employment law overview · pdf fileb. bill amendin divgers provisions of the e federal labor...

an alliance of employers’ counsel worldwide

EmploymEnt law ovErviEw 2017

Mexico

i. GEnEral 01ii. hirinG practicEs 04iii. EmploymEnt contracts 06iv. workinG conditions 08V. Anti-DiscriminAtion LAws 11vi. social mEdia and data privacy 13vii. authorizations for forEiGn EmployEEs 14 viii. tErmination of EmploymEnt contracts 15iX. rEstrictivE covEnants 18X. riGhts of EmployEEs in casE of a transfEr of undErtakinG 20Xi. tradE unions and EmployErs associations 22Xii. othEr typEs of EmployEE rEprEsEntativE BodiEs 25Xiii. social sEcurity / hEalthcarE / othEr rEquirEd BEnEfits 26

Table of contEnts

an alliance of employers’ counsel worldwide www.leglobal.org

• Durationoftheemploymentcontract.TheFLL assumes,asageneralprinciple,thatanemployment agreementhasbeenexecutedforanindefinite term,unlessthenatureortheparticulartype ofservicetobeprovidedcallsforanemployment agreementforaspecificjoborterm,orifthe partiesagreetoexecuteanemploymentagreement forinitialtrainingorsubjecttoaprobationary period.• RestrictiveCovenantsorNon-Competes.Inthe strictestsense,non-competeagreementsarevoid underMexicanlaw;specifically,underArticle 5oftheMexicanConstitution.Notwithstanding theforegoing,pursuanttoanopinionissued byaCircuitCourt,Covenantsnottocompeteare fullyenforceableprovidedtheyarelimitedintime, geographicalscope,clientsandactivity,products andservices,andconsiderationispaidinexchange.• Outsourcing.Althoughstrictlyruled,theFLL allowsforthesubcontractingofspecializedservices or‘outsourcing’.Thistypeofworkmustcomply withthefollowingconditions:(a)Itcannotcover thetotalityoftheactivities,whetherequalor similarinwhole,undertakenattheworkcentre; (b)Itisjustifiedduetoitsspecializedcharacter; (c)Itcannotincludetasksequalorsimilartothe onescarriedoutbythecustomer’sworkers.Ifany oralloftheseconditionsarenotmet,thecustomer willbedeemedtobetheemployerforpurposes andeffectsundertheLaw,includingasitappliesto obligationsrelatedtosocialsecurity.

3. LegalFramework

The Mexican legal system is based on the Civil Lawtradition; which is highly systematized and codified.Thus, themain sources of law are codified texts thatderivefromtheprovisionsoftheMexicanConstitution.AstheutmostsourceoflawinMexico,theConstitution,hasspecificprovisionssetforthtoprotecttherightsofcitizens.Theserights,previouslyreferredtoasIndividualGuarantees inthecivil tradition(ConstitutionalRights)and now regulated as Human Rights, are classified inrelation to the right they safeguard: (i) constitutionalrightsofequality; (ii) constitutional rightsof freedom;(iii)constitutionalrightsofdueprocessoflaw(orlegalcertainty);and, (iv)constitutionalsocial rights–whichby definition are those that were created with theintentiontoprotectthecommoninterestsofaspecificgroupasacollective(e.g.,workers,students,commonland farmers).Applicable legislations for Labor law in


i. GEnEral

1. IntroductoryParagraph

Mexican Labor Law grew out of an armed revolutionthat concluded with the adoption of the currentFederalConstitutionin1917.Article123oftheFederalConstitution, entitled “Labor and Social Welfare”,expresslyrecognizesandprotectsthebasicinalienablerights of employees. This was the first constitutionalrecognitionoflaborrightsinworldhistory.Thereafter,in 1931, the first Federal Labor Law was enacted toregulateemployer-employeerelationsnationwide,laterreplacedbythe1970FederalLaborLaw,whichimprovedworkingconditionsforemployees.The1970Lawwas,for all practical purposes, the federal government’s“political reward” to workers’ organizations for notsupportingthe1968studentmovement.

