Labour & Employment 2013 – Mexico	                                                                                        ...
LatinLawyer Reference 	                                                                                                   ...
Labour  Employment 2013 – Mexico	                                                                                         ...
LatinLawyer Reference 	                                                                                                   ...
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Latin Lawyer

  1. 1. Labour & Employment 2013 – Mexico LatinLawyer ReferenceLATIN LAWYER THE BUSINESS L AW RESOURCE FOR LATIN AMERICA ReferenceLabour & Employment 2013 – MexicoHugo Hernandez-Ojeda Alvirez and Luis R Ruiz-GutierrezBarrera, Siqueiros y Torres Landa, SC1 May foreign employers hire employees directly in your jurisdiction or is Therefore, one of the most important documents for the employment is the it necessary to act through a local subsidiary? agreement in which the work conditions are stated. In any case, the employersIn order to comply with Mexican labour and social security legislation, it is must prove, in the event of a trial, the following:advisable to hire employees through a local subsidiary or via a service entity; • ate of contracting; dadditionally, hiring personnel from a Mexican entity reduces the risk for a for- • eniority; seign employer to exposure, which could lead to the authorities taxing the busi- • bsences; aness as though it were a permanent establishment, independent of the obligation • auses of termination of the labour relationship; cfor the foreign employer to be registered at Mexican social security as employer. • ermination of the employment contract executed to perform a specific t work or for a specific period of time;2 there a limit to the number (or ratio) of foreign employees an Is • urnishing the employee with a written notice of dismissal; f employer may have in your jurisdiction? • mployment contract; eEmployers are able to hire foreign workers in Mexico to make up to the 10 per • uration of labour shift; dcent of their personnel; however, regarding hiring of directors, administrators • ayment of weekly days off and holidays; por general managers, up to 100 per cent of such personnel (staff personnel) • njoyment and payment of vacation; ecould be foreign and therefore, there are no hiring limitations for the employer • ayment of Sunday, seniority and vacation premiums; pin that regard. • mount and payment of salaries; a • ayment of profit sharing; and p3 May labour or employment agreements, and the termination of those • egistration and payment of quotas to the National Housing Fund. r agreements, be subject to any legislation other than that of your jurisdiction? 6 What are the employers’ obligations (social security and relatedAccording to Mexican constitution, employment relationships, including benefits) regarding employees after contracting? Are any socialemployment agreements, that will be placed in Mexican territory, must be gov- benefits tax deductible?erned by the Mexican Federal Labour Law; therefore, employees and employers The employer’s obligations according to the Mexican Federal Labour Law,are obligated to comply with the obligation and rights considered in such legis- Mexican Social Security Law and Safety and Hygiene regulation, among oth-lation. Termination of those agreements is included in this regulation. ers, include: • omplying with labour and social security legislation; c4 What are the requirements for an enforceable agreement? Are there • xecuting the employment agreement in writing; e any formalities that labour or employment agreements must adopt to • aying the corresponding salary (in a weekly basis to hourly personnel and p be enforceable in your jurisdiction? Are fees, duties or taxes generated biweekly to salaried employees); by any of them? • etaining the corresponding tax and social security contribution from the rEmployment is generally defined as the execution of an individual employment salary of the personnel;agreement, whereby a person undertakes to render a personal, subordinated • roviding to the personnel hired with the required work tools and security pservice to another individual or entity in exchange for payment of a salary or equipment (if is applicable) to render services;wages.This agreement does not need to be registered in order to be enforceable. • ranting the minimum benefits stated by the Labour Law; g In the event that an agreement is not made in writing, the employer is held • egistering as employer before the Mexican Social Security Institute (IMSS); rresponsible for that omission; the employee shall, nevertheless, have all the rights • ffiliating employees to the IMSS five days after their hiring; athat stem from work rules and the services rendered to the employer. • etaining and pay social security, housing and retirement contributions; r • roviding training to the personnel; and p5 What are the implications of hiring personnel without a clear, written, • articipating in the safety and hygiene commissions in order to reduce the p employment agreement in place? May this have any effect in the event exposure of the personnel and work centre visitors to suffer accidents. of litigation?Due to the protectionism of the Labour Law in Mexico, in case of a claim, the Any social security and related benefits granted to the employees deriving fromemployer always carries the burden of the proof regarding work conditions, so the services rendered, should be tax deductible.it is recommended to have clear employment agreements for the employees inorder to have the best evidence in case of litigation. The document in whichthe work conditions must be stated is the individual employment agreement. –1–
