Note published on April 6 in El Economista, Empresas [Companies] Section by María del Pilar Martínez.
Read original source
Note published on April 6 in El Entorno Inteligente, Empresas [Companies] Section by María del Pilar Martínez.
Read original source
Note published on April 6 in Total Sapiens, México [Mexico] Section by María del Pilar Martínez.
Read original source
After three months of negotiations, the parties agreed that labor subcontracting will be prohibited, but only that of personnel directed to the companies’ main activities and, therefore, its use in specialized tasks that are not essential to the Firms’ corporate purpose will be permitted.
After three months of negotiations, the federal government sealed an agreement with the private sector and the unions in order to unblock its reform bill on labor subcontracting, which provides that it can only be used in specialized tasks – not belonging to the company’s corporate purpose – while it also limits the payment of profit sharing to workers to a maximum of 90 days of salary. The legal reform contemplates granting a period of three months for its implementation and a month for the implementation of the new National Registry of Subcontracting Companies.
It is a comprehensive model that includes changes on labor, tax and social security, which will be immediately sent to the House of Representatives to be considered in the discussion that will be conducted in the next few days by the legislators, for a possible approval.
“An important agreement on subcontracting and profit-sharing matters was reached today between union leaders, business leaders and the government, for the benefit of all”, said President Andrés Manuel López Obrador in his Twitter account after the meeting.
In this regard, the Secretary of Labor and Social Welfare, Luisa María Alcalde stated that “the agreements reached include five aspects: the prohibition of personnel subcontracting; the regulation of subcontracting of specialized services different from the corporate purpose and the main economic activity of the contracting company; registration with the STPS and registration in the public registry of subcontracting companies that provide specialized services and works; the joint liability in the event of non-compliance, and the granting of a period of three months for the subcontracted workers to become part of the actual employer’s payroll.
Additionally, an agreement was reached on the topic of profit sharing in order to avoid possible distortions in capital-intensive companies, creating two modalities for the calculation of profit sharing, the first is to establish a cap of three months and/or, if applicable, using the average of the last three years. “With this formula, discretionality is eliminated and an increase of 156% in the amount of profit sharing among workers is achieved.”
Thus, an amendment to the Federal Labor Law, in Article 127, Section VIII is proposed, establishing that “ the amount of participation in profit sharing will have, as an upper limit, three months of the worker’s salary or the average of the participation received in the last three years; the amount that is most favorable to the worker will apply”.
Abuse is stopped: STPS [Department of Labor and Social Welfare]
The head of Labor explained that “these agreements contribute to the settlement of an historical debt in favor of women and men who have worked under the mode of subcontracting for decades and have seen their rights violated.”
In this regard, the director of the Mexican Social Security Institute (IMSS), Zoé Robledo, stated that the reform and the agreement are aimed at “eliminating subcontracting, abusive subcontracting, the subcontracting of the entire payroll of a company, as it happened in many cases. It should be prohibited outright and subcontracting of specialized works and services should be in existence, as it should have always been.”
He added that these changes will make it easier for the IMSS to conduct collection properly, “it is estimated that up to 14% of the registered population may have been registered at some point by one of these companies, which many times fail to register the complete amount of the salary, which negatively affects workers, it affects companies, competitiveness, because it places those who do things correctly at a disadvantage versus those who cheat. Therefore, we believe that it is a good agreement.”
Subcontractors will not disappear
If the reform on the mode also known as outsourcing is approved “the existence of contracts in which essentially the labor force of Mexican workers is hired would be illegal”, stated Héctor de la Cruz, partner at the D&M Abogados Firm.
Héctor Márquez, president of the Association of Human Capital Companies (AMECH), stated that the particulars of the proposal to be approved by the House of Representatives are yet to be known, but this doesn’t mean that subcontracting companies must leave the country, although an important percentage of their invoicing would be lost due to the reduction of their activities.
He recalled that over 60% of companies that use the mode of subcontracting are micro-companies and, therefore, it is important to provide them with an option for subcontracting formally; otherwise, they would use people and pay them in cash or by fees.
Lawyer Germán de la Garza de Vecchi said that knowing the contents of the proposal contributes to decision-making in companies, but it will be important for the legislative process to be conducted in order to know the contents of the final document.
Alejandro Avilés, a labor specialist, said that, while subcontracting will not be prohibited, “the problem lies in the fact that the “specialty” or “specialization” that allow it are not defined, which opens the possibility of discretionality in the authorizations for companies to continue subcontracting.”
Alfonso Bouzas, coordinator of the labor observatory, stated that “this is the second most important reform to the Federal Labor Law. It is a great step that, as any reform, can be improved, but we must acknowledge that it is headed in the right direction.”
The key points of the tripartite agreement
- Subcontracting of personnel for the performance of tasks that are part of the company’s corporate purpose is prohibited.
- The regulation of subcontracting of specialized services outside the corporate purpose and the main economic activity of the contracting company is considered.
- Registration before the STPS and subscription into the public registry of subcontracting companies of specialized services and works is provided for.
- The joint liability of the contracting company in the event of non-compliance by the subcontractor toward the worker is provided for.
- A term of three months is granted for the true employers to incorporate the workers that they had subcontracted into their payroll.
- Two modalities for the calculation of profit sharing are created, with a limit of three months of salary or the average of the profit sharing received in the last three years.