Mexico: Labor inspections and General Compliance on Labor Matters
Dec 11, 2015
QuickCounsel
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Introduction
The purpose of this article is to present a general analysis of the labor inspections that the Ministry of Labor and Social
Welfare ("STPS" for its acronym in Spanish) may perform in the workplaces and companies' sites in order to verify the
compliance of the relevant provisions established in the Federal Labor Law, the regulation of labor inspections and
application of fines, sanctions and other Mexican legal bodies.
In general terms, labor inspections are principally practiced to ensure that the workplaces are complying with their
obligations on:
- General work conditions;
- Workplace health and security;
- Training of employees;
- As well as any other provision established in the Mexican laws and by the applicable
Mexican Official Rules (NOMS for its acronym in Spanish ), based in the workplace core business.
The STPS may conduct two types of inspections, namely ordinary inspections and extraordinary inspections. Ordinary
inspections are those performed for the first time in a workplace; periodic inspections, which take place on a yearly basis;
and verification inspections, which are held discretionally by the authority pursuant to verify that companies have already
complied with a specific labor obligation.
One main characteristic of extraordinary inspections is that the STPS can order them at any time, even on non-working
days or outside working hours, especially if employees are on imminent danger or risk, in case there is a violation to the
labor laws, or if the STPS has knowledge of any work accidents.
The compliance of these provisions is critical, because in case companies fail to comply with the requirements, they can
be subject to the imposition of penalties that may go from an economic fine, to the closure of the workplace.
The Federal Labor Law provides that the imposition of an economic penalty is calculated from a minimum fine
equivalent to 50 times the minimum wage (approx. USD$220.00 dollars) to a maximum fine of 5,000 times the
minimum wage (approx. USD$22,000.00 dollars)
Should labor authorities determine that an Employer does not comply with the applicable provisions, the amount of the
economic penalty is determined at the discretion of the competent labor authorities considering the gravity and the
recidivism of the non-compliance.
The imposition of economic penalties or any other sanction to the Employer at a workplace does not relieve the said party
from complying with the provisions; hence the obligation to rectify the failure is not eliminated.
During the inspection, the STPS will review the information and documents disposed hereafter:
General Information of the Company
The inspector will review that the Employer complies and provides the following documents and information:
General Information of the Company
The inspector will review that the Employer complies and provides the following documents and information:
a. Incorporation deed;
b. Corporate name;
c. Proof of address;
d. Operation permit;
e. Registration before the Ministry of Treasury (RFC for its acronym in Spanish);
f.
Federal Taxpayer Registry;
g. Notice of the fiscal situation before the Tax Service Administration, and;
h. Registration before the Mexican Institute of Social Security (IMSS for its acronym in Spanish), Housing fund Institute
(INFONAVIT for its acronym in Spanish) and Employees credit fund Institute (FONACOT for its acronym in Spanish).
Representation of the parties
The inspector is entitled to verify that the parties have been granted with sufficient authority, which is generally fulfilled;
in the case of the employees, through a simple copy of their official identification, and the legal representative of the
Employer, through a certified copy of the power of attorney.
Outsourcing
When the Employer has personnel working under an outsourcing scheme, the Service Provision Agreement should be
provided, or any other legal vehicle which evidences that the third party personnel is entitled to operate at the Employer's
facilities. Such document should be in writing.
The third party personnel must also be registered before the Mexican Institute of Social Security (IMSS). It is important
to point out that outsourcing services shall not be implemented with the purpose of reducing employees' labor rights.
Limitations to outsourcing services in the workplace include:
a. The entirety of the employees (100%) performing the same or similar activities as those developed at the work center cannot
come from third parties
b. Specialization of activities or knowledge should be needed and duly justified.
c. Outsourced activities cannot be the same or similar to those performed by the Client's employees.
Social Welfare
The Employer must evidence the fulfillment of all the obligatory payments and contributions, and prove that the entirety
of the employees are duly recorded before the Mexican Institute of Social Security (IMSS for its acronym in Spanish),
before the National Housing Fund for Employees (INFONAVIT for its acronym in Spanish) and before the Employees
credit fund Institute (FONACOT for its acronym in Spanish).
Employment agreements
The Employer will have to provide the employment agreements duly executed, which must contain the following
information:
a. The name, nationality, age, sex, marital status, Unique Key Population Registration (CURP for its acronym in Spanish), Federal
Taxpayer Registry (RFC for its acronym in Spanish) and address of the Employer and the employee;
b. The type of the labor relationship;
- Definitive time agreement, could contain a "probationary term", or "Initial Training period"
or "Seasonal (discontinuous agreement)" clauses;
- Fixed term agreement; or
- Specific project agreement.
c.
d.
e.
f.
g.
h.
i.
The description of the services that the employee agrees to perform;
The workplace;
The duration of the working day;
The form of payment and the amount of the salary;
The day and place of payment;
The confirmation that the employee will be trained in the terms of the plans and programs established in the company;
Other work conditions, such as rest days, holidays and other agreed between the Employer and the employee.