  2. 2. LatinLawyer Reference Labour Employment 2013 – Mexico7 What benefits, other than cash remuneration are employees in your entitled to the payment of severance, seniority premium as well as to back pay jurisdiction entitled to? What severance entitlements may employees wage, which is the salary that the employee would have been entitled to receive claim? from the termination date until the date when severance is paid.The minimum mandatory benefits that the employers must grant to the per-sonnel are: 8 What is the role of the unions in the relationship with foreign employers and employees?Weekly day off The union will have the right to affiliate employees working for a national or foreignAs a general rule, for every consecutive six days of work, employees are entitled employer in Mexico. If the foreign employer opens a working facility in Mexico,to one paid day off. It is also stated that the employer and the employee should the employees hired by the employer could become unionised, so the union will betry to agree on Sundays as the day off. If not, the employee is entitled to receive able to request the employer to sign a collective bargaining agreement.The foreigna Sunday premium equivalent to at least 25 per cent of the daily wage. employer will have the same obligations as any Mexican employer, including the obligation to review the collective bargaining agreement once a year in order toHolidays increase the salary and every two years for negotiation of benefits increase.The FLL states that the following days are mandatory holidays: Foreign employees can be affiliated to the unions but they are not allowed• January; 1 to be part of the executive committee of the union.• he first Monday of February (commemorating the 5 February); t• he third Monday of March (commemorating the 21 March); t 9 employees have the right to form unions? Is it mandatory for Do• May; 1 employers to honour this?• September; 1 Mexican Labour Law recognises the employees’ right to unionise and to create• he third Monday of November (commemorating the anniversary of Mexi- t a specific union to defend their interests. A union is defined as the association of can Revolution); employees established for the study, aim and defence of their respective interests.• December, every six years, corresponding to the transfer of the Federal 1 In the same way, unions are entitled to create federations and confederations. Executive Power; An employee’s union may be:• 5 December; and, 2 • raft unions, consisting of persons of the same occupation, trade or craft; c• ays determined by federal and local laws in the event of local or federal d • mployees’ union of certain employer, consisting of persons employed by e elections. the same employer (company union); • ndustrial union, consisting of persons who are employed in two or more iVacation and vacation premium corporations devoted to the same branch of industry;The days of vacation an employee is entitled to enjoy, with payment of salary, • ational industrial unions, consisting of persons employed in one or more nare contemplated in the law and are determined by the seniority according to corporations devoted to the same brand of industry established in two orthe following table: more states; and More than one year of service 6 working days • nions formed by employees devoted to different professions. u More than two years of service 8 working days Employees are free to decide if they will be part of a union or if they will con- More than three years of service 10 working days tinue working as non-unionised personnel. More than four years of service 12 working days 10 May unions be an independent party to a labour controversy in your jurisdiction? What are their rights and duties towards the employerAfterwards, vacation days will increase by two days for every five years of service. and unionised employees?Employees will be entitled to receive a ‘vacation bonus’ of at least 25 per cent Unions have the right to represent the unionized employees affiliated to theof the salary for the vacation days, independently of the salary for those days. union, but union and non-unionised employees have the right to handle any controversy against the employer, and the union could be independent to thatChristmas bonus conflict without any participation in the conflict.In order to enable employees to meet Christmas expenses, the FLL obligates Unions will have the right to represent union