Regulating and not prohibiting subcontracting, this is what is being requested from legislators

Note published in El Pulso Laboral, Mundo Laboral y RR.HH. [Labor World and HR] Section by María del Pilar Martínez.
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Faced with the possible reform on subcontracting matters, business organizations of the third-party contracting industry issued a call to legislators of the House of Representatives to regulate the activity instead of prohibiting it, following the example of countries like the United States, Canada, Peru, Chile, Uruguay, Argentina and Colombia.

In different forums for the analysis of the bill in regard to this subject, they stated that, worldwide, 57.7 million people were placed by a private employment agency in 32 countries; out of these, 3.8 million people were placed through direct recruiting, while 53.9 million people were placed through a temporary employment agency.

It should be noted that a survey conducted by the AMECH [Mexican Association of Human Capital Companies] among Mexican companies showed that once the reform on outsourcing is in place, 30% of them would hire their employees directly, with all benefits, but 60% would hire them through other methods, such as on a fee-basis, in which workers would lose all social security benefits, and 10% will simply take them on as external collaborators.

In this regard, Héctor Márquez, president of the AMECH, said that companies within this sector do not intend to leave their investments, “but operations will obviously be affected”, he maintained.

In another virtual forum with the participation of Colombia and Peru in which the matter is also discussed extensively, Ricardo Martinez Rojas, partner at the D&M Abogados Firm, explained that a very deep analysis is being conducted in all companies “seeking to study the corporate purpose of each one of them and reviewing the contracts they have entered into – there are those who have over 700 contracts – that involve people having to go close to the facilities to provide independent services, we have to analyze each and every contract that we have with suppliers that involves the provision of labor from a third-party, it is a titanic job.”

This is due to the fact that the bill presented by the Executive Power on subcontracting contemplates prohibiting third-party contracting, and contracts in which the object of the contract is the same as the personnel that is part of the workforce cannot be entered into.

What does the reform allow? Martinez Rojas said, “the only thing it allows is that specialized services or works are provided, which we already have, but it adds that they must not fall within the corporate purpose of the party contracting the services nor within its main activity, which is killing insourcing.”

According to Héctor Márquez, a specialist in human resources, the critical issues that are about to be decided in the reform are: the transitory periods on invoice deductibility; temporary work and specialized services.

He also pointed out that the modes that harm the industry and affect workers are those that are used in order to pay workers under schemes such as assimilated to salaries, payment through unions, payment for copyright, the use of private pensioning and retirement plans.