejedo@gmt.mx
Alfonso García-Mingo, a.garciamingo@gmt.mx
Carlos Acle, carlos.acle@gmt.mx

This 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.

On May 24, 2021, the guidelines to secure such registration were published in the Federal Official Gazette (Diario Oficial de la Federación).

Below are the key points of the guidelines:

• Vendors must access the following platform: http://repse.stps.gob.mx/.
• They will be asked to provide general information regarding (i) the company, such as by-laws, Federal Taxpayer Registry, address; (ii) its legal representative; (iii) number of employees; and (iv) economic activity, among others. The Ministry may request, at any moment, additional information.
• Vendors must be up to date with their social security and tax obligations.
• Vendors must prove the specialized nature of the services or the work.
• The Ministry will have 20 business days to issue the notice of registration; the registration will be valid for three years. The registry number and folio must be stated in the services or work agreements.
• The registration may be denied or cancelled; the guidelines do not contemplate an appeal mechanism in the event of denial or cancellation.
• Vendors that are registered must identify their employees by means of image, name, badge, etc. that links them to their employer during their services in the workplace of the company that hires the specialized services.
• Companies that provide shared or complementary services or work also have to register.
• The registry will be available for public consultation in a Ministry’s internet site.
• Vendors will have up to 90 natural days to register as of May 24, 2021; in other words, vendors must be registered before August 24, 2021.

Juan Tejedo, juan.tejedo@gmt.mx
Alfonso García-Mingo, a.garciamingo@gmt.mx
Carlos Acle, carlos.acle@gmt.mx

After much discussion and negotiation among the Mexican Government, the workers’ sector and the employers’ sector, the bill was passed into laws and published in the Federal Official Gazette on April 23, 2021.

Below are the key points of the amendments to the Labor Law (Ley Federal del Trabajo )¹:

1. The outsourcing of personnel as we know it is now prohibited (both outsourcing and insourcing). Any violations will face hefty fines;
2. However, the outsourcing of personnel will be permitted under two scenarios as long as certain requirements are met and such services are not part of the corporate purpose or core economic activities of the person contracting the services or benefiting from them (the “Permitted Services”):
   • The contracting of “specialized services” and “specialized work”; and
   • The contracting of “supplementary or shared services” among companies that belong to the same corporate group.
   • Among other requirements, vendors who wish to provide Permitted Services will have to register in a public registry that will be created by the Ministry of Labor and Social Welfare within 30 days of the publication of the amendments to the law. Once the registry and guidelines are issued,vendors will have up to 90 days to register.
3. Companies contracting Permitted Services will continue to be jointly liable with their vendors if the latter fail to comply with their labor and social security obligations towards their employees;
4. The Law provides for a 3-month transitional period starting on the publication date during which all employers must adopt all changes necessary to become compliant to the new Law; including transferring the employees from the outsourcing/insourcing company to the actual employer; and
5. Profit sharing will now be limited to the greater of: (a) three months of salary; or (b) an average of the profit sharing received by the employee in the last three years.

Juan Tejedo, juan.tejedo@gmt.mx
Alfonso García-Mingo, a.garciamingo@gmt.mx
Carlos Acle, carlos.acle@gmt.mx

¹ This Client Alert does not discuss amendments to other laws including the Social Security Law, Institute of the National Housing Fund for Workers Law, Tax Code, Income Tax Law and VAT Law.

1. outsourcing personnel will be prohibited (both outsourcing and insourcing);
2. both specialized services and specialized work will only be allowed for activities not related to the corporate purpose or main activities of the contracting company. The supplementary or shared services and works between companies of the same corporate group, will also be considered specialized only if such services are not part of the corporate purpose or the main activity of the entity receiving such services;
3. companies providing specialized services or works must be registered with the Ministry of Labor and Social Welfare and with the public registry applicable to such companies;
4. there will be joint liability for the contracting party if the services provider does not comply with its labor and social security obligations with its personnel;
5. a term of three months will be granted to transfer the employees that are outsourced to the payroll of the real employer; and
6. there will be a limit for profit sharing payments (a) three months of salary; or (b) an average of the profit sharing received in the last three years; the amount more beneficial to the employee will apply.

Once the amendment bill is approved by Congress, we will let you know.