employees in collective labouremployers to pay employees, before 20 December of each year, at least 15 day’s issues and the unionised employees are linked to any agreement entered by theadditional salary. union and the employer.Profit sharing 11 May a union request, bring about or cause a stoppage? If so, in whatThe FLL provides that employees are entitled to participate in the employers’ cases and what remedies would be available to the employer?profits in the percentage determined by the National Profit Sharing Commission, Unions have the right to represent employees working for an employer andwhich is currently 10 per cent. For purposes of profit sharing, profit is defined as Mexican Labour Law grants the right to Unions to call to strike if the objectivetaxable revenue. It also establishes that profit-sharing payments shall be made to of the strike is any of the following:employees within 60 days after the date on which income tax was paid. • o obtain equilibrium between the production factors, harmonising the t rights of labour with the rights of capital;Indemnities/severance • o obtain from the employer the signing of a collective bargaining agree- tEmployer and employee may terminate the labour relationship without liability ment and to request its review every two years;only if one of the parties incurs any justified cause established by law. If the • o request the salary review every year; temployee terminates the labour relationship arguing a justified cause, he or she • o demand the compliance of the collective bargaining agreement in the twill be entitled to receive, as severance pay, three months salary, twenty days of enterprises or establishments in which it has been violated;salary for each year worked, seniority premium, plus the accrued and propor- • o demand compliance with the legal provisions for profit sharing payment; ttional benefits owed to him or her by the employer. If the employer terminates • o support a strike handled from any other union against other employers. tthe labour relationship arguing a justified cause, it will not be obligated to anypayment except the accrued benefits owed to the employee. Any stoppage different to a strike would be illegal. Notwithstanding the above, in case of trial, if the labour court resolves thatthe termination of the employment was not justified, the employee could be –2–
  3. 3. Labour Employment 2013 – Mexico LatinLawyer Reference12 Which legislation governs the enforcement of international • ils and vegetables grease; o relationships or labour agreements provided for in international • ood production, exclusively covering the manufacture of those which are f business contracts, and in international commercial proceedings, to be packed, canned or bottled, destined for such procedures; performed within your jurisdiction? • anufacture of beverages which are bottled or canned or which are des- mEmployees who render services in Mexico (no matter if the employer is located tined for such procedures;abroad) are protected by the Mexican constitution and the Mexican Federal • ailways; rLabour Law; therefore, in case of a labour conflict, Mexican labour courts will • ood products, including the production of sawdust and the manufacture wbe the only tribunal with jurisdiction in Mexico and will resolve under the of plywood and particle board;Mexican Labour Legislation. • lassmaking; exclusively the manufacture of plate, flat or carved glass, and g glass bottles;13 Which international treaties or conventions are applicable to labour or • obacco, covering the benefit or manufacture of tobacco products. t employment relations in your jurisdiction? Has your country made any • anking and Credit services. B reservations to or denounced any treaties of the International Labour Organization? CorporationsRegarding international treaties or conventions, according to Mexican constitu- • hose, which are administered directly by the federal government or by one ttion, all treaties and convention ratified by the Mexican senate are applicable in of its decentralised organisations.Mexican territory and must be considered by the courts as law. • hose operating under federal contract or concessions and those industries t There are a lot of international treaties and conventions ratified by Mexico connected thereto.(ie, International Work Organization Resolutions, Vienna Convention, etc), • hose which execute works in federal zones or which carry out their work tapplicable in our country as part of the Mexican Labour Legislation. in federal jurisdictions, in federal territorial waters or in waters included in Mexico has denounced treaties numbers 34, 32, 63, 62, 107, 7, 6 and 23 due the exclusive economic zone of the nation.to the ratification of treaties numbers 96, 152, 160, 167, 169, 58, 90 and 166. Any other activity not considered in the above list shall be regarded as local.14 arbitration agreements to resolve labour or employment disputes Are As Spanish is the national language in Mexico, all procedures before labour valid and enforceable in your jurisdiction? Is there any legislation courts must be carried out in