By Oscar De La Vega and Eduardo Arrocha.
Reading the document prepared on March 26 by the Department of Labor and Social Welfare, called “The Labor Situation in Face of Covid-19, frequent questions” has motivated us to write this article. The only intention is to clarify, from the legal standpoint, the labor uncertainty that we are living.
In effect, in question 11., the subject document reads:
Can an employer suspend work in a company without a health contingency having been declared?
Answer: Yes, it can, as long as it continues paying workers their salaries and benefits. In the event of a health contingency decreed by the competent authority, which has not been happened to this date (March 26 2020), the employer will have the obligation of paying the amount of one minimum wage to the workers during the suspension, for up to one month…”
In regard to this statement, in the sense that the health contingency has not been declared, the World Health Organization (hereinafter “WHO”) declared the pandemic of the disease caused by the SARS-CoV2 virus (hereinafter “COVID-19”) as a public health international emergency and issued a series of recommendations for its control.
The General Health Council of Mexico, a collegiate body based on Article 73, Section Sixteen of the Political Constitution of the United Mexican States in the decision made on the session held on March 19 of this year, in turn, resolved in Agreement 1:
“The plenary session of the General Health Council acknowledges the disease caused by the SARS CoV2 (COVID) virus in Mexico as a serious disease requiring priority attention.”
In point 2 of the same session, the Council agreed:
“The plenary session of the General Health Council sanctions the measures for preparation against, prevention and control of the COVID epidemic designed, coordinated and supervised by the Department of Health and implemented by the agencies and entities of the Public Federal Administration (APF), the Legislative and Judicial Powers, the institutions of the National Health System, the governments of the federal states and various organizations of the social and private sectors.”
The foregoing means, without a doubt, that Mexico is facing a health contingency, which is the only thing that can justify the measures taken by the Federal Government, by means of “stay at home”, and by several institutions, the Judicial Power among them, which have ordered the suspension of work, as well as those measures adopted by the state governments, including that of Mexico City.
If we were not in the midst of a health contingency, there would be no legal basis for adopting the measures included in the AGREEMENT issued by the Minister of Health, published in the Official Gazette of the Federation on March 24 of this year which, in its statements, outlines and explains the bases for the emergency measures included in the abovementioned Agreement of March 19 by the General Health Council and based on Articles 181, 183 and184 of the General Law on Health, which empower it to “immediately promulgate the indispensable measures to prevent and fight health risks, under the provision that said measures are then sanctioned by the President of the Republic”, measures that restrict activities and rights of both natural persons and entities were mandated.
In effect, the measures adopted in Phase 2, which include the so-called “social distance”, include among others: 1) the suspension of activities in companies and, therefore, the suspension of employment relationships with their employees, 2) the confinement of people in their homes, 3) the restriction to the free transit of people, 4) the suspension of labor for people over 65 years of age and other groups considered to be vulnerable; among many other measures including the possibility of imposing penalizations and the use of public force to enforce these measures.
This agreement was sanctioned by the President of the Republic, under the terms of the Decree published in the Official Gazette of the Federation, also on March 24, expressly in ARTICLE 1 of the Decree.
It is clear that measures to prevent and fight the health contingency, a situation that cannot be called by any other name, are being implemented; nevertheless, the labor authority contends that the contingency has not been declared, this with the sole purpose of circumventing the legal provisions of the Federal Labor Law, as explained below.
The institution of COLLECTIVE SUSPENSION OF WORK exists in our Labor Law. Its objective being to avoid the termination of employment relationships by just suspending them in face of extraordinary situations that affect the normal development of activities in the workplace, allowing the employer to preserve the viability of the company by reducing labor costs during the contingency and ensuring a compensation that allows the worker to face this extraordinary situation, as long as the work suspension implies: the non-provision of the service and, therefore, the non causation of the salary.
Before the amendment made in 2012, our Federal labor Law stated in its Article 427, with limitation, the only cases in which collective labor relationships could be suspended by the employer.
“Art. 427.- The following are cause for the temporary suspension of employment relationships in a company or establishment:
- Force majeure or fortuitous event not attributable to the employer or his physical or mental incapacity or his death, that produces the suspension of jobs as a necessary, immediate and direct consequence.
- The lack of raw materials, not attributable to the employer;
- The excess of production in relation with its economic conditions and the circumstances of the market;
- The temporary, notorious and manifest financial impracticableness of the exploitation;
- The lack of funds and the impossibility of obtaining them for the normal continuation of the work;
- The lack of ministration by the State of the amounts it has committed to pay the companies with which it has contracted work or services, as long as these are indispensable”
It is important to note that all of these suspensions are not automatic and are not to be made at the employer’s discretion they must be sanctioned and authorized by the Conciliation and Arbitration Board through complicated and lengthy procedures, the Board, upon authorizing suspension, may impose upon the employer the obligation of paying the workers a compensation of up to one month of salary.
As we can see, the article did not make provisions for the case of suspensions ordered by the authorities due to a health contingency and, in 2009, Mexico experienced a major health contingency due to the Human AH1N1 Influenza epidemic which, in the Official Gazette of the Federation of May 2, 2009 was acknowledged as a serious and priority disease and, in consequence, the Federal Government established measures for facing the contingency; said measures ordered the suspension of the activities in many companies and were similar to the measures being dictated now.
Given that this contingency was not provided for by the Federal Labor Law as a cause for suspension, at the time, employers were forced to close their businesses temporarily, with no measures for the protection or mitigation of the cost of employment in place; in face of this situation, which was not provided for, some continued to pay the full salaries of the suspended workers and others, being that this situation was not provided for in the Law, ceased to pay salaries, as there was no provision to force them to do so. The result was catastrophic, especially in the case of micro, small and medium companies; many of them had to close permanently and many workers lost their jobs or ceased to receive any compensation during the contingency.
