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Labor Outsourcing Reform

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Reforma de Subcontratación Laboral Reforma de Subcontratación Laboral

With respect to the labor subcontracting reform, the following is a summary of the important issues:

 

Background:

  • Last Monday, April 5, the Mexican Government and the private sector (union and business leaders) reached an agreement on outsourcing in order to submit the proposal to the Congress of the Union for a vote and possibly reform the Federal Labor Law. On April 13, it was published in the Congressional Gazette to be approved in commissions and later endorsed in the Plenary. On April 20, it was approved in Senate commissions and on April 21 in the Plenary.

ANTECEDENTES

Analysis

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The following key points were agreed upon:

  • Subcontracting of personnel is prohibited, defining this as the action of a natural or legal person to provide or make available its own workers for the benefit of another person.
  • Employment agencies or intermediaries involved in the personnel hiring process may only participate in the recruitment, selection, training and qualification. These agencies or intermediaries shall not be considered as employers, since such character shall only be held by the beneficiary of the services.
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  • It is intended to prohibit insourcing, so there can be no companies without workers, nor can a company be created dependent on the parent company with the aim of separating the production process.

 

What is the impact of the above?

The above will have an impact on a higher PTU payment, regardless of whether it is capped (there are two modalities for its calculation).

 SUBCONTRACTING

INFONAVIT

  • There will be the need to relocate workers, this will bring consequence in IMSS issues in terms of labor risk premium and issues with INFONAVIT credits, among others.
  • Only the subcontracting of specialized services different from the corporate purpose and the predominant economic activity of the contracting company will be allowed, for which the contractor must obtain a registration before the Ministry of Labor and Social Welfare, which will be granted once it has accredited that it is up to date with its tax and social security obligations. The Secretariat will form a registry, which will be public and will be available for consultation on an internet platform. The registration will be renewable every three-year period.
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  • The registration must be obtained within three months from the publication by the STPS of the general provisions regulating the obtaining of the registration, which will be issued within thirty days after the publication of the reform.
  • The registration must be obtained within three months from the publication by the STPS of the general provisions regulating the obtaining of the registration, which will be issued within thirty days after the publication of the reform.
  • Complementary or shared services or works rendered between companies of the same business group, will also be considered as specialized as long as they are not part of the corporate purpose or of the predominant activity of the beneficiary company.
  • The subcontracting shall be set forth in a written contract stating the object of the services to be provided or the works to be executed, as well as the approximate number of workers that will participate in the performance of such contract.
  • The PTU is capped, the amount of which will have a maximum limit of three months of the worker's salary or the average of the participation received in the last three years, applying the amount that is most favorable to the worker.
  • The joint and several liability of the contractor and the contractor is maintained, when the latter fails to comply with the obligations deriving from the relations with its workers.
  • Penalty of 2,000 to 50,000 UMAS to individuals or legal entities that provide subcontracting services without registration, as well as to the beneficiaries of the services, without prejudice to other penalties that legally correspond
  • For an employer substitution to take effect, the assets of the company or establishment must be transferred to the substitute employer.
  • It will be mandatory to provide the IMSS on a quarterly basis, information regarding the provider of specialized services or execution of specialized works rendered for a beneficiary, as well as the contract and attach a simple copy of the registration issued by the STPS. The IMSS will inform the Secretariat about the non-compliance with this obligation. Likewise, the Institute may impose a fine of 500 to 2000 UMAS.
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  • For INFONAVIT purposes, the term of two years is modified to three months, in which the substituted employer is jointly and severally liable with the new employer with respect to the obligations derived from the Law governing such Institute, born before the date of the substitution.

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DEDUCIBLES

  • It will also be mandatory to provide INFONAVIT on a four-monthly basis, information about the provider of specialized services or execution of specialized works rendered for a beneficiary, as well as the contract, amounts of contributions and amortizations, information about the workers and attach a simple copy of the registration issued by the STPS. INFONAVIT will inform the Secretariat about the non-compliance with this obligation.
  • .
  • Payments or considerations made for subcontracting personnel to perform activities related to both the corporate purpose and the main economic activity of the contracting party will not be deductible.
  • Payments or considerations for the subcontracting of specialized services or the execution of specialized works may be deductible, provided that they are not part of the corporate purpose or the predominant economic activity of the beneficiary of the same and that they are registered with the STPS, in addition to complying with the requirements of the Income Tax and VAT Law.
  • Solidarity liability in tax matters will exist when legal entities or individuals receive services or contract works to perform activities related to both the corporate purpose and the predominant economic activity of the contracting party, among other cases.
  • It will be considered as a tax fraud offense to simulate the rendering of specialized services or the execution of specialized works allowed by the Federal Tax Code or to perform subcontracting not allowed by such legislation.
  • The authorized deduction of ISR, in the case of the rendering of specialized services or the execution of permitted specialized works, the contractor must verify that when the payment of the consideration for the service received is made, the contractor has the registration of the STPS, among other requirements.
  • VAT that is transferred for subcontracting services not allowed by the Federal Tax Code, will not be creditable in accordance with the Law governing the tax.
  • VAT that is transferred for subcontracting services not allowed by the Federal Tax Code, will not be creditable in accordance with the Law governing the tax.
  • For VAT to be creditable in the case of the provision of specialized services or the execution of specialized works allowed by the Tax Code, the contractor must verify that when the payment of the consideration for the service received is made, the contractor has the registration of the STPS, among other requirements.

 

 

DIARIO OFICIAL

 

Now pending publication in the Official Journal of the Federation.

Pending publication in the Official Journal of the Federation.

Employers will have 90 days from publication to carry out the transfer of employees (would take effect August 1, 2021).

Employers will have 90 days from publication to carry out the transfer of employees (would take effect August 1, 2021).

The STPS will have 30 days to publish conditions and requirements to grant authorizations for specialized service providers. Pending as of the date of this mailing.

Pending as of the date of this mailing.

For bureaucratic personnel, the reform will enter into force in January 2022 (prohibition of subcontracting, unless authorized by the STPS).

For bureaucratic personnel, the reform will enter into force in January 2022 (prohibition of subcontracting, unless authorized by the STPS).

Because of the relevance of the foregoing, we recommend carrying out a detailed analysis of the possible labor, tax and social security effects that such initiative could have in order to mitigate the impact to the least possible extent.

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