memorandum - l&e global

MemorandumGeneral Overview Employment Law/Mexico

Memorandum - General Overview Employment Law/Mexico 1

1. Brief Introduction

Mexico’s Federal Labor Law is regulated by Article 123 of the Constitution that establishes “every individual has the right to decent and socially useful work; to this effect, creation of employment and social organization for work will be promoted, according to the Law.”

Departing from these ideas, we acknowledge as sources of the right to work: The Constitution, the labor laws and their regulations, international treaties ratified by Mexico; the general principles deriving from these ordinances, the general principles of law according to social justice arising from court precedents, custom and equity.

2. Antecedents

• On August 28, 1931 the Federal Labor Law was promulgated.• In 1970, the Federal Labor Law was reformed. This reform does not have many changes from the Law of 1931, its bases are kept almost identical. The important changes are: - Regulation of the Constitutional right to housing, resulting in the creation of the Infonavit (national housing fund institute). - It eliminates some restrictive norms to the right to strike, introduced in 1942.• The previous reform was made in 1980 in procedural matters.• On November 30, 2012, the last Reform to the Labor Law was approved, and it came into force as of December 1st. It brings the Law up to date according to the situation in Mexico and in the world, and opens the doors to formal employment by allowing new forms of hiring. • The major reforms are: The reform allows labor flexibility, and promotes training, productivity and quality of work. It regulates outsourcing companies. It allows flexibility in employment. In litigation, payment of back pay is limited to one year maximum.

3. Federal Labor Law

Mexico’s Federal Labor Law has a federal sphere and applies throughout the Mexican Republic. It is divided into seventeen Titles and has 1,010 articles and 13 transitory articles. We will give a very brief summary.

The finalities of the labor law are: social justice, the ideal of equality, freedom and dignity for the workers and the purpose of ensuring to the individuals who work a decent level of living, adopting also, a universally acknowledged principle: “In case of doubt, the more favorable interpretation shall be made in favor of the workers.”

It establishes that work is a social right and an obligation, and not a commodity, because it deals with human working energy, which demands respect for the freedom and dignity of the individuals who perform it and must be done under conditions that ensure the life, health and decent standard of living for the worker and his family.

No distinctions may be made among the workers due to race, gender, age, religion, political

Memorandum - General Overview Employment Law/Mexico

doctrine or social status.

No one can be prevented to work or to work in the profession, industry or trade of her choice, as long as they are licit. Exercising these rights can only be forbidden by resolution of the competent authority when the rights of third parties are fought or the rights of society are offended.

4. Concepts

Work: Work is any human, intellectual or material activity, regardless of the degree of technical preparation required by each profession or trade. (8).

Worker: Individual who works for another person or company, rendering personal subordinated services.

Company: Is the economic unit of production or distribution of goods or services, and establishment shall mean the technical unit which as a branch, agency or the like, is an integral part and contributes to the achievement of the enterprise‘s objectives. (16).

Intermediary: Is any person who contracts or intervenes in contracting other person or persons to work for an employer.

Basic Rule: Enterprises which contract for work with a view toward carrying out such work with their own resources, the latter being sufficient to meet their obligations towards their workers, shall not be deemed to be agents, but employers. Otherwise, they shall be jointly and severally liable along with the persons for whom the work or services are performed for the obligations contracted with the workers. (12 and 13).

Persons who make use of agents for entering into contracts with employers shall be liable to fulfill all the obligations arising out of this Law and the services rendered.

The workers shall have the following rights:I. They shall perform their work subject to the same employment conditions and have the same rights as the other workers performing similar work in the enterprise or establishment.II. Agents shall not receive any remuneration or commission deducted from the workers‘ wages. (14).

In enterprises performing labor or services exclusively or principally for another enterprise, that do not have sufficient resources of their own within the meaning of Art. 13, the following norms shall be observed:I. The enterprise for which the labor or services are performed shall be jointly and severally liable for all obligations contracted with the employees.II. Workers employed to perform works or services shall be entitled to have the same employment conditions that the workers who perform similar services in the beneficiary company.

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In order to determine the proportion, the differences existing in the minimum wages applicable in the geographic areas in which the enterprises are situated and all other circumstances which might influence employment conditions shall be taken into consideration. (15).

Interpretation

Where there is no express provision in the Constitution, or in this Law, the regulations thereunder, or in the treaties referred to in Art. 6, their provisions covering similar cases, the general principles of law, the general principles of social justice deriving from article 123 of the Constitution, case law and precedent, custom and equity shall be taken into account.

In interpreting labor norms, the objectives laid down in Arts. 2 and 3 shall be borne in mind. In case of doubt, the more favorable interpretation shall be made in favor of the workers. (17 and 18).

5. Employment Relationship or Individual Employment Agreement

Employment relationship shall mean the personal performance or work under the authority of another person, in return for payment of remuneration.