Juan Tejedo, juan.tejedo@gmt.mx
Alfonso García-Mingo, a.garciamingo@gmt.mx
Carlos Acle, carlos.acle@gmt.mx

Earlier today, an amendment to the Federal Labor Law (herein, Labor Law) was published in the Federal Official Gazette which will be in full force and effect starting tomorrow; such amendment adds a new chapter to the Labor Law with new regulations for home office/telecommuting. The new term teletrabajo consists of the services being provided in locations other than the employer’s workplace.

Key Elements of Telecommuting

• teleworkers are entitled to the same rights as those who provide services in the workplace.
• telecommuting involves the use of information and communications technologies (“ICT”).
• telecommuters must provide more than 40% of their work outside of the workplace.
• telecommuting is voluntary on both sides and can be cancelled under certain conditions.
• the terms and conditions for telecommuting must be in writing.
• Collective bargaining agreements (“CBAs”) should include telecommuting provisions. If employers do not have a CBA in place then, such provisions must be included in their internal labor regulations.

Specific Obligations for Employers

• provide training for the use of ICT.
• assume some expenses and costs derived from telecommuting including payment of telecommunication services (i.e., internet) and a pro-rata portion of the electric bill.
• guarantee the right to disconnect.
• guarantee the right to privacy and personal data protection including limiting the circumstances under which video cameras and microphones must be used.
• The Labor Inspection Authority has full authority to verify compliance with these new obligations.

Specific Obligations for Employees

• keep employers informed of the costs associated with telecommunication services and electricity.
• use and abide by the employers’ mechanisms and systems to supervise their activities.

The Ministry of Labor and Social Welfare has 18 months to issue an Official Mexican Standard related to health and safety conditions for telecommuting and to further clarify other terms and conditions.

It is unclear at this point if Congress or the Labor Authorities will issue guidelines on how to determine when more than 40% of the services are provided outside of the workplace, what exactly is meant by the “right to disconnect” and clarification on the expenses and costs that employers must cover regarding telecommunication services and electric bill. But in the meantime, we recommend that employers revise their current regulations, policies and employment agreements to adopt the telecommuting provisions described herein.

Juan Tejedo, juan.tejedo@gmt.mx
Alfonso García-Mingo, a.garciamingo@gmt.mx
Carlos Acle, carlos.acle@gmt.mx
Regina de la Fuente, regina.delafuente@gmt.mx

Federal Labor Law

• As a general rule subcontracting or outsourcing personnel will be prohibited except for very limited situations described in the bill.
• Subcontracting or outsourcing may be permitted to the extent it refers to specialized services or specialized works that are not part of the corporate purpose or main activity of the beneficiary of the services. In such case, the service provider must obtain certain authorizations described in the bill.
• The authorizations to become a service provider of specialized works or services must be renewed every three years; however, the Ministry of Labor may refuse or cancel such authorizations at any time if the person in question fails to comply with statutory requirements. Service providers will have to register in a special registry called “Padrón de Prestadoras de Servicios Especializados u Obras Especializadas” that will be available to the public online.
• All arrangements with an authorized service provider must be in writing and the beneficiary and the service provider will be jointly liable for any violations involving labor and social security matters related to the employees involved in the service.
• The bill introduces fines that can go as high as US$220,000.

Social Security Law

• In case of violations to the Federal Labor Law, the beneficiary and the service provider will be jointly liable for violations on social security matters related to the employees involved in the service.
• Service providers will be required to make regular filings and comply with other reporting obligations to the Social Security Institute and the Ministry of Labor regarding of the services agreements they have entered into and other employee-related information, such as contributions and employee’s base salary.

Tax Related Laws

• Payments for unauthorized subcontracting or outsourcing will not be deductible for tax purposes: (i) when employees were originally employed by the beneficiary and then transferred to a service provider in an attempt to circumvent the law; or (ii) when employees performed all activities for the beneficiary of the services, as opposed to specialized work only.
• The beneficiary of the services must obtain from the service provider copies of (i) its authorizations, (ii) salary payment tax receipts, (iii) withholding tax return, and (iv) payments to the Social Security Institute and the National Fund for Workers Housing (INFONAVIT).
• Value Added Tax paid in connection with unauthorized subcontracting or outsourcing will not be creditable.

Unfortunately, the bill does not expressly address or gives a transition or correction period for current outsourcing regimes to become compliant with the bill. This needs further analysis.

Based on the above, the question then becomes: How to properly and lawfully subcontract or outsource personnel (if possible, at all) once, and if, this bill becomes law? These questions will be part of an ongoing analysis of the bill as the legislative process moves forward.

Stay tuned for our follow-up analysis.

