Tax and Legal Services
Labor Reform approved
by Mexican Congress
PwC Mexico
November 13, 2012
On November 13, 2012, the Senate approved the Federal Labor Law proposed by President
Felipe Calderon Hinojosa, after extensive debate in the Chamber of Representatives and the
Senate, and will be forwarded to the Executive (except for two items to be submitted to the
Chamber of Representatives) for publication most likely before November 30, 2012.
The reform will enter into effect the day after publication. Therefore, we recommend that the
following issues are evaluated as soon as possible:
a) The specific impact of the new provisions on your business
b) Changes that will need to be implemented to comply with the new rules
c) The evaluation of the use of the new hiring and payment alternatives.
We summarize the salient provisions, as follows:
Adequacy of Labor Work Standards consistent with the principles
of the International Organization of Labor
Dignified work, the right to non-discrimination and training, among others.
Subcontracting ("outsourcing")
Aspects to consider regarding the cases of joint labor liability of the Contractor and Contracting
party (subcontractor) and potential characterization of the Contractor as Employer
New Recruiting Categories
Hiring for seasonal periods, hiring for trial period, hiring for non continual work, hiring for
initial training period and part time hiring.
New Payment Alternatives
Hourly pay, rules for electronic payment
Telecommuting
Using information technology
Regime for Employees Assigned Abroad
Amendment to rules
Working in Coal Mines
Responsibility for employers and managers in charge.
Protection of Women Rights
Recognition of rights and new features
www.pwc.com/mx/servicios-impuestos-legales
This content is for general information purposes only, and should not be used as a substitute
for consultation with professional advisors.
© 2012 PricewaterhouseCoopers, S.C. All rights reserved. PwC refers to the Mexico member firm,
and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see
www.pwc.com/structure for further details.
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Tax and Legal Services
Protection of Child Rights
Protection rules and penalties
New Obligations for Employer and Workers
Rules relating to employer obligations for “Alimony Beneficiaries”, new grounds for
termination, aspects of productivity, education and training, change of rules for hiring and
promotion, preemptive rights, among others.
Farmworker Rules
New obligations for employers regarding temporary field workers.
Back Wages and Severance Payment Rules
New rules for back wages (Salarios Caidos) while in court procedures.
Procedural Changes to Litigation
Trial Lawyer representation (Abogado Patrono), witness procedures, powers of attorneys
requirements, acceptable evidence, among others.
System for Determining Sanctions
Penalties for noncompliance are substantially increased with considerable discretion for
assessing these increases.
The proposed reform will require changes in the way the working relationship is currently
documented in order to comply with the new law requirements and in order to avoid
possible payment of substantial penalties.
With respect to the subcontracting with both related and unrelated parties, new rules are
set in order to prevent evasion and avoidance of compliance with obligations of the
contractor (as an employer).
The legislation also included three important conditions that if all of these are breached,
the contractor shall be deemed as the employer for purposes of labor law. The conditions
are:
a) The (subcontractor) activities may not cover all of the activities, the same or similar as a
whole, taking place in the workplace (of the contractor).
b) The activity (of the subcontractor) must be justified by their specialized nature.
c) The activity (of the subcontractor) should not contemplate the same or similar tasks
conducted by the rest of the workers of the contractor.
If the contractor is deemed to have a labor relationship with the employees of the
subcontractor, there is an interpretation that joint liability applies in regard to labor
obligations in terms of this legislation. This interpretation is consistent with the exposition
of motives issued by Congress.
Considering the above interpretation, only if the contractor fails to fully comply with their
www.pwc.com/mx/servicios-impuestos-legales
This content is for general information purposes only, and should not be used as a substitute
for consultation with professional advisors.
© 2012 PricewaterhouseCoopers, S.C. All rights reserved. PwC refers to the Mexico member firm,
and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see
www.pwc.com/structure for further details. MPC:111214_PG_BoletinReformalaboral_Eng_FB
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Tax and Legal Services
labor and social security obligations, the contractor can have a major economic impact,
including possible risks relating to the mandatory employee profit sharing obligation plus
the imposition of fines.
These provisions may have different interpretations, because its wording is not clear, and
ultimately, may even result in litigation.
As mentioned, the reform will enter into force the day after its publication, which suggests
that you should consider performing a review of labor, legal, tax, including transfer pricing
matters, to determine the actions to take in order to comply with the provisions and
eliminate any potential risks.
At PwC we have a multidisciplinary team to meet your needs, including potential
modifications, in order to comply with the rules and to take advantage of any
opportunities arising from labor reform.
Contacts:
Mauricio Hurtado de Mendoza
Partner in charge of Tax and Legal Services
[email protected]
Carlos Manuel Martínez
Partner in charge of Corporate and Labor Law
[email protected]
Jose Alfredo Hernandez
Tax Partner
[email protected]
Carlos Montemayor
International Tax Services Partner
[email protected]
Fred Barrett
Transfer Pricing Partner
[email protected]
www.pwc.com/mx/servicios-impuestos-legales
This content is for general information purposes only, and should not be used as a substitute
for consultation with professional advisors.
© 2012 PricewaterhouseCoopers, S.C. All rights reserved. PwC refers to the Mexico member firm,
and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see
www.pwc.com/structure for further details. MPC:111214_PG_BoletinReformalaboral_Eng_FB
3 | PwC