April 9, 2020

Applicable Criteria for Inspections During Salary or Minimum Salary Directives in Mexico

Holland & Knight Alert
Leslie Palma

Based on the declaration of health emergency in Mexico due to force majeure stated on March 30, 2020, the Ministry of Labor and Social Security determined on March 31, 2020, that in order to monitor that employees' rights are respected and to guarantee that employees' salaries are paid in full, the following criteria will apply:

  1. Visits to work centers under federal jurisdiction will only be carried out if there is knowledge that there are potential breaches to work regulations; that is, that an employee reports to the authority that he or she did not receive payment of his or her salary or that his or her salary has been reduced.
  2. The Federal Labor Representation office will investigate the actual activity that requires the source of employment in order to establish whether such activity corresponds to a federal or local jurisdiction, as the case may be, and if the latter is the case, the Federal Labor Representation office will file the complaint or report it to the competent local authority.

If the inspection meets the criteria, it must comply with the following:

  1. Upon the inspector's arrival to the work center, he or she may request proof that employees receive payment of their full salary; that is, employers will possibly be requested to exhibit payroll receipts with the employees' signatures.
  2. The inspector will also request the job position catalog of the work center in order to ascertain the number of employees, confirm the salary received by each one of the employees and verify if it is paid in full.
  3. If the inspector finds any lack of or reduction in payments, he or she must record it in his or her official record and attach a copy of the evidence. Likewise, in such a case, the inspector must also inform the federal prosecutor's office.
  4. The report cannot be issued if the company does not have available the requested information during the inspection or if there is no person to attend such inspection. These circumstances will grant the employer a five-day term to deliver all necessary evidence to validate and accredit full payment of employees' salaries.

In case of inspections, the following criteria is suggested:

  1. The company must provide evidence that its business activities are essential in accordance with the provisions of the Official Gazette of the Federation published on March 31, 2020. This can be validated with the company's articles of incorporation or letters from clients that indicate that its activity is essential and that its products are part of the critical production line, or with purchase orders from clients that carry out essential activities.
  2. The company should have payroll receipts for March 2020 and any subsequently available receipts. If there are salary deductions other than taxes and social security fees, employers should have the documentation to prove the origin of the discount; if there is any modification to the working conditions (working hours and wages), the company must provide an express agreement with the employees or with the union, if such exists.

Holland & Knight attorneys have extensive experience in labor matters in a variety of industries. For more information, contact the author or Holland & Knight's Mexico City office.

DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact your responsible Holland & Knight lawyer or the author of this alert for timely advice.

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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