Note published in Reforma, Negocios [Business] Section by Verónica Gascón.
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Note published in El Norte, Negocios [Business] Section by Verónica Gascón.
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Note published in Mural, Negocios [Business] Section by Verónica Gascón.
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Labor subcontracting |
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| Insourcing is when a company creates another corporate name, within the same group, to manage the payroll; it doesn’t have the obligation of paying benefits or profit sharing. | |
| · The legality of this mode could be discussed in the bill sent by the Executive Power to Congress for the regulation of outsourcing.
· The bill presented by senator Napoleón Gómez Urrutia intended to prohibit this mode. |
· Insourcing is not currently regulated in the Federal Labor Law.
· Outsourcing is regulated in Article 15-A and it is estimated that there are around 4.5 million workers hired under this scheme. |
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Source: STPS [Department of labor and Social Welfare], Federal Labor Law |
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Insourcing or labor subcontracting is a mode that has spread among companies and is used to face commitments such as the payment of profit sharing, and it will be a topic that is expected to be discussed in Congress soon, experts said.
This mode is used to manage the administration of the payroll internally, through a company created exclusively to offer these services, Ricardo Martínez, of the Martínez De la Vega & Martínez Rojas Firm, said the insourcing does not appear in the Federal Labor Law (LFT), but that it is not illegal and over 70 percent of companies have resorted to this scheme to manage their personnel.
“Insourcing is when a corporate group creates a company to place all of the workers in and thus lowers the PTU (profit sharing).”
“Insourcing is not illegal, no law prohibits your having corporations and structuring your corporate group as you wish, it is not illegal”, Martínez pointed out.
He added that since this year the labor authority decided to maintain 10 percent of companies’ profits as profit sharing (PTU) the insourcing scheme will continue to be used.
“Given this decision of keeping the PTU at 10 percent, many will continue to resort to insourcing. That is where we will have the problem of their wanting to further limit that part of insourcing, and this will cause disinvestment because if they are not allowed to have their service companies, they cannot pay them the PTU; the truth is that it will be problematic, indeed”, he anticipated.
Isaac Ibarra, of the Ibarra Barajas Firm, agreed that this scheme is common practice and that it has been used to avoid the payment of benefits to workers.
“A company that handles its own payroll has the obligation to share profits; if it has another company that has all of the personnel in it, what it is doing is avoiding the payment of profit sharing, because it has no income, it is funded with the salary of the workers”, he pointed out.
For his part, Armando Guajardo, president of the Labor Commission of the Employers’ Confederation of the Mexican Republic defended the mode of outsourcing and the so-called insourcing because they comply with tax obligations.
“On this topic of outsourcing, the mode has been attempted to be fully criminalized, and there has been confusion in the matter, mixing it together with companies that have been created specifically to commit fraud, to obtain benefits, damaging the workers along the way”, he pointed out in an interview.
In the opinion of experts, it is foreseeable that this issue will be covered in the discussions on the regulation of outsourcing that could take place in Congress, as a result of the Executive power’s presenting a bill in this regard.
