By: José Díaz y Eumir Quintero

The Ministry of Labor and Social Security published on April 23, 2021 in the Federal Official Gazette a decree through which various provisions of the Federal Labor Law, as well as other laws, are amended, added and repealed (Social Security Law, Infonavit Law, Income Tax Law, Value Added Tax Law, Federal Law of Workers at the Service of the State Regulatory of Section B of Constitutional article 123, Regulatory Law section XIII BIS, section B of Article 123 of the Constitution), regarding labor subcontracting, also known as outsourcing.

The decree modifies various provisions of interest to workers, unions and companies, including the Maquiladora sector, in terms of outsourcing, and especially the rules for hiring specialized work.

In summary, the main changes to the Federal Labor Law on outsourcing that concern companies and that are already in force as of April 24, 2021, are the following:

Outsourcing

What has already been established since November 2012 is reactivated, due to the labor reform of that date, and it is regulated for the purpose of preventing the company in which the service is provided from being considered as “Beneficiary of the Service”, and therefore responsibility could be attributed, the service must comply with the following conditions:

  1. It may not be carried out in the substantive activities that constitute the main purpose of the company;
  2. It must be justified by its specialized nature that it adds an additional input to the production or service processes;
  3. It may not cover all the activities carried out in the workplace;
  4. It may not cover the same or similar tasks to those carried out by the rest of the workers in the service of the beneficiary.

Because the burden of proof continues to correspond to the Employer, it should not be forgotten that the company in which the service is provided (Beneficiary of the Service) must have a written contract and ensure that the Employer complies with its obligations in matters of safety, environment and health at work under penalty of being considered as an Employer. (Updating supplier contracts is recommended).

Main aspects included in the Reform

  • Subcontracting of personnel is prohibited. Anyone who benefits from the services provided is considered an employer. Art. 12 LFT.
  • The subcontracting of specialized services or the execution of specialized works, which are not part of the company’s corporate purpose, is allowed. Art 13 LFT.
  • Subcontracting must be formalized in a written contract, in which it must be noted:
    • The object of the services or work to be executed.
    • As well as the approximate number of workers who will participate in said contract. Art 14 LFT.
  • The employer or company that subcontracts specialized services will be jointly and severally liable for the breached contractor. Art. 14 LFT.
  • Companies that provide outsourcing services must:
    • Have registration with STPS.
    • Be up to date with tax and social security obligations.
    • The registration must be renewed every three years.
    • The procedure established in the LFT must also be complied with.
  • Article 127 of the LFT is also reformed, regarding the right for workers to participate in Profit Sharing (PTU), establishing that the maximum amount will be the equivalent of three months’ salary or the average number of shares of the last three years.
  • The employment agencies or intermediaries that intervene in the process of hiring personnel, may only participate in the recruitment, selection, training and capacitation, but they will not be considered employers, since by law this character is held by the company who benefits from the Provision of services.
  • Sanctions are established for the employer who does not allow the inspection and surveillance of the Labor Authorities. Fines from 250 to 5,000 UMAS. Art.1004-C LFT.
  • Fines of 2,000 to 50,000 UMAS will also be imposed on those who subcontract personnel, or the employer who hires without complying with the provisions of these provisions, or who benefits from subcontracting. Art 1004-C LFT.
  • Article 15 A of the Social Security Law (LSS) is also reformed, in accordance with the aspects indicated in the reform of the LFT.
  • In the reform to LSS, the joint responsibility of the company that hires outsourced services is highlighted.
  • Likewise, in the terms of the adjustments to the LSS, it is mentioned that the company that provides specialized services must provide information on the contracts signed every four months, no later than the 17th day of the months of January, May and September, having to comply with the minimum information required in the terms of these provisions. Art. 15 A LSS.
  • The IMSS and the STPS will verify compliance with the established obligations and may carry out joint verification actions, in regard with their own jurisdiction.
  • Sanctions and fines are as well applied regarding the violations of rules abovementioned.

It should be borne in mind that the reform in the field of labor outsourcing includes reforms to the following laws:

LAWVALIDITY
Federal Labor Law (LFT)April 24 2021
Social Security Law (LSS)April 24 2021
Law of the Institute of the National Housing Fund for Workers (LINFONAVIT)April 24 2021
Federal Tax Code (CFF)*August 01 2021
Income Tax Law (LISR)August 01 2021
Value Added Tax Law (LIVA)**August 01 2021
Federal Law of Workers at the Service of the State, Regulatory of section B) of Constitutional article 123 (LFTSE)Fiscal year 2022
Regulatory Law of fraction XIII BIS of section B, of article 123 of the Political Constitution of the United Mexican States (LR123FXIII BIS)Fiscal year 2022

* Regarding the reform of the Tax Code (CFF), it indicates that the payments or considerations made for the subcontracting of personnel to carry out activities related to both the corporate purpose and the predominant economic activity of the contractor. Art. 15 D CFF, becomes effective on August 1, 2021.

** Regarding the reform of the VAT Law (LIVA), it indicates that the tax that is transferred for the services referred to in article 15-D, first and second paragraphs of the Fiscal Code of the Federation, will not be creditable in the terms of this Law. Art. 04 (LIVA), becomes effective on August 1, 2021.

Fines

It is important to know and observe the new labor and Social Security provisions, since the reform insists on the application of various fines ranging from 250 minimum wages (UMAS) to 50,000 minimum wages (UMAS), and in some cases the fines may apply for each affected worker.

The purpose of this newsletter is to provide an informative summary of the new provisions related to companies in the Reform of the Federal Labor Law, but for the execution of specific tasks, please consult your lawyer.


If you have any questions, please send a message here to contact our labor law experts.

The content of this page is not and should not be considered legal advice, the information is for informational purposes only.


Eumir Quintero

Eumir Quintero

Associate at GD Legal, specialized in Labor, Intellectual Property, Corporate and Administrative Law.