Juan Tejedo, juan.tejedo@gmt.mx
Alfonso García-Mingo, a.garciamingo@gmt.mx
Carlos Acle, carlos.acle@gmt.mx

On May 29, 2020 the Mexican Government published Specific Technical Guidelines for the Reopening of Economic Activities (the “Guidelines”) in the Federal Official Gazette.

The Guidelines are mandatory for all workplaces and their purpose is to outline the necessary measures for reopening or for the continuity of activities.

To determine the measures that apply to each workplace the following features must be considered:

• (i) activity type (are you an essential or non-essential activity?);
• (ii) workplace size (based on the number of employees);
• (iii) internal characteristics of the workplace; and
• (iv) health alert level where the workplace is located.

Based on the responses to the abovementioned queries, it will be possible to identify the applicable measures to each workplace listed in the checklists annexed to the Guidelines.

If the company’s activities are essential, a mandatory online self-assessment of compliance should be made. For non-essential activities, the online self-assessment is voluntary; however, observance of the measures is mandatory.

The “New Normality” begins on June 1, 2020.Based on the traffic light system, the following will be determined: (i) what is the alert level (which will be updated weekly); and (ii) which activities may restart operations.

WHAT MUST BE DONE?

1. Implement the applicable measures for each workplace;
2. Self-assess; and
3. Constantly monitor the traffic light system.

Be on the look-out for possible subsequent guidelines for specific industries and changes to the alert level at each workplace location.

Juan Tejedo, juan.tejedo@gmt.mx
Alfonso García-Mingo, a.garciamingo@gmt.mx
Carlos Acle, carlos.acle@gmt.mx
Regina De la Fuente, regina.delafuente@gmt.mx

As the coronavirus outbreak continues in Mexico and given that the Mexican Government has extended the stay at home orders at least through May 30, 2020, many employees who used to commute to their place of work are now working from home (“telecommuting”). Thus, organizations may have realized by now that telecommuting arrangements during the pandemic were more productive and climate friendly so they should think about what steps they need or want to take going forward to manage the
impact in their workplace, including continuing telecommuting arrangements on a permanent basis.

Although organizations in Mexico are not mandated or required to offer telecommuting, the current global health crisis makes it a key tool to maintain productivity, workforce, and source of employment. Forbes¹ predicts that telecommuting is here to stay.²

Generally speaking, implementing telecommuting arrangements in Mexico will require preparing at least a telecommuting policy to ensure consistency of application and telecommuting agreements that must comply with such policy and other statutory requirements. The legal framework is less than perfect so any strategy and implementation will require a nuanced assessment of the situation and the
possible costs.

The foregoing calls for critical advance planning to avoid business interruptions and ensure the availability of resources and personnel. This is not to say that we are advising all clients to immediately adopt telecommuting arrangements. Rather, we suggest considering preparing action plans and putting them “on the shelf” ready for rapid deployment if and when advisable. Pilot programs may also be helpful in determining if telecommuting arrangements are effective enough.

This document was prepared by the team of García Mingo & Tejedo, S.C. We can work with your organization in creating content and strategies to implement telecommuting policies and arrangements tailormade to your organization’s specific needs.

FOR MORE INFORMATION, PLEASE CONTACT:
Juan Tejedo, juan.tejedo@gmt.mx
Alfonso García-Mingo, a.garciamingo@gmt.mx
Carlos Acle, carlos.acle@gmt.mx
Regina de la Fuente, regina.delafuente@gmt.mx

¹ Telecommuting Surge Likely to Last Past COVID-19 Crisis, Predicts Brookings Report by Ted Knutson.
https://www.forbes.com/sites/tedknutson/2020/04/08/telecommuting-surge-likely-to-last-past-covid-19-crisis-says-brookingsreport/#
5269fb8574ca. (Last visited: April 8, 2020)
² https://www.fastcompany.com/90504163/twitter-will-let-employees-work-from-home-permanently-will-other-companiesfollow?
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rner (Last visited: May 19, 2020)

On March 31, 2020 the Mexican Government issued a health emergency declaration (emergencia sanitaria por causa de fuerza mayor) over SARS-CoV2 (COVID-19) coronavirus outbreak and issued stay-at-home and shut-down orders. Although these orders have not been lifted as of today, so this Alert will discuss tips and actions that employers and organizations should proactively engage to be prepared once such orders are lifted especially since new guidelines have been issued by various levels of government creating a complex regulatory maze for employers to navigate in
preparation for reopening.