Collective Bargaining Agreement
The Employer must prove to have a Collective Bargaining Agreement executed with an accredited Union registered
before a Labor Board. They should also prove to have performed the revisions to the Collective Bargaining Agreement
and to have updated annually the salary tabulation.
Internal Regulations The Employer must prove that it has executed its Internal Work Regulations and the document has been duly registered
before the Labor Board, and approved by the Mixed Commission for the creation and approval of the Internal Work
Regulations, which should be integrated by at least two representatives from the Employer and two from the employees.
According with the Federal Labor Law the Internal Work Regulations must contain at least the following items:
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
Attendance record;
Workplace;
Days and hours for cleaning the facilities, machinery, equipment and tools of work;
Day and place of the payments.
Regulations for use of the seats or chairs;
Regulations to prevent work risks and instructions for providing first aid;
Regulations for the work of underage employees and pregnant women;
Medical examinations;
Permits and licenses;
Disciplinary provisions;
Regulations for the training of employees.
Working day
The Employer must prove that the employees comply with the requirements of the working days established by the
Federal Labor Law and by their employment agreements through an assistance schedule.
The legal maximum working hours is of eight hours per day for the day shift, seven hours for the night shift, and seven
hours and half for the mixed shift (day/night).
The company should prove that all the employees have at least one rest day per six days worked, and at least half hour of
rest within the working day. In case employees work overtime, the Employer must prove that the extra hours are paid at a
rate of one hundred percent more than the regular salary, and that the extra hours do not exceed the legal limits (nine
hours per week, nor more than three hours in a day). In case that the overtime exceeds the legal limit, the extra term must
be paid at a two hundred percent additional to the regular salary.
Moreover, in case that employees work on Sundays they must receive a Sunday bonus for the equivalent of at least
twenty five percent more of their regular working day.
Salary
The Employer must prove that the employees received the salary established in their employment agreements, evidenced
with a duly signed payment receipt. The salary cannot be less than the minimum salary established by the labor
authorities and by the National Commission of Minimum Wages (CONASAMI for its acronym in Spanish).
Vacation
The Employer must prove that their employees took their vacation equivalent to at least 6 working days per year, this
term being increased by 2 days every year until it reaches 14 days / year; and from then on, 2 additional days for every 5
years worked. Also, employees must receive their vacation bonus, which must be for no less than twenty five percent of
the corresponding salary for their vacation period.
The Employer has to present evidence of their employees effectively taking their vacation periods and that the vacation
bonus was paid, trough a vacation payment receipt, which should contain the dates of the vacation period, the seniority of
the employee, the daily salary and the amount of the payment for this concept.
Year-End bonus
The Employer must comply and have evidence that the employees received a year-end bonus, which must be equivalent
to at least 15 days of the employee's salary and must be paid no later than December 20th.
Profit sharing
Employees are entitled to a profit sharing bonus. The payment of such benefit must be reviewed and approved by a
Mixed Commission integrated by at least two representatives from the Employer and two from the employees. The
employees must sign a profit sharing receipt upon payment.
Seniority
The Employer must have a general list of the seniority of all the employees prepared by a Mixed Commission integrated
by at least two representatives from the Employer and two from the employees.
Special works
The Employer must comply with the provisions established by the Federal Labor Law for the special works:
- Underage: The Employer cannot hire children under the age of 15 years old. In addition,
employees under 18 cannot be employed in hazardous conditions or work risks.
- Women Labor: In case of pregnancy or adoption, a maternity leave period of six weeks is
granted. In addition, they cannot be employed in hazardous conditions or work risks.
- Foreigners: Foreign employees cannot be more than the ten percent of the total
employees. All the foreign employees must have their immigration documents valid and
regularized.
National Fund Institute for Workers' Expenditures (FONACOT for its acronym in Spanish)
Employers must prove that the work center is registered in the FONACOT, which is a governmental entity created with
the purpose of promoting development and increasing the employee's economic heritage through the provision of credits
to acquire goods and services.
Health and safety
A Mixed Commission of Health and Safety has to be integrated every year, along with its Security Measures Chart, both
are to be registered before the Ministry of Labor. The Commission should be integrated by at least two representatives
from the Employer and two from the employees.
The Employer must comply with the provisions established by the Mexican Official Rules (NOMS), based on the main
activity of the company.
Training and productivity
Although a Mixed Commission of Training and Productivity has to be integrated, plans and programs for their employees'
training have to be agreed and registered before the Ministry of Labor. The Commission should be integrated by at least
two representatives from the Employer and two from the employees.
Conclusion
It is crucial for companies to understand the differences in Mexico's legal system for labor matters for the proper
compliance of provisions established by the Federal Labor Law and other labor regulations in order to ensure the welfare
of their employees, avoid economic fines, or to prevent even more drastic sanctions which could result in the termination
of a business.
About the Authors
Gerardo Valencia and Oscar Valencia, Cuesta Campos Abogados
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