Individual employment agreement, irrespective of its form or title, is a contract by which a person binds himself or herself to perform a personal service for another under his management or supervision in return for payment of remuneration.

Performance of work in the manner referred to in the first paragraph shall have the same effects as the conclusion of a contract (20).

The existence of an employment contract and an employment relationship shall be presumed between the persons performing a personal service and the person who receives such services. (21).

It shall be unlawful to employ children under 14 years of age and those between 14 and 16 years of age who have not completed their compulsory education, except in such cases approved by the competent authority, where, in the opinion of such authority, the employment does not exclude the possibility of completing the child’s education. (22).

Any person who has reached 16 years of age may give his services freely, subject to the limits laid down in this Law. Children between 14 and 16 years of age shall require the authorization of their parents or guardian, or failing this, the authorization of the trade union of which they are members, of the Conciliation and Arbitration Board, and the inspectors of Labor of the government authority. Persons under full legal age who are in employment shall have the right to have their wages paid to them in person and institute any legal proceedings in connection therewith. (23).

Where there is no existing collective contract applicable, the employment conditions shall be stated in writing. At least two copies thereof shall be made, one of which shall be retained by

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each party. (24).

The written record of the employment conditions must include:

I. Name, nationality, gender, marital status, CURP, RFC (tax ID) and address of the worker and of the employer.II. If the employment relationship is for piecework or for specified duration, seasonal, for initial training, or for unspecified duration, and, if it is subject to a trial period;III. Whether the employment relationship is for a specific piece of work or duration, or for unspecified duration; IV. The service or services to be rendered, described as precisely as possible;V. The place or places where the work is to be performed;VI. The daily hours of work;VII. Form and amount of the wages;VIII. Day and place where wages will be paid;IX. Statement that the worker will be trained for the occupation in terms of the plans and programs established or to be established in the enterprise, according to the provisions of this Law;X. Other employment conditions, such as rest days, vacation leave and other conditions agreed to by the worker and the employer.

Failure to put in writing the matters referred to in articles 24 and 25 shall not deprive the employee of his rights derived from the labor norms and the services performed, the employer shall be liable for failure to carry out the formality. (Art. 26).

6. Duration of Employment Relationships

Employment relationships can be for piecework or for specified duration, seasonal or for unspecified duration, and, if applicable, may be subject to a trial period or initial training. If there is no express stipulation, the employment relationship shall be for unspecified duration.

A contract for a specified piece of work may be made only when such contract is required by the nature of the work. (36).

A contract for a specified duration may be made only in the following cases:

I. When the nature of the work to be done requires it;II. When the contract is to provide a temporary substitute for another employee; andIII. In the other cases provided for in this Law.IV. If, on the expiry of the specified period the object or material to be worked still subsists, the employment relationship shall continue for so long as this circumstance continues. (A37).

7. Suspension of Effects of an Employment Relationship

The following shall be grounds for temporary suspension of the obligation to perform the services

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and to pay the wages, without liability on the part of the worker or the employer:

I. If worker contracts an infectious disease;II. Temporary incapacity due to an accident or sickness other than an employment injury;III. Remand of the worker in custody followed by acquittal. If the worker acted in the defense of the employer’s person or interests, the latter shall be bound to make up any wages which the worker did not receive;IV. The worker’s imprisonment;V. Completion of the services and performance of the duties referred to in Art. 5 of the constitution and fulfillment of the obligations laid down in Art. 31, III, thereof;VI. The worker’s appointment as representative to any state body, conciliation board, Conciliation and Arbitration Board, the National Minimum Wage Committee, the National Board for Worker’s Profit-Sharing in Enterprises or any similar body; andVII. Default of any document required for employment by laws and regulations, where such default is due to the worker’s negligence. (42).

8. Termination of the Employment Relationship

The Labor Law establishes fifteen grounds for which a worker may be terminated for cause, and without legal severance pay. But this implies full labor proceedings; offering proof of the cause or causes argued against the worker when the contract is terminated. This termination also implies a quasi-judicial procedure of serving notice.

In cases where cause may be argued for a justified termination and when the worker has been informed, the worker has two options: to sue demanding constitutional severance pay or to sue for non-compliance of his/her employment agreement, which implies reinstating the worker in the position held prior to dismissal.

If worker chooses reinstatement, there are only four cases determined by the Law in which the employer can object to this: paying an indemnification, (temporary workers, workers with less than one year seniority, trusted workers and domestic workers) which are those established by Article 50 of the Law.

When dismissal is not for cause, that is, when there is no cause to justify the termination of a contract and employer agrees with the worker, the payment of legal severance, or when the employer objects to reinstate worker in the established cases, Article 50 of the Law provides the amounts to be paid.