According to the International Monetary Fund; this pandemic -dubbed by the IMF as the “Great Lockdown”¹– is the “…the worst recession since the Great Depression, and far worse than the Global Financial Crisis.”² But as days and months go by, countries and organizations across the globe are preparing for their comeback. The Great Reopening.

Although it is critical to make a thorough assessment of the situation and come up with a plan tailored made to your organization’s specific needs, everyone can benefit from the following tips and proposed actions:

WHAT WE LEARNED?

• Identify and understand the weaknesses and strengths of your business during the crisis.
• Understand if your business was sufficiently prepared to cope with the coronavirus outbreak and the consequences it entailed (e.g., shut-down or slow-down orders, telecommuting, etc.).
• Brainstorm with your team what are the takeaways from the crisis and what innovations can come out of it. Innovations do not necessarily have to be disruptive. Incremental innovations are also a good thing; small but smart adjustments and changes can go a long way.³

HOW TO MOVE FORWARD?

To use a football analogy, you need to huddle with your team, prepare a game plan and call the next play.

You can resume business as usual or you can take advantage of the unprecedented crisis to adapt and innovate. In any scenario, addressing the issues in the prior section can be a good starting point to make informed decisions. There are many aspects you might need to consider based on the specifics of your business but here we will focus on some legal tips that can get you started on the legal aspects of your business:

• It is impossible to predict the next crisis but gaining a good understanding and hindsight of the current crisis will help you be better equipped to navigate the next one -whether it is a global pandemic or otherwise.
• Whether your organization was classified as an “essential” business or not, prepare and keep a file of what actions were taken and what actions should have (or shouldn’t have) been taken during the crisis. This will help you navigate the next crisis.
• Plan communication to employees to get back to the office and be prepared to answer the next questions:
  • What if employees refuse to go back to the office?
  • Can employees be ordered to wear facemasks and get tested for Covid-19 as a condition to go back to the office?
  • Are there any regulations that should be complied with prior to going back to the office such as social distancing rules, staggered work shifts, sanitization protocols, use of face masks, etc.?
• Identify and assess what will happen with employees who were subjected to salary reductions or employees who were furloughed.
• Many firms realize that work-at-home arrangements during the pandemic were more productive and climate friendly so you might want to consider the following:
  • Assess if telecommuting was a good thing during the pandemic and if it can be implemented going forward.⁴ You can test the waters with a pilot.
  • Update your telecommuting/home office policies and arrangements.
• Assess your need for leased office space especially if telecommuting will be implemented. Review your lease arrangements to understand your contraction rights.
• Assess contractual relations with your vendors and customers.
• Identify who suspended/defaulted compliance with their contractual commitments due to the coronavirus outbreak and identify next steps to resume operations with them.
• Understand if your firm suspended/defaulted compliance with its contractual obligations due to the coronavirus outbreak, identify the legal consequences that may result from such default/suspension such as penalties, termination rights, termination of exclusivity rights, to mention a few.
• Understand your payment obligations in foreign currency and the dollar/pesos fluctuation. Many businesses in Mexico undertake payment obligations in US dollars but their cash flow is in pesos.
• Identify if there are federal or local tax breaks available and if your organization is eligible for such benefits.

BE PREPARED TO MAKE ADJUSTMENTS

It is not possible to come up with a perfect plan to get back on track so be ready to adapt and adjust as needed. The coronavirus outbreak presented unique and unprecedented circumstances and its long-term effects are yet to be seen in the years to come, so getting back to normal -or a new normal- will be a challenge and will take time.

CONCLUSION

Just like in football, your business is not the huddle. If you never break the huddle, if you never run the plays, you can never win the game.

This document was prepared by the team of García Mingo & Tejedo, S.C. We can work with your organization in creating content and strategies in preparation for your reopening.

FOR MORE INFORMATION, PLEASE CONTACT:

Juan Tejedo, juan.tejedo@gmt.mx
Alfonso García-Mingo, a.garciamingo@gmt.mx
Carlos Acle, carlos.acle@gmt.mx

¹ https://blogs.imf.org/2020/04/14/the-great-lockdown-worst-economic-downturn-since-the-great-depression/
² Idem
³ https://www.theatlantic.com/ideas/archive/2020/04/safely-reopen-make-workweek-shorter/610906/
⁴ https://www.fastcompany.com/90504163/twitter-will-let-employees-work-from-home-permanently-will-other-companiesfollow?
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rner