Mexico: New Labour Regulation; What’s Next?

By Hugo Hernández-Ojeda Alvírez

Posted: 22nd May 2014 08:47

The Mexican Federal Labor Law governs employment relationships in Mexico; such regulation applies to all work relationships.  The Law is of constitutional origin, and its dispositions cannot be waived.
 
In December 2012, after 42 years, the Mexican Federal Labor Law was finally amendment (“Labor Reform”) with new rules for the employment relationships applicable.  The amendments include:
 
 - Notion of a dignifying and decent employment.
 - Strengthens the provisions to avoid discrimination at work place.
 - New rules related to subcontracting (outsourcing) regime are applicable; this is one of the most important modifications of the Law due that affect the profit sharing strategies implemented in Mexico by the employers.
 - It is forbidden to hire employees less than 14 years of age outside the family circle.
 - In addition to the existing contracting schemes, it is provided that the labor relationship may be for a seasonal period, for initial training and for trial periods.  In all of these cases, the social security of the personnel shall be guaranteed.  When the corresponding authorities issue a sanitary contingency decree that implies a suspension of work, and only in the case of collective suspension of labor relationships, the employer shall not require the approval or authorization from the Conciliation and Arbitration Board and shall be obliged to pay its workers an indemnity equal to one day of the general minimum wage for every day in which the suspension lasts, without exceeding one month.  The workers shall be obliged to restart labors as soon as the contingency is over. 
 - There is an additional cause of termination of the labor relationship with cause due to the lack of honesty and probity in which an employee incurs against clients and suppliers of the employer.
 - An additional cause of termination of the labor relationship with cause consists in an employee incurring in sexual harassment against any person within the place of work. 
 - It is provided that a wage by unit of time may be specifically agreed.  The parties may agree the amount as long as the salary is compensated and it does not exceed the maximum legal shift and the labor and social security rights are respected.
 - It is allowed to pay the salary, prior consent of the employee, through deposits in a bank account, debit card, wire transfers or any other electronic means.
 - Employers who have more than 50 workers shall have adequate facilities for access and development of activities by handicapped individuals.
 - In addition, there is an obligation for the employer to comply with the regulations and official Mexican standards (normas oficiales mexicanas) with respect to security, health and environment in the place of work, as well as to have, at all times, medication and first aid materials necessary for these purposes.
 - The maternity leave becomes flexible with respect that four of the first six weeks prior to birth may be transferred to period after childbirth.
 - The paternity leave (consisting in five working days of pay permit) is now a benefit for the employees.
 - Regarding work at home, there is a regulation on distance work and the use and benefit of available technology.
 - There is regulation of mine work, making special emphasis in the security of the workers, especially with respect to coal mining workers.
 - New regulation related to the Union’s administration is applicable.
 - The Labor Courts shall consider regarding litigation, new rules for the Labor Process.
 - Sanctions for violations to the Federal Labor Law are included, including fines for discrimination at the place of work.
 
The Labor Reform is an answer of the new times in which Mexican Labor and Employment Authorities are facing, among others, the following challenges:
 
1. Creation of new and better employment opportunities to be implemented in the eleventh labour market in the world.
2. Incorporation of policies to promote the productivity among employers, unions and employees.
3. Increase the purchasing power of the employees.
4. Reduction of “informality” employees in the country.
5. Supervision of the accomplishment of the labor regulation by employers and employees.
6. Flexibility if the employment requirements.
 
The “Mexican Labor Modernity” implies a lot of obligations to the employers and new opportunities for employment.  The flexibility to hire and terminate an employment relationship is just one of the changes included by the Labor Reform.
 
Nowadays, due to the Labor Reform, new individual employment agreements, including in such documents probation or training periods, are executed by the parties of the employment; the subcontracting and outsourcing relationships must be documented properly; sexual harassment, discrimination and moving are considered reasons for termination of the employment; back salaries in labor procedures are capped for a year (after that period a new labor fee will be charge); and other important changes shall be considered for the employer and employee.
 
Due that the Labor Authorities are now able to impose higher fines to the employers that will not comply with the Labor Regulation (around USD$30,000.00), companies and individuals are emphasising their efforts to their employer, social security and tax obligations.
 
The Labor Reform is changing the idea of some employers related that the lack of accomplishment of labour, social security or tax obligations represents savings for their companies; I believe in Law and, therefore, my advice to our clients is always to fully comply with law, strategy that, in the long time, is always cheaper for employers.
 
In my opinion the Labor Reform was the first step for the new Mexico era; after the Labor Reform, other legislations (energy, telecom, tax, etc.) were amended and some others are in the process to be modified.
 
In addition to the reforms and amendments abo mentioned, due to the benefits of its borders (north U.S.A. and south Central America), the strategically geopolitical position in Latin America, and its new regulations, Mexico could become one of the more important player in the economical markets.
 
Mr. Hernández-Ojeda completed his law degree at Universidad Anáhuac del Sur (1995).  He has completed various postgraduate diplomas and specialty courses in Labor and Social Security.
 
He began his professional career in 1991 as an intern at Barrera, Siqueiros y Torres Landa, S.C.
 
In 1992, he joined Santamarina y Steta, S.C.; in 2001, Mr.  Hernández-Ojeda became Senior Partner in the firm Rodríguez y Hernández Ojeda, S.C., heading the Labour and Social Security department; in 2008, he rejoined Barrera, Siqueiros y Torres Landa, S.C., as Partner heading the Labour and Social Security department, his current position.
 
Mr. Hernández-Ojeda has been ranked Band by Chambers and Partners, Latin Lawyer, The Client’s Guide and Legal 500.
 
He has authored various articles on labor for different publications, such as AbogadoCorporativo,Latin Lawyer and The International Comparative Legal Guide.
 
Member of the Mexican Bar Association,theAsociaciónNacionaldeAbogadosdeEmpresa,Colegio deAbogados,ANADE, the InternationalBar Association and Chair of the Executive Board of the United States - Mexico Bar Association.
 
He has given conferences for various associations, universities, and organisations, such as ANADE, AMEDIRH, USMBA, IBA, University of Texas and Universidad Panamericana, among others.
 
Hugo Hernández-Ojeda Alvírez.
hhernandezojeda@bstl.mx
www.bstl.mx

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