A greater clarity on the criteria for new subcontracting is requested

Note published on May 17 in El Economista, Empresas [Companies] Section by María del Pilar Martínez.
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The proposal by the STPS on how the registration of specialized companies will work is ambiguous and its limits should be clearly defined to avoid its affecting other services, in the opinion of lawyers.

The criteria to be announced by the Department of Labor and Social Welfare (STPS) to implement the Registry of Specialized Subcontracting Companies have given rise to a series of questions, in principle, because they speak of any specialized activity that is conducted within a company, regardless of the corporate purpose, which would mean that accounting, human resources or legal services would have to register even if they did not offer subcontracting services.

Specialists point out that the STPS proposal is not limited only to labor registry, “the way in which it was presented to the Cofemer [National Commission for Regulatory Improvement] is very broad, it has to be limited, because this registry should only be of a labor nature”, stated Óscar del Vega, partner at the D&M Abogados Firm.

“There is a temptation of requiring that all works and services activities, whatever their nature, be registered before the Department of Labor, and this would entail an absolute economic control; that is, I cannot provide legal services to anyone if the Department of Labor does not authorize me to do so”, explained the lawyer.

It is important to recall that Article 13 of the reform on subcontracting matters establishes that specialized works or services may be subcontracted when they are not part of the company’s core business; as long as they are not part of the corporate purpose or of the main activity.

“The condition for having specialized works or services is that they are registered before the STPS, but the important point here is that we continue talking about labor subcontracting; it is labor subcontracting that cannot cover other contracts of a different nature, sale, commercial, contracts for the provision of civil, material services, etc.”, explained De la Vega.

Alejandro Caro, professor at LATAM Business School, explained in the panel “Subcontracting: implementation and challenges of the reform”, that the problem of the main activity is that “we do not know if the labor authority will adhere to the tax definition or whether the courts will give it a different interpretation. To start with I would say that it would seem most logical that the main economic activity is the one that generates the most, out of all of the activities that I have; what we don’t know is what happens if several activities are highly connected, and it could be considered that two of them are a single activity.”

Additionally, the specialist in labor practice pointed out that “if we fall within subcontracting and we cannot justify that it is specialized and we must absorb these workers, one of the options is terminating the employment relationship and then hiring them. In the case of 2 companies, they can reach agreements and the staff is transferred, but in many cases this will not work if the supplier is a third party and not a related party, this is not good for me, for tax reasons and the third option is an employer substitution, which I believe is the most practical option, as it is the one that will take the least time and it has several benefits; one of them is that if we conduct it within the first 90 days after the law enters into force, we do not have the obligation of transferring assets from a company.”

Key changes with the labor reform that prohibits outsourcing
Labor changes | 2021 AGREEMENT
Subcontracting of personnel to be part of the corporate purpose of the company is prohibited.

Registration of companies before the STPS [Department of Labor and Social Welfare] and the public registry of companies subcontracting specialized services and works.

A term of three months will be granted for the true employers to incorporate subcontracted workers into their payroll.

Subcontracting of services different from the essential activity of the contracting company will be regulated.

If the subcontractor fails to comply, the company will be jointly liable toward the worker.

Profit sharing will be of three months of salary or the average of the amount received in the last three years.

SOURCE: INEGI [National Institute of Statistics and Geography] ILLUSTRATION: EL ECONOMISTA