Member Article

On November 30, 2012, the long-awaited amendments to the Mexican federal labor law were published in the Official Gazette of the Federation (Diario Oficial de la Federación). The primary purpose of this set of reforms is to promote job creation and to attempt to regularize labor relationships that arise informally.

The issues addressed by the labor reforms include: defining the elements of any employment relationship, incorporating the notion of “decent work” promoted by the International Labor Organization; regulating child labor, among other things making it a crime to hire minors; regulating the work of Mexicans outside of Mexico; establishing the obligation to suspend work in the event of health emergencies and adopting measures to prevent and combat them. The reforms also: clarify the grounds for termination of employment and the duties of, and restrictions upon, employers; prescribe working conditions for farmworkers; and clarify the rules related to the working conditions of domestic workers. There is also a new chapter regulating labor in the mines: it prohibits working in vertical coal mine shafts and disallows hiring minors under 18 to work in the mines, along with making procedural reforms.

The following are some of the highlights of the labor reforms:

Outsourcing

The reforms address the issue of outsourcing (subcontratación), establishing a prohibition against companies hiring all their employees via intermediaries. It also provides that companies who do contract with outsourcing companies will be jointly and severally liable with them vis-à-vis the worker if they fail to meet their obligations to the worker. Thus, the employer has the duty to verify that the (outsourcing) company it retains complies with all statutory requirements and stays abreast of its tax, safety and health obligations. Employees of these companies will have all the same rights and benefits as the other workers.

New Hiring Arrangements

Certain new hiring arrangements are addressed in the reform. It is contemplated that trial or probationary labor contracts be in writing, for set periods of time (30 or 180 days depending on the case), and may not be extended or renewed. In the event the employee does not demonstrate his or her qualifications within the period established, the relationship will terminate without any liability to the employer. In any of such arrangements, salary and benefits must correspond to the category of job performed or the position filled.

The amendments also regulate employment for training; this arrangement is allowed for periods of three or six months, depending on the case, but may not be applied either simultaneously or successively to the same worker in a given company or establishment. If the prescribed trial or training period ends and the working relationship keeps going, then unless stated otherwise, it will be deemed to be an employment relationship for an indefinite period and the time spent in training will be counted in determining seniority.

Back Wages

Under the new set of reforms, the accrual of back wages during a trial for wrongful dismissal will be limited to one year; if the trial is not concluded within that time, the employer will be required to pay interest, at a rate of 2 percent per month, calculated on an amount equal to 15 months’ salary. Moreover, back wages will cease accruing upon the death of the employee in order to avoid such trials being artificially prolonged by the attorneys involved, and fines will be imposed for prosecuting legal actions that are patently frivolous.

Payment by the Hour

The concept of paying for services per unit of time is introduced. In cases where this type of employment relationship is agreed upon, it is expected the payment term must be specifically spelled out. Accordingly, under this scheme, the worker and the employer may agree upon payment per hour of service provided, so long as the maximum number of hours per day is not exceeded and the total income is not less than the minimum for one work day (the general minimum wage then in effect).

Productivity and Training

The amendments favor worker productivity as the main criterion for being selected to fill vacant positions, both permanent ones and interim ones of more than thirty days, as well as newly created positions. All things being equal, preference should be given to the worker who has more training or demonstrates greater aptitude.

Transparency of Labor Unions

The reform is intended to allow for greater transparency as far as information about labor unions and the management of their assets is concerned. The record-keeping authorities are expected to make available to any person the current information found in the unions’ public filings, and imposes on the union leadership the obligation to submit to the assembly every six months a full and detailed accounting of the management of union assets, including income from union dues.

Death Benefit

The amount paid out in the event of the death of a worker as a result of a job-related incident has been increased: it will be an amount equal to 5,000 days’ worth of minimum salary, without deducting any amounts received during the period of temporary incapacity.

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