Termination of the labor relationship if the employment contract is for a specified duration of less than one year, the legitimate severance pay is an amount equal to the total amount of remuneration payable for one-half of the entire period of employment; if the employment relation lasted for more than one year, an amount equal to six months’ wages for the first year of service, plus twenty days’ wages for each additional year of service. In case of termination of the employment relationship of a worker with an employment agreement for unspecified duration, the severance pay amounts to twenty days‘ wages per year of service.

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In addition to the compensation or severance referred to in the preceding paragraphs, the amount to be paid is three months’ wages, plus back pay, to be counted from the date of dismissal and until a maximum period of twelve months.

If at the end of the term stated in the previous paragraph the procedure has not been concluded, or the final ruling has not been executed, the worker shall also be paid the interests generated on the amount of fifteen months’ wages, at two percent monthly rate, that will be capitalized upon payment. The provisions of this paragraph shall not be applicable for payment of any other type of severance or benefits.

In case of death, as of the date of worker’s death, back pay shall cease to be added to the amount to be paid.

Furthermore, in terms of Article 89 of the Law, all this must be paid based on the integrated daily salary rate provided for in Article 84, which sets forth that wages are integrated by remuneration made in cash at the daily rate, tips, receipts, housing, bonuses, commissions, benefits in kind and any other sum of money or benefit given to the worker on account of his work.

In all cases, upon termination of the employment relationship, worker must be paid accrued benefits or those to which he/she was entitled, such as: pending wages, bonuses, expenses due, proportional share of Christmas Bonus, vacation leave and vacation bonus.

Then, not as a compensation concept, but as an additional benefit to which workers are entitled, in Mexico the Length-of-Service Bonus must be paid, which consists of twelve days’ wages (capped at: a maximum of twice the minimum wage) per year of service or fraction thereof. The only requirement to pay length-of-service in case of voluntary termination is that the worker must have 15 years of service to be entitled to it. But this requirement is not considered in all other cases, such as workers who are dismissed from their employment regardless of whether it was for cause or not.

In sum, the indemnification concepts are:a. Three-months wages;b. Twenty days per year of service;

These two concepts based on integrated salary, mentioned in Articles 84 and 89 of the Federal Labor Law, that is, including any other amount or benefit given to the worker on account of his work.

9. Employment Conditions

The employment conditions shall in no case be inferior to those prescribed by this Law; they shall take into account the importance of the work performed; equal conditions shall prevail for equal work, and no difference shall be made on the grounds of race, nationality, sex, age, religious persuasion or political opinions, except in so far as expressly stipulated in this Law.

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10. Hours of Work

It is the time during which the worker shall be available at the employers’ service for the performance of the work.

Worker and employer shall fix the hours of work, which shall not exceed the statutory maximum.

Workers and employer may so arrange the hours of work as to enable the workers to have Saturday afternoon off or some similar arrangement.

The Law States Three Types of Hours of Work

1. Day work is work performed between 6 am and 8 pm, with a maximum duration of eight hours a day and 48 hours per week.2. Night work is work performed between 8 pm and 6 am, with a maximum duration of seven hours a day and 42 hours per week. 3. Mixed work contains both day and night work, provided that the period of night work shall be less than three and a half hours. If it amounts to three and a half hours or more the entire working period shall count as night work. The maximum duration of mixed work is 7.5 hours a day and 45 hours per week.

In the course of continuous daily hours of work the worker shall be granted a rest period of at least half an hour’s duration. If a workers is unable to leave his workplace during the rest periods and meal times, such periods shall be deemed to be hours actually worked, and shall be included in the daily hours of work.

To prolong overtime exceeding nine hours a week, obliges the employer to pay to the worker the exceeding overtime at a rate of two hundred percent over the wages corresponding to the hours of work (Triple pay), the above without prejudice of the sanctions established by the Law.

Overtime is the time worked beyond the ordinary hours of work, before or after the work shift.

The Law establishes three types of overtime, namely:

1. Mandatory overtime. It is mandatory to work overtime in the terms of article 65, that is, in cases of accident or imminent risk in which the life of the worker, fellow workers or the employer or the very existence of the company is in peril. In these circumstances, the shift may be extended for the time strictly necessary to avoid such dangers. These hours of work shall be paid in terms of the provisions of article 67 of the FLL, that is, at the same rate as ordinary hours of work.

2. Allowed Overtime. It refers to article 66 of the FLL, and is commonly know as overtime. The Law determines that the hours of work may be prolonged on account of exceptional circumstances, on condition that they are never allowed to exceed the normal hours by more than three hours a day or three times a week.

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These hours shall be paid at double-time rates.

3. Illegal overtime. The Law determines that to prolong overtime, exceeding nine hours a week, obliges the employer to pay to the worker the exceeding overtime at a rate of two hundred percent over the wages corresponding to the hours of work (Triple pay). The above without prejudice of the sanctions established by the Law. 11. Rest Days

The Law establishes in Article 69 that for each six days of work, the workers shall enjoy at least one rest day, with full wages paid. (Art. 69 FLL).

