Country snapshot

Key considerations

Which issues would you most highlight to someone new to your country?

In December 2018 Mexico will welcome a new president into office following a historical electoral victory and expectations are high after six years of political unrest and increasing levels of corruption. The change in the federal administration means not only a different governing party but also a potential modification to national public policy. As the president takes office with a new vision for Mexico and a substantial majority in Congress, the country expects significant labour reform to strengthen active unions and promote productivity.

The government must ensure that foreign investors understand the cultural differences and expectations that come with operating in Mexico, as well as the legal differences and implications associated with country of origin.

Navigating the business world in Mexico should always be done with the advice of serious legal counsel, as foreigner investors are often subject to corruption and fraud. Large companies and public companies in stock markets should rely on attorneys that advise clients with the highest international compliance practices and US Foreign Corrupt Practices Act knowledge.

What do you consider unique to those doing business in your country?

Investors recognise Mexico as a site where opportunities for doing business are prolific. Extremely successful investors never lose site of the vicissitudes of corruption, workers’ unions, legal implications and the scope of responsibilities while they take advantage of cultural differences that allow for production, stable labour and employment conditions, and maintaining healthy profit margins derived from naturally low costs.

Is there any general advice you would give in the employment area?

There is only one federal labour law which is aimed at the protection of employees. All statutes set out by law are compulsory for employers and must be abided by at all times. All investors should be trained and have minimal working knowledge of employment norms and all companies should be prepared for collective (ie, unionised) working conditions and negotiations with unions that are pro-production and company-oriented.

Employers may have to look at encouraging more open and active union engagement in the workplace. Companies should start analysing possibilities, consider the issues mentioned above and look at offering training in:

  • labour relations;
  • the importance of productivity; and
  • workplace stability.

Unionised employment has proven to be successful when employers and employees understand that unions and employers should not operate as rivals. Further, the relationship between an employer and a union is symbiotic by nature and therefore it is important that this fact is recognised.

Emerging issues/hot topics/proposals for reform

Are there any noteworthy proposals for reform in your jurisdiction?

Yes, businesses, foreign investors and interested parties should not lose sight of the fact that reform is welcomed, despite the negative media attention and political hype surrounding it.

Following the announcement of the long-awaited labour reform in 2016, the bill was presented to the Senate on 7 December 2017. The 286-page document was not officially enacted and approved by the Senate; therefore, the enactment and approval of a new bill as per official legislative procedure is awaited.

The next year will be interesting as there is a constitutional need to amend and reform all governing employment laws to cover:

  • the end of labour boards (as administrative authorities) and the introduction of judicial employment authorities that will govern all legal procedures between employers, employees and unions;
  • making unionised life in legal entities more representative and transparent, as new collective bargaining agreements must include sufficient evidence to prove that the majority of employees support and are represented by a union; and
  • new rules and regulations concerning the use of outsourcing.

What are the emerging trends in employment law in your jurisdiction?

Alongside the new administration of justice in labour and employment, HR management and collective relationship management is becoming more important. The constitution has put more weight and importance on human rights and international standards, which translates into:

  • more professional HR management;
  • better workplaces;
  • collective bargaining focused on productivity; and
  • jointly beneficial strategies for employers and employees.

The president-elect and Luisa Maria Alcalde (the future minister of labour) have been open about democracy in unions and transparency in unionised life throughout the country. Further, in September 2018 the government ratified the International Labour Office Convention 98, regarding the freedom of association and the protection of the right to organise. In addition, the US-Mexico-Canada Agreement that was enacted in October 2018 has also been ratified.

Convention 98 has been in effect internationally since 1950, but was stuck in the Mexican Senate for years before it was enacted when the Morena party gained its majority. As a result, Mexico’s current political and entrepreneurial climate is constantly changing and should be considered in light of these developments.

The employment relationship

Country specific laws

What laws and regulations govern the employment relationship?

The Federal Labour Law is the only governing law in Mexico for labour and employment relationships in the private sector.

Who do these cover, including categories of worker?

Mexico does not admit a distinction between employees. All employees, foreign or national, are guaranteed all statutory benefits in accordance with Federal Labour Law.

Misclassification

Are there specific rules regarding employee/contractor classification?

Misclassification is a longstanding issue in Mexico. Third-party service providers claim to be the sole employers of any given employee rendering services to a third party. The Supreme Court has stated that due to abuse in misclassification, regarding labour relationships there can be a joint liability principle, whereas both the third-party service provider which pays the salary and the third party as beneficiary of the work being performed are equally liable for all statutory benefits and severances. All employers should be careful when employing staff through outsourcing companies and must always comply with the following three rules:

  • An entire workforce must not be...