April 12, 2019

Mexico's House of Deputies Approves Amendment of Federal Labor Law

Holland & Knight Alert
Leslie Palma

Highlights

  • Mexico's House of Deputies has approved the amendment of the Federal Labor Law to regulate the Constitutional Amendments made to Articles 103 and 123, in effect since Feb. 24, 2017.
  • The objective is to modernize the labor justice system in Mexico while also complying with Agreement 98 of the International Labor Organization (ILO) as well as with Annex 23 of the United States-Mexico-Canada Agreement (USMCA).

Mexico's House of Deputies (Camara de Diputados, or HD) approved on April 11, 2019, the amendment of the Federal Labor Law (FLL) to regulate the Constitutional Amendments made to Articles 103 and 123, in effect since Feb. 24, 2017, to comply with Agreement 98 of the International Labor Organization (ILO) as well as with Annex 23 of the United States-Mexico-Canada Agreement (USMCA). The objective is to modernize the labor justice system in Mexico.

It is speculated that by April 19, 2019, the House of Senators will approve it , and for it to be published on May 1, 2019.

The following points are the most relevant changes to the FLL:

Outsourcing of Services and Freedom of Association

1. The regularization of the outsourcing of the provision of personnel services

The amendment approved by the House of Deputies does not include modifications to the articles regulating outsourcing, only in Article 5 of the CFT that the stipulation established a) shall be null and void of a working relationship with simulated legal acts to avoid the fulfilment of labor and/or social security obligations and b) to register an employee with a lower salary than he or she actually receives.

2. Union democracy and freedom of collective bargaining

  • a) Recognition of International Labor principles: The right to freedom of association, free syndication and protection against acts of interference are explicitly recognized.
  • b) Election of union directives: It is established that the procedures for the election of trade union directives and sections shall safeguard the exercise of the personal, free and secret vote.
  • c) Registration of trade unions: It is established that for the registration of a trade union, documents certifying that the union exists and which has an updated register of members must be presented to the Federal Center for Conciliation and Labor Registration.

    In addition, the trade union directive shall be obliged to account for its members at least every six months with respect to the income, expenses and the administration of the trade union heritage.

    The establishment of a Federal Center for Labor Conciliation and Registration, whose main activities in addition to labor conciliation will be the registration of trade union organizations and collective labor contracts.
  • d) Representation in the signing of Collective Bargaining Agreements.

    Addition of the "Representativeness Certificate," which will be issued by the Federal Center for Conciliation and Employment Registration as part of the requirements for the registration or a collective contract and as a requirement for the strike position by contract signature, which in both cases the union shall obtain in order to fulfill the principles of representativeness. This constancy will be valid for six months.
  • e) Establishes mechanisms for consultation of employees for the approval of Collective Bargaining Agreements and negotiated revision agreements, i.e., it is proposed to introduce that any application for registration of an initial contract or a revision agreement should have prior approval of the collective agreement by the majority of the employees covered by it through the personal, free and secret ballot.
  • f) All collective agreements shall be reviewed within four years of the entry into force of secondary legislation, and employees shall approve such revisions in accordance with the procedure laid down in the preceding subparagraph.
  • g) The count test. If after consultation with the employees there is a loss of ownership of the collective agreement to demand ownership of the contract, the union shall promote the collective special procedure established by law.

    In the case of violations of fundamental rights in collective matters that infringe on the freedom of succession, freedom of association or right to negotiate, or when challenge procedures for the election of union directives are to be taken, it will not be necessary to go to the interlocutory conciliation or exhibit the constancy of representativeness.
  • h) Propose prohibiting trade unions from participating in schemes of evasion of contributions or failure to comply with employers' obligations with respect to employees, exercising acts of violence or participating in acts of simulation assuming the character of patron and Hinder the participation of employees in the procedures for the election of their union directives.

Conciliation and Union Registry Center

As provided in the amendment to Article 123 of the Mexican Constitution, an independent body named the Conciliation and Union Registry Center will be created and have the following main duties.

1. Be a conciliator in federal jurisdiction conflicts between employers and employees. The conciliation process will be a pretrial mandatory stage, since a certificate of having attended this conciliation process will need to be attached to all complaints filed before a Labor Court.

2. Register all of the collective bargaining agreements and internal work regulations related to labor unions.

3. Set forth professional career development for its employees.

4. Determine training and professional development plans.

In the same manner, local Conciliation and Union Registry Centers will be incorporated nationwide. These local centers will be dependent on the local government of each state, having the main duty of assisting in conciliation process of local jurisdiction conflicts.

Labor Courts

This project set forth the guidelines for the operation of the new Labor Courts that will replace the Conciliation and Arbitration Labor Boards. The new courts will be part of the federal or local Judicial Branch, depending on the jurisdiction.

Labor Procedure

This reform envisages changes in the Labor Procedure. These will be the main reforms:

1. The Court will have a digital platform to make electronic notifications to the parties in a lawsuit.

2. A voluntary registration system will be implemented so that the employer can register to receive information of new lawsuits filed against them.

3. Electronic paystubs (Comprobante Fiscal Digital por Internet, or CFDI) will be valid as original documents.

4. The initial complaint must include: a) a certificate that proves that the pretrial conciliation process was completed, b) proxy letters and/or power of attorney, and c) documental evidence.

5. Propose new procedural terms.

Human Rights and Gender Perspective

1. No discrimination and violence environment will be of public interest.

2. The employer will have to implement a protocol to prevent gender discrimination and to give attention to violence and sexual harassment cases.

3. Protection of rights is envisaged when discrimination in employment is claimed.

Other Important Changes

1. The nomination of beneficiaries for the payment of wages and benefits accrued and not charged to the death of the employee is proposed in the individual working contract.

2. It is proposed that, to be valid, the termination agreements of the working relationship or liquidation must be ratified before the Conciliation Centers. If the termination agreements are concluded without the intervention of the authority, the corresponding court could nullify the waiver of the rights of employees, with the rest of the agreement retaining its validity.

3. Addition that the failure of the notice of termination of the working relationship alone presumes the unjustified separation, unless otherwise proven to prove that the dismissal was justified.

4. Addition of the Article 48 bis with the cases of actions notoriously inappropriate, carried out by the parties and the public servants.

5. The employer is exempted from the obligation to reinstate the employee through the payment of the corresponding compensation in the cases marked in Article 49 of the current law and contemplate that by the procedures to deposit the corresponding compensation.

6. Add as employer's obligations:

  • a) deliver to their employees free of charge a printed copy of the Collective Bargaining Agreements or its revisions
  • b) implement a protocol to prevent discrimination on the grounds of gender
  • c) establish and disseminate the faithful text of the call requested by the Federal Center for Conciliation and Labor Register for the development of the consultation procedure referred to in the Freedom of Association chapter, and
  • d) establish in the work center the call that the union requests when it consults with employees on the contents or revision of the collective agreement

7. Employers have the obligation to register household employees with the Mexican Social Security Institute, without any obligation to cover the contribution to the National Workers' Housing Fund Institute (Instituto del Fondo Nacional de la Vivienda para los Trabajadores, or INFONAVIT).


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.


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