In occupations that require continuous work, the employees and the employer shall fix by mutual agreement the days on which the weekly rest day shall be taken by the workers. (Art. 70 FLL).

The Law determines that the rest day shall fall on a Sunday. Workers who have to work on a Sunday shall be entitled to an extra 25% or time and a quarter at least, over normal work days (Art. 71 FLL).

A worker shall not be obliged to work on his rest days. If this provision is not observed, the employer shall pay to the worker, in addition to the wages to which he is entitled in respect of such rest day, double-time for the work actually performed (Art. 73 FLL).

12. Compulsory Rest Days

1. January 1st;2. The first Monday of February in commemoration of February 5th;3. The first Monday of March in commemoration of March 21st;4. May 1st;5. September 16;6. The third Monday of November in commemoration of November 20;7. December 1st every six years, when the new Federal Executive takes office; 8. December 25; and9. Day federal and local electoral laws determine to be election day, in case of ordinary elections.

13. Vacation Leave

Workers who have been in the service of an employer for more than one year shall be entitled to paid annual vacation leave, which shall in no case be less than six working days, and shall be increased by two working days (up to a maximum of twelve) for each subsequent year of service. (76).

Workers who perform casual or temporary work, and seasonal workers shall be entitled to an annual vacation period in proportion to the number of days worked in a given year. (77).Workers shall be allowed to take at least six days of their annual vacation leave in one

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uninterrupted period. (78).

It shall be unlawful to pay compensation in lieu of vacation leave (79).

If the employment relationship is terminated before one year’s service is completed, the worker shall be entitled to remuneration in proportion to his length of service.

14. Vacation Bonus

Workers shall be entitled to a bonus of not less than 25% of the wages payable in respect of the vacation period. (80).

The worker shall be allowed to take his vacation within the six months following the date on which he completes the year of service. The employer shall issue yearly to each worker a record stating his length of service and, based on that, the period of leave entitlement and the date on which the leave is to be taken. (81).

15. Wages

Wages are the remuneration that must be paid by the employer to the worker for his work. Wages may be fixed according to unit of time, on a piecework or commission basis, in the form of a lump sum or in any other manner.

The wage shall be made up of remuneration paid in cash at the daily rate, tips, receipts, housing, premiums, commissions, benefits in kind and nay other amount of money or benefit given to the worker on account of his work.

Salary may be paid, if worker previously consented, by deposit in a bank account, debit card or via transfer. The expenses shall be paid by the employer.

To determine the amount of the wage supplements payable to workers the wage in respect of the day on which the right to such benefit commences shall be taken as a basis, including therein the remuneration in cash at the daily rate and proportional amount of the payments referred to in Art. 84. (Articles 82, 83, 84 and 89).

16. Minimum Wage

Minimum wage shall mean the smallest cash payment which a worker shall receive for services performed during the hours of work.

Minimum wages may be general for one or more geographic areas which may cover one or more States, or occupational groups for a given branch of economic activity or for individual occupations, trades or special work, within one or more geographic areas. (91).

Minimum wages shall be fixed by the National Committee composed of workers’, employers’ and government representatives which may receive help from special consultative committees,

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which shall be considered indispensable for the better fulfillment of the National Committee’s functions. (94).

Minimum wages shall not be the object of set-off, deduction or reduction, except in the following cases:

I. Alimony or maintenance payments ordered by the competent authority in favor of the persons mentioned in Art. 110 item V; andII. Payment of the income referred to in Art. 151, in such cases the amount deducted shall not exceed 10% of the salary.III. Payment of bonuses to cover loans guaranteed by the national housing Fund for workers, intended for the acquisition, repair, enlargement or improvement of residential housing or for the payment of loans acquired for those purposes. Also, to workers who have been granted a credit for the acquisition of houses located in joint housing financed by the Institute of the National housing Fund for workers, 1% of the salary to which Art. 143 of this Law refers will be discounted which shall be intended to cover the costs expended for administration, operation and maintenance of the joint housing. These discounts must be freely accepted by the worker and may not exceed 20% of the salary.IV. Payments in connection with loans guaranteed by the find referred to in Art. 103 Bis of this Law taken out for the purchase of consumer durables or for the payment of services. Such deductions must have been freely accepted by the worker and shall not exceed 10% of his wage.

17. Worker’s Share in Profits of the Enterprise

The workers shall participate in the profits of the enterprise at a percentage rate fixed by the National Committee for workers’ Profit-Sharing in enterprises, currently set at 10% of the profits obtained during the previous year. (117).

The profits to be shared shall be divided into two equal parts: The first part shall be shared equally among all the workers, taking into account the number of days worked by each worker during the year, regardless of the amount of each worker’s remuneration. The second shall be shared out in proportion to the total remuneration earned for the work performed during the year.

