The Labor Reform enters into force in eight states

Note published in Revista Evidencias, Zona Legal [Legal Zone] Section by Juan Danell.
Read the note in its original source

It all started with the USMCA. The Mexican legal-labor system is undergoing an intense transformation forced by the Trade Agreement signed by Mexico, the United States and Canada (USMCA), which substitutes the 1994 agreement (North American Free Trade Agreement) signed by the government of Carlos Salinas de Gortari.

A fundamental part for the implementation of the new agreement was the Labor Reform, which entered into force in May 1, 2019 and must be fully implemented by May, 2022, with an estimated federal budget of 400 million pesos and a support fund of 180 million dollars provided by Donald Trump’s administration.

The importance of the Labor Reform in the signature of the USMCA was explained in the opinion of the Expenditure Budget of the Federation (PEF) for 2020, in which congressmen stated that “it represents a key element for the country’s economic policy and was (at the time of issuance) a fundamental topic in the negotiations of the new trade agreement with the governments of Canada and of the United States of America.”

It all started with the USMCA. The Mexican legal-labor system is undergoing an intense transformation forced by the Trade Agreement signed by Mexico, the United States and Canada (USMCA), which substitutes the 1994 agreement (North American Free Trade Agreement) signed by the government of Carlos Salinas de Gortari.

A fundamental part for the implementation of the new agreement was the Labor Reform, which entered into force in May 1, 2019 and must be fully implemented by May, 2022, with an estimated federal budget of 400 million pesos and a support fund of 180 million dollars provided by Donald Trump’s administration.

The importance of the Labor Reform in the signature of the USMCA was explained in the opinion of the Expenditure Budget of the Federation (PEF) for 2020, in which congressmen stated that “it represents a key element for the country’s economic policy and was (at the time of issuance) a fundamental topic in the negotiations of the new trade agreement with the governments of Canada and of the United States of America.”

In accordance with the decree that orders the Labor Reform, various provisions of the Federal Labor Law, the Organic Law of the Judicial Power of the Federation, the Federal Law of Public Defense Services, the Law of the National Worker’s Housing Fund Institute and the Social Security Law are modified, added to and repealed, in regard to matters relating to Labor Justice, Union Freedom and Collective Bargaining.

In order to meet the goals, set by the new legislation, nine areas of action were defined in which the main topics to be developed in order to start functioning within the new labor justice system were taken into account:

Legislative regulation and harmonization, the creation and installation of the Federal Center for Labor Conciliation and Registration, the implementation of decentralized Public Agencies in the federal entities, the transfer and digitalization of files, the creation and start of operations of the labor courts, the conclusion of matters in process that are still pending to be resolved, the professionalization in labor justice matters, procedures to guarantee union democracy and authentic collective bargaining, gender perspective.

The three stages begin

The first two must be ready by October 1, 2021 and the third by May 2022.

Three stages are established for the implementation of the reform; through these stages, the states of the Republic were divided in three blocks, to enable the necessary adjustments in infrastructure and in juridical and legal matters, as well as in trained human resources in the entities to enter into force progressively within a maximum period of three years.

Information provided by the Department of Labor and Social Welfare (STPS), specifies that the first stage starts on November 15 of this year and includes: Campeche, Chiapas, Durango, the State of Mexico, Hidalgo, San Luis Potosí, Tabasco and Zacatecas.

The second stage is set for October 1. 2021 and includes Aguascalientes, Baja California, Baja California Sur, Colima, Guanajuato, Guerrero, Morelos, Oaxaca, Puebla, Querétaro, Quintana Roo, Tlaxcala and Veracruz.

And in the third stage, established for May 1, 2022 the following states are included: Chihuahua, Mexico City, Coahuila, Jalisco, Michoacán, Nayarit, Nuevo León, Sinaloa, Sonora, Tamaulipas and Yucatán.

In the opinion of…

Ricardo Martínez Rojas, founding partner of the De la Vega y Martínez Rojas Firm, said that the State of Mexico stands out in the first stage and that it should set the example to follow: “It has done very well, it already has everything properly implemented, it is a very large entity that covers a very large number of trials, companies and unions. It already has the facilities and the judges in place. It is a very good thermometer. Campeche is another state that is doing things correctly.”

He says that “we all need to do our part and give our support to enable this new legal-labor system to have positive effects, extortion must be eliminated and there must be clarity both for employees and employers. Enthusiasm and a budget are present in the states of the Republic that are about to start using the new system and with the new judges, as well as with the Conciliation and Labor Registration Centers; the Federal Center for Labor Conciliation and Registration will also start operations. We are starting, we have to wait to see the results.”

Within the new legal-labor order, the substitution of the local conciliation and arbitration boards (58 throughout the country) plus the federal board was established; they will be replaced by the local conciliation centers (32, one for each federal entity) plus the federal one; this with the objective of making the application of labor justice transparent and more expeditious.
According to an analysis by the bank of Mexico, the new legal-labor order provides greater union freedom, as it acknowledged “international labor principles, such as the right to belong or not belong to a union. it gives the workers the right to organize themselves in different types of unions: trade unions, by company, of different trades, national and by industry, among the most important changes.”

Additionally, the document specifies, all types of employer interference that violate the right of workers to decide who must represent them in collective bargaining are prohibited and the mechanisms of union democracy, transparency and accountability are strengthened.

In the opinion of Carlos de Buen, a trial lawyer, a key topic of the reform is union freedom, transparency in unions and the registration of collective bargaining agreements. The other fundamental aspect is the extinction of the Conciliation and Arbitration Boards, the birth of the labor courts in the judicial powers both of the federation and the states.

“In regard to this second point – he explains – the entry into force of the new courts has been delayed; to date (October 2020) none of them are in operation yet; however, in November they will enter into force in eight states. During the transition, the boards will continue to exist in order to resolve the trials that are already underway in them. The oral procedures that were established to process the cases will be much better than the current ones and having the boards disappear is great news. This reform