The Private Sector brings attention to the disparity in the application of the reform on subcontracting

Note published on June 13 in El Sol de México, Finanzas [Finance] Section by Bertha Becerra.
Read original source

According to the executive order published in the DOF [Official Gazette of the Federation], companies that practice subcontracting have until August of this year to comply with the new reform; the State, however, has a deadline of 2022.

Given the different treatment before the law for the private sector and for the federal government, many companies are resorting to amparo suits against the executive order published on April 23 of this year, through which the Federal Labor Law and other laws on subcontracting matters were reformed.

The arguments are different, but it is obvious that they one topic is a constant: “a different treatment in the eyes of the law”, stated a Labor Law expert lawyer, Héctor de la Cruz, of the De la Vega & Martínez Rojas Firm.

He explains: “Subcontracting was declared to be an illegal activity for the private sector as of this last April 24. From that moment forward, companies, from micro to large companies, implement their restructuring in order to comply with the law.”

The federal government, however, granted itself until 2022 to comply with this law, even though the high level of subcontracting existing in the different agencies is known to all.

“That is, private companies are placed under the full weight of the law but, in its agencies, the government extends the term, and, for the rest of the year, it can continue outsourcing or subcontracting with all freedom.”

The labor expert states: “This results in unequal treatment before the law, a discriminatory treatment and, therefore, it must be addressed in the amparo suits that have been filed, as the government cannot create a law for the private sector and make exceptions for itself.”

Additionally, he points out, “the law for companies is unclear, since the new Article 12 of the Federal Labor Law prohibits personnel subcontracting, understanding this as the case in which a company provides its own workers or places them at the disposal of a third party for the benefit of said third party.”

But Article One of the agreement for the registration of subcontracting companies states that companies providing their own personnel or placing it at the disposal of a third party for the benefit of the latter must be registered.

“This is contradictory, because the prohibited activity must be registered in order to be lawful.”

He explained to EL SOL DE MEXICO that private companies are transferring outsourcing personnel to the operating company and conducting the registration procedure with the Department of Labor and Social Welfare with all speed, in order to comply with the law.

They are also modifying their corporate purposes, service invoicing, registrations before the Mexican Social Security Institute (IMSS), payrolls, fee payments, among others.

“All of this is being done at forced marches because, as of this coming August 1, companies that are not in compliance will lose the possibility of accrediting the Added Value Tax (VAT) or deducting Income Tax (ISR) for the specialized services that they provide or receive.”

Informality, the great risk

Separately, the director of Institutional Relations of ManpowerGroup, Héctor Márquez Pitol, in an interview with OEM, warned about the risk that, upon the prohibition of subcontracting, “the tendency in the country is for people to move toward informality.”

Or that they are contracted as independent workers, through the payment of fees or copyright or through some mode that does not include social security, which increases costs between 25 and 30%, said the executive.

He said: “We are now in the transitional period. While subcontracting has been prohibited, the subcontracting of specialized services is now permitted. A period of 3 months was granted: from May to July, for the contracts in place to be attended to and changed.”

He stated that in ManpowerGroup we hope that this time is sufficient. All of us working in formal companies will comply with the new provisions, but contracts will be 25% more expensive, because employee profit sharing and three months of salary must be given.