Relevant amendments to the Federal Labor Law (“FLL”), the Social Security Law (“SSL”), the Institute of the National Fund for Employees’ Housing Law, as well as several tax provisions (“Amendments”) have been published in the Official Federal Gazette (“DOF”) on April 23rd, 2021.
The Amendments include, amongst other matters, the following changes and adjustments to the subcontracting/outsourcing regime:
1. Personnel outsourcing through which an individual or legal entity make avail- able their own employees for the benefit of another individual or legal entity is forbidden;
2. The distinction between “personnel outsourcing” and the “rendering of specialized services or the execution of specialized works” is established, the latter being those focused on the rendering of services that are not comprised within the beneficiary’s corporate purpose or its core business;
3. Subcontracting between companies of the same business group is allowed, as long as the complementary or shared services or tasks are not part of the corporate purpose or the predominant activity of the one that receives them;
4. Sets the manner in which the rendering of specialized services or the execution of specialized works must be formalized between the parties, as well as the requirements to be fulfilled for such purposes;
5. Joint and several liability is established between the provider of specialized services or works and the individual or legal entity that fails to comply with its employment, social security, and tax obligations;
6. The creation of a registry of specialized service providers is foreseen, to identify and regulate the companies that render specialized services or perform specialized works, of which the Ministry of Labor and Social Welfare (“STPS”) will be in charge. For such purposes, the STPS will grant authorizations for those individuals or legal entities that carry out the aforementioned activities and that evidence the specialization thereof. The aforementioned authorization shall be renewed every three years and the STPS may revoke the authorization in the event the individual or legal entity fails to comply with the above referred obligations.
7. Broadens the definition of intermediation;
8. Eliminates provisions 15-A, 15-B, 15-C and 15-D of the FLL regarding the subcontracting regime;
9. Determines that the amount of the employee profit sharing will be limited to three months of the employee’s salary or the average of the participation received in the last three years. In any case, the amount that is most favorable to the employee will be applied;
10. For an employer substitution to be valid and enforceable, a transfer of assets to the substitute employer shall be carried out;
11. Economic fines that may range between MXN$179,240.00 and MXN$4,481,000 are established and may be imposed in case of hiring services or execution of works without the corresponding authorization granted by the STPS, for each employee. Likewise, such fines may also be imposed to those individuals or legal entities that benefit from the subcontracting of personnel, breaching the provisions established in the FLL; and
12. Tax incentives are eliminated for those individuals or legal entities carrying out personnel outsourcing that do not comply with the new requirements set forth by the FLL.
The transitory articles of the Amendments establish, amongst other matters, that:
(i) within the next thirty days, the STPS must issue the corresponding provisions on the incorporation of the registration of individuals and legal entities for the execution of specialized services and tasks;
(ii) individuals or legal entities engaged in the provision of specialized services or tasks must obtain the corresponding registration from the STPS within a period of no more than ninety calendar days from the publication of the provisions issued by the STPS; and
(iii) for the purposes of an employer substitution, the obligation to carry out a transfer of assets during the period of ninety days from the publication of the Amendments in the DOF is exempted, as long as the transferred employee’s employment rights, including their seniority generated and the terminated occupational hazards are honored.
As an effect of the publication and application of the Amendments, is highly relevant that insourcing structures (service providers that belong to the same corporate group) and outsourcing structures (service providers that are not part of the same corporate group) that several companies have implemented are analyzed and modified in order for them to be compliant with the new employment, social security and tax provisions, where applicable.
At González Calvillo we are prepared to advice your company and answer your questions with respect to these amendments and its potential impact.
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