The right of the workers to share in the profits does not imply any right to intervene in the management or administration of the company. 18. Workers’ and employers’ rights and obligations

The Law names different obligations for the employers, some examples are: to observe the labor norms applicable in their enterprise or establishments; to pay to the workers the wages and other payments to be made to the workers, in accordance with the rules applicable in the enterprise or establishment; to provide the employees with the tools, instruments and working materials necessary for the execution of the work; to furnish training to its workers; to comply with the safety and hygiene provisions as required by the law and the regulations; to affiliate the

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work center to INFONACOT, grant 5-day leave for paternity, to men workers for the birth of their children, or in case of adoption of an infant, work centers with more than 50 workers, must have adequate facilities to access and perform the activities by persons with disabilities, sanctions to over 315 minimum wages ($20,399.40 MXN) up to 5,000 min. wages ($323,800.00 MXN).

19. Prohibitions to the employers

Molestation or sexual harassment is prohibited. Employers cannot request medical certificates of non-pregnancy to hire or promote or workers, and cannot dismiss or oblige the worker to resign if they do not. (133).

Among the workers obligations are: To observed the prevention and health measures ordered by the competent authorities and those prescribed by the employer for the workers’ personal safety and protection; to carry out the work working hard, carefully and to the best of their ability in the manner, at the time and place agreed upon; to scrupulously keep in confidence any technical, commercial and manufacturing secrets concerning products which workers is directly or indirectly involved in their manufacture, or secrets with which worker may become acquainted, etc. (134).

Sexually harass any person or commit immoral acts in the places of work, use materials and tools provided by the employer, for a different purpose, etc. (135).

20. Workers’ training

Every worker has the right to training in his work furnished by the employer which shall permit him to elevate his station in life and productivity, in accordance with the plans and programs formulated by the employer and the trade union or the workers in common and approved by the Ministry of Labor and Social Welfare. (153-A).

21. Rights of preference, length of service and promotion

Employers shall be obligated to give preference, all other circumstances being equal, to Mexican workers over non-Mexicans (preference being given to those workers who have served satisfactorily for the greatest length of time). To heads of families who have no other source of income, and to trade union members over non-members.

If there is a collective agreement containing an admission clause, the preference for occupying vacancies or new posts shall be regulated by the provisions of the collective agreement and the union by-laws.

Trade Union Member shall mean any worker who is affiliated to any lawfully constituted trade union organization. (154).

22. Employment of women

Women shall have the same rights and the same obligations as men. (164).

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The modalities laid down in this Chapter shall have as their fundamental purpose the protection of maternity.

The workers shall have the following rights:

I. During the period of pregnancy they shall not perform work demanding considerable strength, which is dangerous for their health in relation to the gestation period, such as lifting, dragging or pushing heavy weights, that produces rapid vibrations, remaining in a standing position for long periods or that which may alter their mental or emotional state;II. They shall have maternity leave six weeks before and six weeks after birth; at the express request of the worker, and prior written authorization from the doctor at the Social Security institution corresponding to her, or if applicable, the health service provided by the employer, taking into account the employer’s opinion and the nature of the work she performs, she can transfer up to four of the six weeks leave prior to birth for after birth. In case the children are born with any type of disability or if they need hospital medical care, leave may be up to eight weeks after birth, after having presented the corresponding medical certificate.III. In case of adoption of a child they shall have six-weeks paid leave, after the day they receive the child.IV. The maternity leave referred to in the preceding item is extended by the time necessary if it is impossible for the woman to return to work on account of her pregnancy or confinement;V. During the period of lactation the woman shall be entitled to two extra breaks each day of one half hour’s duration each to breast feed her infant, in suitable hygienic premises designated by the enterprise;VI. During the maternity leave referred to in item II the woman shall be entitled to her full wages, in the case of the extended maternity leave referred to in item III, the woman shall be entitled to half pay for a period not exceeding sixty days;VII. Reinstatement in the post she previously occupied, on condition that she returns to work within the year following her confinement;VIII. The full period of prenatal and postnatal maternity leave shall be counted as periods worked for the purpose of seniority and length of service.

23. Employment of young persons

The employment of young persons between 14 and 16 years of age shall be subject to the special control and protection of the Inspectorate of Labor.

Young persons between 14 and 16 years of age shall obtain a medical certificate stating their aptitude for the work and shall undergo such medical examinations as may be periodically ordered by the Inspectorate of Labor. It shall be unlawful for an employer to give employment to any such young person without production of the said certificate. (174).

