On March 3, the Joint Commissions on Labor and Social Welfare and Legislative Studies submitted an initiative with a project for the reform of the Federal Labor Law, the Social Security Law and the Law of the National Worker’s Housing Fund Institute in regard to subcontracting matters.
In the first place, the initiative makes reference to the draft opinion proposed by Senator Napoleón Gómez Urrutia, expressing its agreement with many of the factors that justify a reform in regard to the topic of subcontracting, in order to prevent the violation of workers’ rights and the creation of tax evasion schemes.
On the other hand, the Joint Commissions of Labor and Social Welfare and Legislative Studies, taking into account the concerns that have risen in different forums, such as the opinions expressed on the Open Senate Assemblies of July, 2019 and February 13, 2020, propose reforms within the governing framework of outsourcing, with the following objectives in mind:
- Contributing to the full enforcement of individual and collective labor rights, which are violated at present by the widespread practice of illegal, if not fraudulent, subcontracting;
- Providing the instruments required to enable coordinating the actions of the competent agencies in charge of supervising compliance with employers’ labor, fiscal and social security obligations;
- Refining the principles and requirements included in the reform to the LFT [Federal Labor Law] of 2012, with the objective of having a clear legal regime in favor of the workers. This regime must address the need for modernizing and limiting subcontracting in Mexico, incorporating several innovative concepts, in addition to the necessary mechanisms to achieve equilibrium between competitiveness, productivity and the protection of worker’s rights.
These objectives did not result in a drastic change to the articles of the 2012 Labor Reform; instead, they resulted in the Draft Opinion, in a strengthening of the State’s supervisory capacity, providing the necessary power required for a better coordination between labor, social security, tax and criminal authorities.
Among the main changes made, we find that the joint liability of the contracting party and the requirement that the subcontractor be registered in the National Registry of Subcontracting Companies were added for the type of subcontracting provided for in Article 15A. The creation of the abovementioned Registry is established in the new Article 15 E and this article includes the obligation of depositing a bond as guarantee of the subcontractor’s labor obligations.
Article 15 A also establishes the possibility of conducting coordination inspection and supervision actions between the Department of Labor and Social Welfare, the Mexican Social Security Institute and the National Worker’s Housing Fund Institute.
The power of the Department of Labor and Social Welfare to notify the competent social security, tax and criminal authorities of any facts noted in the performance of its duties is also established, as a complement.
The Social Security Law incorporates the reference to Article 15 A of the LFT into its own Article 15 A, seeking to protect the family income of the workers registered in the Mexican Social Security Institute and providing them with the assurance that their families have access to social security, medical treatment, disability benefits in case of illness or workplace accident, a disability or retirement pension. As well as their children’s access to a daycare center. It is expected, in turn that, with the establishment of registration in the Social Security Institute, tax fraud and labor simulation schemes will be avoided as well as the embezzlement of the workers’ income.
In regard to the INFONAVIT [National Worker’s Housing Fund Institute], Article 29 Bis provides the Institute with the necessary elements to supervise contracting companies and contractors.
In the transitory regime, the Department of Labor and Social Welfare is expected to issue the Operational Guidelines of the National Registry of Subcontracting Companies within 12 months, from the date after the entry into force of the Decree.
It can be seen that the proposed changes do not include the conditions and limitations included in the initiative proposed by Senator Napoleón Gómez Urrutia. On the contrary, the same standards established in the reform to the Federal Labor Law of 2012 subsist underneath, although elements to reinforce supervision, were added, the joint liability of the beneficiary of the services was established, the National Registry of Subcontracting Companies was created and the standards of the Social Security Law and the INFONAVIT are harmonized and, additionally, a better coordination between the authorities, in order to prevent tax fraud, is expected.
