Note published in El Economista, Empresas [Companies] Section by María del Pilar Martínez.
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The IMSS, the Infonavit and the STPS have jointly established contact with employers to exhort them to avoid the practice of terminating workers at the end of the year and hiring them back at the beginning of the following year; last year, the sector that canceled the most jobs in December was the construction sector, with over 121,000.
The federal government started a campaign, through the Department of Labor and Social Welfare (STPS), the Mexican Social Security Institute (IMSS) and the National Worker’s Housing Fund Institute (Infonavit), to prevent the cancellation of job positions by employers in the month of December with the intention of rehiring them in January, under the reasoning that it is a practice that violates workers’ labor rights.
On average, 277,000 job positions have been canceled during the months of December of the last decade, although a record level of 382,210 layoffs was reached last year, a figure that represented 53% of the net number of net hirings from January to November of that year (724,287 positions). This percentage was higher by 17 percentage points when compared to the level of 2018, when 387,561 layoffs were recorded, after counting one million 39,471 hirings from January to November.
According to the federal authority, at least half of the workers laid off in December of last year were rehired at the beginning of 2020, “which gives an account of the bad practices that occur, with the sole objective of cutting off workers’ seniority.”
The government campaign, with the joint participation of the IMSS, the Infonavit and the STPS, includes calls to work centers of large employers, as well sending letters urging them to avoid canceling employment at the closure of December 2020, even though complicated weeks are expected due to the return to confinement measures caused by the rebound of the number of Covid-19 cases.
“The Mexican government has identified employers that are deregistering their workers from the IMSS and the Infonavit during the month of December; these same workers are historically rehired the following year. Unjustified deregistrations have a negative impact on the continuity of workers’ labor, social security and housing rights”, states a joint communication.
In this regard, they explained that out of the 382,210 job positions terminated between November and December 2019, 65% corresponded to workers registered as having permanent positions, despite the fact that an argument used by employers to justify the drop in employment is that the positions in question were temporary.
Terminations are not all due to outsourcing
According to human resources Firms that were consulted, the seasonal termination of workers registered at the IMSS is not an exclusive practice of companies that use labor subcontracting (outsourcing), as is commonly believed.
In 2019, the sector that had the most layoffs between November and December was construction – which practically does not use labor subcontracting – with 121,153 workers laid off due to temporary works. It was followed by the transformation industry sector (110,565 terminations), business and personal services (53,241 deregistrations), social and community services (53,241 deregistrations) and commerce (49,286 terminations).
Geographically, there were layoffs in 30 of the 32 federal entities of the country, with the largest numbers centering in the states of: Mexico City with 70,765; Nuevo León with 38,916, and the State of Mexico with a cancellation of 37,438 positions.
Labor authorities informed that “the STPS, the IMSS and the Infonavit sent letters to the employers that we identified that may have incurred in these practices, with the objective of having them review whether the way in which they manage their personnel is in accordance with the current regulatory framework and having them avoid taking actions that affect the rights of their workers through the illegal elusion of obligations in labor and social security matters.”.
Ricardo Martínez Rojas, labor specialist at the D&M Abogados Firm, said that even though the actions taken by the labor authorities are in line with the agreement signed by employers and unions in recent weeks to regularize labor subcontracting “it becomes a very complex matter, particularly when we are going back to a red traffic light status that implies confinement and reaching new agreements with the workers in order to be able to conserve job positions.”
The end of the year brings a complicated outlook for many employers; additionally, the federal authority made it clear that lack of compliance with labor and social security obligations will bring legal consequences that could put companies’ finances at risk and even lead employers to face criminal and administrative liabilities, said the lawyer.