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24. Special work

Depending on the particularities of special works, in Mexico the following are regulated:

I. Workers in positions of trust;II. Seafarers;III. Employment of flight crews;IV. Employment on railways;V. Toad transport work;VI. Employment of public service manual workers in zones under federal jurisdiction;VII. Rural workers;VIII. Commercial agents and the like;IX. Professional athletes;X. Actors and musicians;XI. Home work;XII. Domestic employees;XIII. Workers in hotels, restaurants, bars and other similar establishments;XIV. Family industry;XV. Medical residents in specialty training; XVI. University workers and workers in legally autonomous higher educational institutions.

25. Collective Labor Relations

In Mexico, in order to put on the same level the social strengths of workers and employer, the law acknowledges the freedom of association of workers and employers, through unions, federations and confederations.

The employers who hire workers who are members of a union shall have the obligation of entering into a Collective Agreement with the Union, at its request, and the workers, in case of refusal by the employer, may exercise their right to strike.

One figure that regulates collective hiring is the National Labor Contract, entered into one or several workers’ trade unions and several employers, or one or several employers’ unions, in order to establish the conditions according to which work must be provided in a given field of industry, and declaring it mandatory in one or several federative entities, in one or several economic zones that cover one or more of these entities, or throughout the national territory.

26. Collective bargaining agreements

A collective agreement is the convention concluded between one or more workers’ trade unions and one or more employers or one or more employers’ trade unions for the purpose of establishing conditions under which the work shall be performed. (386).

An employer who employs workers who are members of a trade union shall be bound to conclude a collective agreement with such trade union upon request.

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If the employer refuses to sign the contract, the workers may exercise the right to strike provided for in Art. 450.

27. National Labor Contract

An agreement concluded between one or more workers’ trade unions and two or more employers or one or more employers’ unions for the purpose of stipulating employment conditions in a given branch of industry and declared compulsory in one or more federative states, in one or more economic zones within one or more of the said federative states, or binding throughout the national territory shall be in agreement having statutory generally binding force. (404).

28. Internal Labor Regulations

It is the whole body of regulations binding upon the workers and employers in the course of the work in an enterprise or establishment.

Technical and administrative standards drawn up directly by enterprises for the execution of the work shall not form part of the employment regulations.

Companies have the obligation of having Internal Labor Regulations, and it is formulated by a commission integrated by equal number of representatives from the employer and from the workers, to prepare and publish the internal regulations to carry out the work at the company; this document validates the employer’s power to sanction.

29. Collective suspension of employment relationships

The following shall constitute sufficient cause for terminating the labor relationship without liability for the worker:

I. “Force majeure” or any unforeseen event not attributable to the employer or the employer’s physical incapacity or death shall entail the suspension of work as an inevitable, immediate and direct consequence;II. Lack of raw materials not attributable to the employer;III. Over-production in relation to the enterprise’s economic situation and the state of the market;IV. The known and obvious inability, of a temporary nature, of the enterprise to pay its way;V. Lack of money and the impossibility of obtaining it for the normal continuance of work on condition that these facts are adequately proved by the employer.VI. The failure of the State to provide the moneys it undertook to pay to the enterprises with which it has entered into a contract for work or service in cases where such moneys are indispensable (427).

30. Collective termination of employment relationships

Termination of the labor relationship as the result of the closing down of an enterprise or establishment or definitive retrenchment of production. (433).

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Collective termination of employment relationships

I. “force majeure” or any unforeseen event not attributable to the employer or the employer’s physical incapacity or death shall entail the suspension of work as an inevitable, immediate and direct consequence;II. The known and obvious inability, of a temporary nature, of the enterprise to pay its way;III. The exhaustion of the substance being extracted by a mining enterprise;IV. The cases referred to in Art. 38; andV. Statutory declaration of insolvency proceedings or bankruptcy. If the competent authority or the creditors decide on the permanent closing down of the enterprise or the permanent retrenchment of production.

31. Strikes

The term “strike” means the temporary suspension of work brought about by a coalition of workers. (440). A strike may affect one enterprise or one or more of its establishments. (442).

The objectives of strikes must be, among others, to obtain balance between the different factors of production, bringing harmony between the rights of labor and of capital; to make the employer or employers agree to enter into a collective bargaining agreement and to demand its revision on the expiry of its validity; to make the employers agree to enter into an agreement having generally binding force and to demand its revision on the expiry of its validity; to demand the fulfillment of a collective bargaining agreement or of a national labor contract in enterprises or establishments where such agreement is not observed, etc.; and the activities of the majority of workers of the enterprise must be suspended.

32. Occupational Injuries

“Occupational Injury” (riesgo de trabajo) means any accident or disease to which workers are exposed in the course of their employment, or any consequences thereof.

These may be accidents at work and occupational diseases.

The consequences of any of the aforesaid injuries may be:

I. Temporary disability;II. Permanent partial disability;III. Permanent total disability;IV. Death.

33. Prescription

Actions arising out of labor matters shall be barred after one year, counted from the day following the date on which fulfillment of the obligation can be claimed, subject to the exceptions contained in the following articles (516).