Taking this negative experience into consideration, at the time in which the amendment to the Federal Labor Law was made in the year of 2012, a section was added to the aforementioned Article 427 in order to prevent the negative consequences of a suspension arising from a health contingency.
- The suspension of labor or work, declare by the competent health authority in case of a health contingency.”
It is important to highlight that when this article makes reference to “declare”, it does so in relation to the “work”, not to the contingency: therefore, the suspension of work is declared due to the contingency, the contingency is not the one being declared. In addition to the fact that texts must be interpreted not only from the grammatical standpoint, but in consonance with their historical reason for being (covering health contingencies, which were not provided for in 2009) and, above all, in their teleological purpose (the health of the population and the preservation of companies).
For its part, Article 429 states:
- In the case of Section Seven, the employer will not require the approval of or authorization by a Court and will have the obligation of paying its workers a compensation equivalent to one day of the general minimum wage in force for each day of suspension, for a period not to exceed one month.”
Notwithstanding that the purpose of this addition to the Federal Labor Law is clear, today, when different authorities are facing the labor consequences of the health contingency, it is contended that the emergency has not been declared, as if the “declaration” were a legal formality required by Law, but this requirement does not exist either in the Constitution or in the General Law on Health. In the absence of a contingency (whether the word “declaration” is used or not), the measures that have been ordered would have no basis: The suspension of activities in companies, the confinement of people in their homes, the limitation of the free transit of people, to name some of them.
This illegal reasoning has no other purpose than making the current articles that regulate the suspension of work by reason of a health contingency unenforceable in our positive law and returning matters to their former state, before the 2012 amendment; that is, concluding that there is no regulation in place in the Federal Labor Law to solve the current situation and, therefore, the Executive Power can legislate by means of a decree, disaffirming the provisions of the Law and usurping the role of the Legislative Power to order that only the provision of services and not the salaries are suspended during the suspension.
The danger of this statement made by the Department of Labor can have serious consequences, particularly for the workers, given that, should this point of view prevail and, in consequence, Articles 427 and 429 are inapplicable, we are in the midst of a suspension not provided for in the Federal Labor Law and, taking into account that the suspension, as well established law, implies the non-provision of the service and the non-payment of the salaries, noting that the employer did not order it, nor the Conciliation Board sanctioned it, there is no legal device that defines a compensation and, in effect, the Presidential Decree in regard to the payment of salaries does not have a legal and constitutional basis.
This will have serious repercussions both for the companies and for many workers who will surely lose their jobs, all of this to the detriment of the Country, as a consequence of not abiding by the RULE OF LAW.
Additional Note to the Text.
After having written this article on March 30, a meeting of the General Health Council was held, in which a “Health emergency due to force majeure was declared”. It is evident that there was an element of pressure by the labor authority involved in this Decree, in order to invalidate the scope of the provision included in Section Seven of Article 427 and forcing employers to invoke the scope of the content of Section One of said article as the motive for a suspension caused by force majeure, with a purely political objective, since what is being sought is that the compensation paid to the workers is the one provided for in Article 430, which consists of one month of full salary and not the one included in Article 429, which is of one minimum wage for up to one month.
The foregoing is yet another violation of the Rule of Law, given that, under the principle of lex specialis derogat lex generali, between the two, Section One and Section Seven, the one which must prevail is the one that deals with the case in point, which is the health contingency or emergency, within the category of suspension and not force majeure, which is a different event.
In order to justify the obligation of adhering to Section One of Article 427, an evident legal untidiness was resorted to, as the amply quoted Section One establishes “force majeure or fortuitous event not attributable to the employer…”. We can see that they omitted the fortuitous event.
From the doctrinal point of view, there is a difference between fortuitous event and force majeure; in fact, Manuel Borja Soriano, M.A., in his book “Teoría General de la Obligaciones” [General Theory of Obligations] explains, quoting treatise writer Baudry Lacantinerie:
“Fortuitous events or force majeure can be classified in two categories. Some of them are natural accidents, by their very nature, such as diseases, death, lightning, hail, frost, abundant snow, floods, earthquakes, etc. Others are provoked by man; we will mention war, invasion, bombing, blocking, attacks by bandits, abuses of force, thefts… Acts of State fall within this category..” .
From the above quote, it is evident that the COVID-19 pandemic is not a case of force majeure which consists of manmade situations, but rather a fortuitous event and; therefore, Section One of Article 427 does not apply to this case. Qualifying the current situation as force majeure is exclusively a maneuver for circumventing the Federal Labor Law and invalidating the express provision that regulates the event of collective suspension due to a health emergency.
Nevertheless, from a practical point of view, we suggest that those companies that can cover a compensation of one month of salary, ought to pay that amount to their workers, but adhering to the specific rule established in Section Seven of Article 427 of the Federal Labor Law, that is, the collective suspension of employment relationships as a consequence of a health contingency and the amount of the month of salary is to be given as a substitution of the compensation referred to in Section Four of Article 429 of the Federal Labor Law, without being subject to approval by the Conciliation and Arbitration Boards.
Additionally, it is important to be on the lookout for the publication, in the Official Gazette of the Federation, of the Health Safety Measures issued today by the General Health Council in regard to the immediate suspension of work from March 30 to April 30, 2020 on activities that are not essential within the public, private and social sectors, with the objective of mitigating the spread and transmission of the SARA-CoV-2 virus.
De la Vega & Martínez Rojas, S.C.
 Manuel Borja Soriano. Teoría General de las Obligaciones. Tomo Segundo, pág. 109. Editorial Porrúa, S.A. México 1970