As you are aware, there has been much debate about possible amendments to eliminate subcontracting schemes. In this regard, yesterday the President of the Mexican Republic, together with the Ministry of Labor and Social Welfare, announced that a new Initiative will be submitted to the Chamber of Deputies to amend, add and repeal various provisions of the Federal Labor Law, the Social Security Law, and the Law of the Institute of the National Fund for
It is important to note that the statement of grounds indicates that subcontracting, although it is a natural form of legal relationship for the development of certain specialized processes, has not been free of abusive or simulated practices to the detriment of the rights of workers, so this initiative seeks to strengthen employment and eliminate practices that undermine labor rights and evade compliance with employer obligations. As a result of the foregoing, the main amendments contemplated by the Initiative are: 1. The figure of the “intermediary” is defined, understood as the individual or legal entity that intervenes in the hiring of personnel to provide services to an employer. These intermediation services may include recruitment, selection, training, instruction, among others. In no case shall the intermediary be considered the employer, since this character shall be held by whoever benefits from the services. 2. The subcontracting of personnel is prohibited, consisting of an individual or legal entity providing or making available its own workers for the benefit of another. 3. The provision of specialized services or the execution of specialized works that do not form part of the corporate purpose or of the economic activity of the beneficiary thereof shall not be considered subcontracting of personnel, provided that the contractor has the authorization of the Ministry of Labor and Social Welfare for such purposes. On the other hand, the formalities and requirements that any individual or legal entity must meet in order to be able to contract the provision of specialized services or the execution of specialized works are established, among which is included the formalization of a contract stating the purpose of the services to be provided or the works to be executed, as well as the number of workers who will participate in fulfilling it. It is established that the individual or legal entity that contracts the provision of specialized services or the execution of specialized works with a contractor that fails to comply with the obligations arising from the relationships with its workers shall be jointly and severally liable in relation to the workers used for said provision of services. 4. It is intended to establish as a requirement for the individuals or legal entities that provide the aforementioned services the obligation to have authorization from the Ministry of Labor and Social Welfare. The authorization shall be renewed every 3 years. The creation of a registry of providers of specialized services or specialized works is also contemplated. 5. Regarding employer substitution, it is established that the assets that are the object of the company or establishment must be transferred to the substitute employer for the employer substitution to take effect. 6. A penalty of 2,000 to 50,000 times the Unit of Measure and Update (currently MX$86.88) is established for those who carry out subcontracting of personnel or those who provide specialized services or execute specialized works without the corresponding authorization. As indicated, the Initiative also contemplates relevant changes to the Social Security Law, the Law of the Institute of the National Housing Fund for Workers, the Federal Tax Code, the Income Tax Law and the Value Added Tax Law, in order to bring it into harmony with the reforms to the Federal Labor Law. We will keep you informed of developments and will be pleased to support you in creating an action plan in the event that the reform continues its course. For additional information, contact our experts: Rodolfo Trampe, Partner: +52 (55) 5258 1054 | rtrampe@vwys.com.mx Alix Trimmer, Associate: +52 (55) 5258 1054 | atrimmer@vwys.com.mx Alejandro Pérez, Associate: +52 (55) 5258 1054 | alperez@vwys.com.mx