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The following shall be barred after one month: (517).

I. Actions brought by employers to dismiss worker or impose sanctions for offenses committed by workers or to make deductions from their wages.II. Actions brought by workers to terminate their employment contract.III. In the cases referred to in Item I above the prescriptive period shall run from the day following the date on which the person who could take the action becomes aware of the grounds for dismissal or the offenses committed, from the moment when evidence of the errors committed or loss or damage cause by the worker is available, or from the date on which the debt can be claimed.IV. In cases referred to in Item II above, the prescriptive period shall commence to run as from the date on which the worker becomes aware for the grounds for termination.

Actions by workers dismissed from their employment shall be barred after two months. The prescriptive period shall run from the day following the date of dismissal. (518).

The following shall be barred after two years (519).

I. Actions brought by workers to obtain compensation for employment injuries;II. Actions brought by beneficiaries in the case of death resulting from an employment injury; andIII. Actions to enforce awards of the Conciliation and Arbitration Boards and agreements entered into before such Boards.

The prescription period shall run, respectively, from the time when the degree of incapacity for work is fixed, the date of the worker’s death, or the day following the date on which notice is issued of the Board’s award – or on which the agreement is concluded. If the award obliges the employer to reinstate the worker, the employer may petition the board to impose a time limit of not more than thirty days within which he must return to work; if he fails to do so, the employer may consider the employment relationship as terminated.

34. Labor Authorities and Social Services

The following bodies shall be competent in the respective jurisdictions for the applications of the labor norms:

I. Secretariat of Labor and Social Welfare;II. Secretariats of Finance and Public Credit and of Public Education;III. The authorities of the Federal States, their Directorates or Labor Departments;IV. Workers’ Advocacy Agency;V. The National Employment and Occupational Training Service;VI. The Inspectorate of Labor;VII. The National Minimum Wage Commission;VIII. The National Commission for Workers’ Profit-Sharing in Enterprises;IX. The Federal and Local Conciliation Boards;X. The Federal Conciliation and Arbitration Board;

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XI. The Local Conciliation and Arbitration Boards;XII. The Jury of Liabilities.

The Federal and Local Conciliation and Arbitration Boards, the Minimum Salary Commission and the National Commission for Workers’ Profit-Sharing in Enterprises are three-party entities, constituted by representatives of the employers, of the workers and of the State, and these representatives are elected for periods of six years.

35. Constitutional competence of labor authorities

The federal authorities shall be responsible for the application of the labor norms in all matters concerning:

I. Industrial fields:

1. Textile;2. Electrical;3. Cinematography;4. Rubber;5. Sugar;6. Mining:7. Metallurgy and steel, covering the exploitation of the basic minerals, their winning and smelting, as well as obtaining iron and steel in all their forms and alloys, as well as laminated plate sheet and rolled products of the same;8. Hydrocarbons;9. Petrochemical;10. Cement;11. Lime-klin;12. Automotive, including mechanical or electrical auto parts;13. Chemical, including pharmaceutical chemicals and medicines;14. Cellulose and paper;15. Vegetable oils and grease;16. Food production, covering exclusively the manufacture of those which are packed, canned or barreled, or those which are destined for such procedures;17. Manufacture of beverages which are barreled or canned or which are destined for such procedures;18. Railway;19. Basic woodworking including the production of sawdust and the manufacture of plywood, etc.;20. Glass-making, exclusively the manufacture of plate glass, or barreled glass;21. Tobacco, covering the making or manufacture o tobacco products.

II. Enterprises:

1. Those which are administered directly by the federal government or by one of its decentralized organizations;

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2. Those operating under federal contract or concessions and those which are connected thereto;3. Those which execute work in federal zones or which carry out their work under federal jurisdiction, in federal territorial waters or in waters included in the exclusive economic zone of the Nation.

The application of the labor norms in matters relative to disputes affecting two or more States shall also correspond to the federal authorities; as well as collective contracts which have been declared compulsory in more than one State, the training of their workers and safety and health in the work centers.

36. Inspectorate of Labor

The Inspectorate of Labor shall have the following functions:

I. To ensure compliance with the labor norms;II. To provide technical information and advise workers and employers as to the most effective manner of complying with the labor norms;III. To report to authority any failure to observe, and violations of, the labor norms it discovers in enterprises and establishments;IV. To make such studies and collect such data as may be required by the authorities and those which it seems necessary to achieve harmony in the relations between workers and employers; andV. Such other functions as may be assigned to it by law (540).

37. Federal Conciliation and Arbitration Board

The Federal Conciliation and Arbitration board shall hear and decide labor disputes arising between workers and employers or between workers only or employers only, arising out of the labor relationships or facts closely connected with such relations (604).