Spanish. in your jurisdiction governing the private arbitrability of labour or employment disputes? May controversies in labour or employment 16 labour or employment proceedings generate or accrue taxes, Do matters in your jurisdiction be resolved through private arbitration (in duties or any kind of fees, including attorneys’ fees? your jurisdiction or abroad), or in foreign courts? No taxes or charges are generated for the parties in labour proceedings. Attor-Private arbitration is not admitted by Mexican Labour Law, so these agreements ney’s fees will be paid by each party and no condemn to pay such fees will bewould not be enforceable. The only arbitration governed by Mexican Labour made against any of the parties as Mexican Labour Law does not contemplateLaw is the one to be handled before Mexican Labour Boards. such possibility.15 Does the law require that labour or employment proceedings be held 17 there a concept in your jurisdiction providing for class-lawsuit in Is in a specific jurisdiction or place or require that proceedings be carried labour or employment matters? Does your law allow the consolidation out in a specific language? of multiple labour or employment proceedings? Are human rightsAll labour disputes related to an employment relationship placed in Mexico, related grievances admissible in labour and employment proceedings?must be resolved through the labour authorities, specifically through Concili- There are no class-lawsuits in Mexico, however it is possible to file a massiveation and Arbitration Boards. To accomplish this goal, the boards are basically claim against the employer. In the event that different employees claim the samedivided into federal and local boards. benefits or actions from the same employer it is possible to ask for the consolida- Jurisdiction is decided considering the industrial branch in which the tion of the proceedings to the labour court.employer is classified. Thus, there is a Local Conciliation and Arbitration Board The Mexican Labour Law was amended in order to include that thein each state and a Federal Conciliation and Arbitration Board in Mexico City, employees will have the right to have a worthy and decent job and that nowhich has offices in each state. discrimination should be accepted. According to the FLL, federal authorities are responsible for applying theaforesaid law in the following cases: 18 Can foreign lawyers serve as counsel in labour or employment proceedings in your jurisdiction? If so, can they do so alone or mustIndustrial and service fields a local lawyer serve as co-counsel? Are their fees subject to local• extile; t taxation?• lectrical; e Yes, foreign lawyers may serve as counsel in labour or employment proceedings• inematography; c if they have the appropriate immigration status that would allow them permis-• ubber; r sion to work in Mexico. They will be subject to local taxation if they are tax• ugar, s residents in Mexico.• ining; m• etallurgic and steel, covering the exploitation of basic minerals, their ben- m 19 What are the rules on discovery in proceedings, including information efit and smelting, as well as obtaining iron and steel in all their forms and regarding unions and their internal regimes? alloys, and laminated plate sheet and rolled products of the same; There are no discovery steps in Labour proceedings, the parties are able to• ydrocarbons; h review the evidences provided by their counterparties once such evidences are• etrochemical; p duly offered.• ement; c In terms of an amendment of the Mexican Federal Labour Law, labour• ime-kiln; l authorities have the obligation to permit the consultation of the information• utomotive, including mechanical or electrical auto parts; a about the union’s registration and to grant copies of the files.• hemical, including pharmaceutical chemicals and medicines; c• ellulose and paper; c –3–
  4. 4. LatinLawyer Reference Labour Employment 2013 – Mexico20 labour or employment awards issued by foreign courts or Are 27 Does the law provide that post-award interest accrues on an unpaid arbitration courts recognised and enforced in your jurisdiction? award?Only in the event that homologation of award treaties will be enforceable in Yes, Mexican Labour Law considers that when an award is issued, the plaintiffMexico, foreign labour awards or resolutions could be honoured in our country. has the right to obtain the condemned amount as well as the interest accrued.In our experience, there are no precedents that refer to this specific case in Mexico. 