The changes that companies will have to make due to the limitation of outsourcing

Note published on April 14 in El Contribuyente, Noticias [News] Section, by Diego Coto.
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With the approval of the ruling by the House of Representatives, the reform on outsourcing is approaching. Companies will have to make several changes in order to comply with the new laws.

Yesterday, the Commissions of Labor and Social Welfare and of Finance and Public Credit of the House of Representatives made a change to the ruling that could eliminate labor subcontracting from Mexican law.

This change prohibits the use of outsourcing in federal government agencies, except in cases in which companies are registered in the registry that will be created for this purpose, in the case of specialized services or works.

During the early hours of today, the House of Representatives approved the reforms with 284 votes in favor, 108 against and 17 abstentions. Now the ruling will pass to the Senate.

Changes for companies

Employer substitution

What worries specialists the most are all of the bureaucratic changes that must be made in this period. The main problem is that external subcontracting is prohibited, but so is internal subcontracting. This means that companies in the same group for parallel payroll administration can no longer be created.

Faced with this scenario, companies will have to resort to employer substitution before the IMSS [Mexican Social Security Institute]. Basically, it refers to transferring the workers between employers, preserving their rights. In the case of companies that used insourcing, the concept of employer substitution is the only way of complying with the change in the payroll. Additionally, the new company must acknowledge the labor rights, seniority and occupational hazards of the workers it absorbs.


The current ruling would also prohibit the mode of insourcing. In an interview with Factor Capital Humano, lawyer Óscar de la Vega, partner at the D&M Abogados Firm, explained that companies created to maintain insourcing, as well as personnel suppliers must be restructured.

In this sense, the most important thing is that human capital companies could not be considered as employers of the workers that they place in other companies. Otherwise, they will face tax, labor and criminal penalties.

Changes to the ruling

Additionally, the points of the ruling must be taken into account:

  • 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 before the STPS and subscription into the public registry of subcontracting companies of specialized services and works.
  • A fine of 2 thousand to 50 thousand UMAs [Units of Measure and Update] to anyone who provides subcontracting services without being registered before the Department of Labor and Social Welfare (STPS).
  • Joint liability in case of non-compliance.
  • The granting of a period of three months for subcontracted workers to become a part of the payroll of the true employer.
  • A cap on Employee Participation in Company Profits (PTU) at 3 months of salary or at the average of the last three years.
  • Obligations in IMSS and Infonavit [National Workers’ Housing Fund Institute] matters for companies providing subcontracting services, of presenting quadrimestral information.
  • Limitation of tax deduction and accreditation of payments made to labor subcontracting companies that are not registered before the STPS.
  • Joint liability for the parties contracting services in regard to the contributions for the workers providing the service.
  • Derogation of the withholding of 6% of the Value Added Tax (VAT) in subcontracting.
  • Formal obligations in ISR [Income Tax] and VAT matters in regard to information that must be provided by the contractor to the contracting party.


With information from Factor Capital Humano