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Jáuregui y Del Valle

LABOR REFORM

This Informational Notice refers to the Federal Labor Law Reform published in the Official Daily of the Federation on November 30, 2012 (the “Reform”) in Mexico whose objective is to attain a better balance between the elements of production and social justice and promote dignified work practices, consistent with practices defined by the International Labor Organization (the “ILO”) aimed at workers’ dignity.

Selected highlights of the Reform include:

EQUALITY: It prohibits working conditions that could implicate discrimination based on ethnic background, nationality, gender, age, social status, health status, religion, migratory status and sexual preferences; that is, the equality principle between the workers prevails.

OUTSOURCING: It regulates Outsourcing as a working regime by which an employer defined as contractor executes works or renders services through employees under its supervision in favor of a contracting party.

Outsourcing incorporates three requirements that must be met in order for the contracting party not to be considered as employer:

a) Outsourcing cannot encompass the entirety of the activities of the work place of the contracting party.

b) The contracting party must be in a position to justify the Outsourcing, due to its specialized nature.

c) Outsourcing cannot cover tasks that are equal or similar to those tasks already performed by employees of the contracting party.

Furthermore, it obliges the contractor of Outsourcing to comply with the required documentation necessary for its operations, its obligations before the Mexican Institute of Social Security (Instituto Mexicano del Seguro Social), hygiene and environment working conditions, among others, requiring the contracting party to supervise that the contractor renders the Outsourcing services in compliance with the Federal Labor Law (Ley Federal del Trabajo) (“FLL”).

Lastly, if certain specific conditions are not met, workers of the contractor working in the place of work of the contracting party will be considered part of the contracting party for purposes of employee profit sharing.

NEW TYPES OF LABOR AGREEMENTS. New types of labor agreements are provided for and include: (i) seasonal agreements - when the required services are for specific, periodic and discontinuous works or which do not require the provision of services throughout the entire week, month or year, with the same rights and obligations of indefinite term employees; (ii) trial agreements - to verify if the hired employee has the knowledge and skills needed for the position; and, (iii) initial training agreements - for the employee to acquire the necessary knowledge and skills needed for the position. In trial and initial training agreements, if the employee does not prove to have the necessary knowledge and skills needed for the position, employers may terminate the labor relationship without any responsibility. To that effect, it will need a favorable opinion of the Joint Commission on Productivity Development and Training (Comisión Mixta de Productividad, Capacitación y Adiestramiento) if it has more than 50 employees.

PAY PER HOUR. This form of payment was already included in the FLL but is now expressly regulated. The Reform prohibits that any worker earn in a work day - be it one or eight hours - less than one minimum wage daily salary. Therefore, even if a worker works less than a full eight hour work day, his minimum wage daily salary will not be fractioned.

NEW GROUNDS FOR TERMINATION. It is the first time that sexual harassment is specifically regulated in labor regulations and included as grounds for termination of the labor relationship without responsibility for the employer, as long as it is proven. Furthermore, additional grounds for termination of the labor relationship without responsibility for the employer now include: (i) when employees incur in acts lacking probity and honesty or acts with violence, threats, injuries or improper treatment against clients or suppliers of the employer; and, (ii) the lack of the necessary documents required by the Law and regulations, necessary for the rendering of a service, when it is attributable to the employee.

NOTICE OF TERMINATION. It states that the notice of termination of the Labor Relationship by the employer shall be personally delivered to the employee at the time of dismissal or communicated to the competent Arbitration and Conciliation Board (Junta de Conciliación y Arbitraje), within the following five working days accompanied by the last registered domicile of the employee so that the Board may personally deliver the notice. The statute of limitations will not begin to run until the employee personally receives notice of termination.

ACCRUED WAGES. It limits the liability of the employer in the payment of Accrued Wages by providing that if an employee sues its employer and wins its claim in a labor proceeding, the employee will have the right to receive as indemnification: (i) an amount equivalent to 3 (three) months of salary (“Fixed Indemnity”); (ii) during the labor proceeding, for up to twelve months, 100% of accrued wages (“Capped Variable Indemnity”); and, (iii) as of the thirteen month and forward, only the payment of a 2% monthly interest rate on the Fixed Indemnity and the Capped Variable Indemnity.

DILATORY TACTICTS. It provides sanctions to Attorneys who intentionally delay the labor proceeding with a fine of up to 1,000 times the general minimum wage in effect (salario mínimo general vigente).

FORM OF PAYMENT OF SALARIES. It includes as valid forms of payment of salaries deposits in bank account, debit cards, wire transfers or payments by any other electronic means.

RELATED ACTIVITIES. Employees may perform related or complementary activities those of their main activities, and may receive additional compensation for such activities.

MEANS OF EVIDENCE. New forms of evidence in a labor proceeding now include photographs, cinematographic tapes, finger print scanner registries, audio and video recordings and information and communication technologies, such as, computer systems, optical electronic mediums, faxes, e-mail, digital documents, electronic signatures and passwords.

GENDER EQUALITY. It prohibits the request of certificates of non-pregnancy in order to hire women, as well as their firing for being pregnant. Furthermore, it provides women who adopt a child the right to a six week leave with pay. Lastly, it provides paternity leave, whether it is a consequence of a birth or an adoption, for five working days with pay.