Outsourcing will be penalized and prosecuted as organized crime

Note published in Publímetro, Noticias [News] Section by Mario Mendoza Rojas
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Companies or persons incurring on outsourcing will pay fines of up to 4.3 million pesos, establishes the reform presented by AMLO in Congress to eliminate outsourcing.

Personnel outsourcing or subcontracting will be penalized and prosecuted in Mexico as organized crime, warned the government of President Andrés Manuel López Obrador.

Through a reform presented before the Federal Congress, to eliminate labor abuse generated through that labor scheme, the President proposed that outsourcing be equated to the crime of tax fraud.

He stated that, given the harm caused to the labor rights of the Mexican people and the tax evasion practices, “mandatory pretrial detention and aggravated penalties will apply to the cases of subcontracting or contracting simulation of specialized services.”

The government specified that this last penalization will apply whenever “any group of 3 or more people engage, permanently or repeatedly, in offering, planning, counseling or conducting these illegal schemes that have the objective of causing harm to the Federal Treasury, which is prosecuted as organized crime.”

He warned that mandatory pretrial detention will be extensive to “any company or person that has resorted to these illegal schemes” (subcontracting or simulation of contracting of specialized services); they “will be prosecuted as criminals for the commission of qualified tax crimes that threaten the Nation.”

Fines against outsourcing

The bill presented by President López Obrador also amends Article 1004-C of the Federal Labor Law, with the objective of imposing fines, from two to 50 thousand times the Unit of Measure and Update (UMA), on whoever subcontracts personnel or presents specialized services without the corresponding authorization.

In line with the current value of the UMA, of 86.88 pesos per day, offending persons and companies will face a minimum punishment of 173 thousand 760 pesos and a maximum penalty of four million 344 thousand pesos for violating the prohibitions on outsourcing proposed by the government.

The President also proposes the amendment of the Laws on Income Tax (ISR) and Value Added Tax (IVA) to ensure that any practice that involves subcontracting does not have the benefit of tax deductibility.

It also gives the power to the Department of Labor to create a registry of specialized service companies, which will be the only ones that will be able to provide services and execute projects with their own personnel for other organizations.

And in the event that any organization does not allow the Department of Labor to carry out an inspection in order to verify that it complies with the requirements defined by the new regulations, it will be subject to a fine of 250 to five thousand times the UMA, equivalent to a fine of between 21 thousand 720 and 434 thousand 400 pesos.

Reactions to the reform on outsourcing

“The outsourcing bill violates Convention 144 of the International Labour Organization (ILO) because it does not take into consideration the opinion of companies and unions; it is a weapon that threatens growth and the creation of formal employment.”: Coparmex [Employers’ Confederation of the Mexican Republic]

“The proposal made by the President represents an increase in the tax burden for many organizations; this will foster informality and precarious employment”: Armando Leñero, president of the Center of Studies on Formal Employment (CEEF).


“The reforms will have an impact on six or seven million workers, and they do not address or limit labor simulation mechanisms such as registering workers under lower wages or employing them through schemes such as coops or copyrights”: Ricardo Martínez, founding partner of the, De La Vega y Martínez, Labor Firm.