A brake applied to the reform on outsourcing forces companies to comply with commitments: specialists

Note published in El Economista, Empresas [Companies] Section by María del Pilar Martínez.
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“Businessmen will now have to carry out a series of actions to eliminate bad practices”, said Héctor de la Cruz, a labor specialist at the D&M Abogados Firm.

Next Tuesday, December 8, once the legislators of the Labor and Finance and Public Credit Commissions meet, they will announce whether the discussion and analysis of the bill for the reform in outsourcing matters proposed by the Executive Power will continue further or whether progress will be made on the ruling, said congresswoman Anita Sánchez of the Morena Congressional Group.

Meanwhile, specialists report that the dialogue tables “had an effect and were able to stop its approval a few days after it was presented for discussion at the House of Representatives; nevertheless, businessmen will now have to carry out a series of actions to eliminate bad practices”, stated Héctor de la Cruz, labor specialist at the D&M Abogados Firm.

In this regard, Germán de la Garza de Vecchi, of the Deloitte Legal-Mowat Firm, said that the government and the businessmen have reported that they will sign a letter of intent for the elimination of any form of abusive subcontracting, which includes starting the migration of personnel that is hired through the insourcing mode, even though the regulation in this regard has not yet been ruled upon in Congress.

De la Cruz said that the nine actions that companies in the country will have to start analyzing are: eliminating any contact in which the transfer of people to perform a job in favor of a third party is agreed; not establishing inferior working conditions for those who work in outsourcing; not registering workers at the IMSS [Mexican Social Security Institute] with a salary lower than their actual one.

Also, not paying a part of the salary in cash in order to avoid obligations; eliminating “paper companies” (companies with no employees) which only invoice services without generating profits; eliminating the simulation of labor contracts disguising them as contracts for fees, of partnership, for professional services or any other type of contract that does not acknowledge the person as a worker and paying full IMSS, Infonavit [ National Worker’s Housing Fund Institute] and SAR [Retirement Savings Fund System] fees.

Additionally, subcontracting only specialized services that do not cover the entire company and not having employees in two or more companies doing the same job but earning less than others.

“These practices must be subject to analysis and, of course, must be included in the commitments that entrepreneurs will sign to counteract the negative effects of outsourcing, while mechanisms to monitor compliance with these commitments will have to be implemented, added Héctor de la Cueva.

Modification in profit sharing complicates negotiation

Modifying the percentage granted to workers as the right to their participation in profits is complex given that in September of this year all of the sectors – employers, workers and the government – agreed in keeping it at 10% for the next 10 years.

This was published in the Official Gazette of the Federation on September 18 of this year “in that session, the ruling was established and approved by unanimity …( ) it was established that the percentage of profit sharing for workers should be kept at 10% applicable of taxable income”, he said.

If a review is intended to be moved ahead, this would mean that the STPS [Department of Labor and Social Welfare] would have to publish a new call, in addition to the fact that workers could be affected because the 10% that was approved would already have to be applied in 2020 “there is the problem of legality, because it already is a right acquired by the workers and it would be revoked, which be a violation of labor human rights”, said Pablo Franco, a labor lawyer at the National Union of Jurists.