28 a labour court or board empowered to award attorneys’ fees to the Is21 May labour courts or boards grant interim relief? If so, how is that prevailing party? relief enforced? Does it apply to assets located abroad? Are these valid No, attorneys’ fees are not included in Mexican Labour Law, so each party has against unions? to absorb such fees, so it could not be part of any award.Labour courts grant interim relief in some specific circumstances, so the presi-dent of the labour court may order the temporary attachment in order to 29 Please describe the standard used by the courts in deciding whetherguarantee the amount claimed in a labour suit filed. The owner will be named to vacate an award.depositary of the attached goods. If the court condemns the defendant to pay Awards may not be abandoned because there are rights granted in favour of theand if the defendant does not comply with the award, the temporary attachment employees. Any award has to be complied by the losing party, specifically if con-will become permanent and the attached goods would be sold through auction demns the defendant to pay any amount of money to the employee. It is null andproceedings at the labour court. void any waive to receive severance, benefits and wages included in an award. This would also be valid against unions if they are sued and condemnedto pay. 30 Can a foreign award be enforced if the award has been set aside by the courts?22 Can labour courts or boards issue orders, subpoenas or use other Mexican Labour Law does not include any possibility to enforce any award legal processes to compel the production of evidence by a third issued by foreign courts, as any labour proceeding has to be handled at Mexican party or compel a third-party witness to appear before them? If so, labour boards. will a court of law lend its aid in enforcing such an order against a recalcitrant third party? 31 brief, what advice do you have with respect to labour or InMexican Labour Law allows the employees acting as plaintiffs in labour suites employment relationships and agreements for a foreign lawyer advisingto request the employer to exhibit documents at the labour proceeding. They a foreign client contemplating entering into a business deal with amay be compelled by labour courts to exhibit such evidences. Labour courts company from your jurisdiction? What are the red flags?will also compel third-party witnesses to appear before them, and if they refuse Mexican Labour Law is a protectionist law in favour of the employee’s interests,to appear after having been notified by the court, the witness will be presented so it would be highly recommended to comply with all labour issues and to bethrough the police after a court order. sure that any decision taken is according to Mexican law. It is not recommended to handle labour relationships as if the employees23 Can a party to a labour proceeding seek relief from the court or would be working in any other country, because labour regulations and nor- board? What is the scope of such relief? mal labour advice given in other countries do not necessarily have the sameThe defendant may request labour courts to seek interim relief against the implications in Mexico.employer if there are presumptions or clear evidences that the defendant would The recommendations are to get the advice from a Mexican Labour Coun-not honour a condemned award. The plaintiff has to submit a request to the sel in order to be sure that the decisions to be taken comply with Mexican lawpresident of the labour court, and if he or she finds it appropriate, will order the and that no adverse consequences would appear if the decision is taken.temporary relief of goods in order to guarantee the employee’s claim. Labour relationships need to be handled in Mexico according to Mexican law and Mexican practice and not according to the laws and practice of any24 the resolutions issued by a labour court or board final? What are Are other country. the remedies available for the parties?Resolutions issued by labour courts are not final and the same could be appealedonly through a Constitutional Action to be filed at Federal Courts. Barrera, Siqueiros y Torres Landa, SC25 What are the grounds for challenging an award and what is the period of time a party has to challenge that award? Luis R Ruiz GutiérrezIf the award has not been issued in terms of Mexican Labour Law or if the valu-ation of the evidences rendered by the parties has not been properly made, the lrg@bstl.com.mxlosing party has the possibility to file a Constitutional Action at Federal Courtsagainst the award. This action has to be filed within the following 15 days afterthe award was notified to the party. Paseo de los Tamarindos 150-PB Colonia Bosques de las Lomas26 a party files a lawsuit in violation of an agreement to arbitrate, will If a petition by the defendant to remit the lawsuit to arbitration be Delegación Cuajimalpa granted by the labour courts or boards in normal circumstances or CP 05120, Mexico, DF is the right to sue not waivable? If so, will that petition be treated as a threshold matter or will it be rolled into the merits of the litigation Mexico such that the defendant will also need to defend the merits of the lawsuit in court?As private arbitration is not recognised by Mexican Labour Law, labour courts Tel: +52 55 5091 0000will not accept suits where this kind of request would be claimed. Even if the Fax: +52 55 5091 0123labour suit is accepted, labour courts would not resolve in such terms as thereis no base in order to handle private arbitration in Mexican Labour Law. Theright to sue at labour courts or boards is unwaiveable. www.bstl.com.mx –4–

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