38. Local Conciliation and Arbitration Boards

Local Conciliation and Arbitration Boards shall operate in each of the States of the Federation. They shall hear and settle labor disputes which do not fall within the competence of the Federal Conciliation and Arbitration Board. (Art. 621).

39. Procedural Rules for Labor Disputes

Labor dispute proceedings shall be public, free of charge, expeditious and predominantly oral and shall be instituted at the request of any party concerned. Boards must take the necessary steps to ensure that proceedings are conducted with a maximum of economy, concentration and simplicity. (Art. 685 FLL).

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40. Evidence

All means of evidence which are not contrary to morals or to the law are admissible in the process, and especially the following:

1. Deposition;2. Documentary;3. Testimony;4. Expert;5. Examination of Evidence;6. Presumptive;7. Instrumental from proceedings, and8. Photographs and, in general, any methods contributed by the discoveries of science. (776).

Evidence must be relevant to the disputed facts when they have not been given in deposition by the parties. (777).

The first hearing shall be composed of three stages:

a) Conciliation;b) Petition and exceptions; andc) Offering and admission of evidence.

41. Proceedings in Collective Disputes of an Economic Nature

Collective disputes of an economic nature are those relating to the alteration of conditions of employment, introduction of new conditions of employment or the suspension or termination of collective labor relations for which no other procedure is laid down in this Law. (900).

42. Liabilities and Penalties

Violations to labor rules committed by employers or workers shall be punishable in accordance with the provisions of this title, notwithstanding the liability incurred for the non-fulfillment of their obligations.

Calculation of monetary penalties established in this title shall be done by taking the daily amount of the general minimum wage in force in the place and at the time in which the violation was committed, as a basis of calculation. (992).

43. Committees

The federal Labor Law establishes the creation of several Mixed Commissions, that shall be formed for their operation, by equal number of representatives of the workers and of the employers, which are mentioned next.

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a. Committee for Workers’ Profit sharing

The Federal Labor Law establishes that the employer has the obligation of forming a Mixed Committee for Workers’ Profit Sharing; the Committee shall determine the share of each worker, and the employer must give the Committee the list of attendance and the workers’ pay list.Also, all enterprises have the obligation of giving the workers a copy of the annual Income Tax filing and must make available to them the annexes to the Income Tax Return. These are collective obligations which may even be demanded through the right to strike, regardless of administrative sanctions they may incur. The project for profit sharing formulated must be signed by the members of the Committee.

b. Committee for Safety and Hygiene at the Workplace

It is created in order to study and propose preventive measures to reduce the risks at the workplace and ensure the Company complies with the hygiene measures; it shall make monthly rounds at the facilities of the Company, file a circumstantial notice of the possible failures and give security and follow up to training in matters of safety and hygiene required to carry out its functions. Currently and with the modifications of April 1998 to the Regulations of Safety and Hygiene at work issued by the Labor Secretariat, this Committee must not appear before any authority and must only be kept at the company and be brought up-to-date and work every time it is required.

c. Training and Productivity Mixed Committee

This Committee will undertake the project for Training Plans and Programs of the company. It will also ensure the system is implemented and operated and the procedures that are implemented to improve the workers’ training and will suggest the necessary measures to perfect them, according to workers’ and company’ needs.

It must be presented together with the Plans before the Secretariat of Labor and Social Welfare (the formats of the Plans and Programs must be handed to the Secretariat at its offices located in Calzada Azapotzalco, La Villa, across the street from Metro Station “Ferrerías”) and must be informed to that Secretariat each time there are new members due to changes or to absences.

The labor authorities will ensure that the Mixed Training Committees are integrated and operate regularly and on a timely manner, ensuring compliance with the employer’s obligation to train the workers.

d. Committee for the General Table of Seniorities

Employers in Mexico are under obligation to prepare a general table of seniorities that must include a list of the names of all the workers, listed by category or position (not necessarily by hierarchy) and starting dates, and this must be prepared by said Committee and must be signed by its members and be kept where the workers can see it.

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e. Internal Labor Regulations Committee

This committee prepares the Internal Labor Regulations consisting of the mandatory provisions for workers and employer to perform the work in a company or establishment. In order to be valid it must be presented to and authorized by the corresponding Conciliation and Arbitration Board and a copy of this documents must be given to each workers and must be placed in the most visible places of the Company.

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Memorandum - General Overview Employment Law/Mexico 22

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L&E GLOBAL

Avenue Louise 221B-1050, BrusselsBelgium+32 2 64 32 633Stephan Swinkels, Executive [email protected]

This publication may not deal with every topic within its scope nor cover every aspect of the topics with which it deals. It is not designed to provide legal or other advice with regard to any specific case. Nothing stated in this document should be treated as an authoritative statement of the law on any particular aspect or in any specific case. Action should not be taken on this document alone. For specific advice on any particular feature you should seek advice from the L&E Global representative stated in this memorandum. This document is based on the law as of 2013.

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