On September 2012, the President of Mexico, FelipeCalderon, introduced a bill to amend the MexicanFederal Labor Law, which after much debate beforeboththeHouseofRepresentativesandtheSenate,wasapprovedbytheCongressonNovember13,2012andenactedby thePresidentofMexicoonNovember30,2012 becoming effective onDecember 1st, 2012. Thereform amends and includes important provisions totheMexicanFederalLaborLaw(hereinafterthe“NewFLL”or“NewLaw”),whichhasextensiveimplicationsforemployerswithoperationsinMexico.

2. KeyPoints

EmployersdealingwithoperationsinMexicoshouldbeaware that labor relations are highly regulated in ourcountry and that Mexican employees generally havegreaterrightsthantheirAmericancounterparts.

• Jobstabilityprinciple.Anyindividualemployment relationshipissubjecttotheprincipleof‘job stability’,thatis,subjecttotheemployee’sright tokeephisorherjobaslongastheemployment relationshipsorequires.Iftheemployment relationshipisforanindefiniteterm,theemployee cannotbelaidoffwithoutcause.Inotherwords, thereisnoemployment-at-willinMexico.

www.leglobal.org

01

Mexico derive from the Constitutional provisions onsocialrightsforworkersinArticle123.

Furthermore, Article 123 of theMexican Constitutionprovides protection for the collective interests ofworkers by establishing general employee rights thatseekabalanceintheemployer-employeerelationship;includingbutnot limited to (a) settingmaximum limitofworkinghoursperweek;(b)equalityrights;(c)weekly rest days; (d)mandatory rest days in the year(holidays or long weekends); (e) employees’ right toprofit sharing; (f) maternity leave; (g) limitations onworkofminors;(h)limitationsonworkofpregnantandbreastfeedingmothers;(i)paidvacationperiods;(j)righttounionize,tostrikeandlockout,andrighttocollectivebargaining;(k)minimumsalaries;(l)limitationsonworkshifts; (m) overtime; (n) social security rights (such asthe establishment of a housing fund forworkers); (o)Christmas bonus; (p) mandatory training; (q) Laborauthorities (competence and jurisdiction); amongstothers.

The laws governing all labor relationships in Mexico,regardlessoftheworkers’nationalityare:

• FederalLaborLaw(FLL),1970.• SocialSecurityLaw,1997.• NationalWorkersHousingFundInstitute’sLaw, 1972.

fEdEral laBor law.TheFLL isthemost importantemployment legislation in Mexico. It defines a ‘laborrelationship’ as the rendering of a subordinatedpersonalservicebyonepersontoanother,inexchangeforawage.

The main element of any labor relationship issubordination, which the Mexican Supreme Courtof Justicehasdefined as the employer’s legal right tocontrol and direct the employee and the employee’sdutyofobediencetowardstheemployer.Oncealaborrelationshipexists, the rightsandobligationsprovidedforbytheFLLautomaticallyapply,regardlessofhowtheagreementisdefinedbytheparties.

social sEcurity law.Additionally,theSocialSecurityLaw is the legislation that contains the stipulationsintended to provide further social benefits for thecollective;specificallyaimedfortheemployersandtheemployees.TheSocialSecurityLawcovers thevariousrightsanddutiesofbothemployeeandemployerwith

respect to retirement funds and healthcare benefitsprovidedforbytheauthorities.

national workErs housinG fund institutE’s law, 1972. The National Workers Housing FundInstitute’s Law was created with the purpose ofprovidingsupportfortheemployeesinordertoacquiretheirownhomes.ANationalHousingFundwascreatedfor employees in order for them to have access toa government run mortgage (credit institution) andacquire their ownhomes. There is an obligation fromtheemployertodepositthecorresponding

4.NewDevelopments

a. Bill amEndinG and supplEmEntinG divErsE constitutional provisions on laBor justicE.

On April 28, 2016, President Enrique Peña Nietosent a bill to the Senate to amend and supplementseveralArticlesonlaborjustice.Thisreformintendstoconsolidate the autonomy and effectiveness of laborjusticeadministration,beingthemostrelevantaftertheConstitutionwasenactedon1917.

The initiative proposes a deep transformation ofprocedural labor law, beginning with three essentialpremises:

a. Labor Justice will be further administered by theFederalorLocalJudicialBranch,whichshouldfocus intheirjurisdictionalduties.

b. A pre-judicial conciliatory stage is inserted duringthe labor proceeding, which will be mandatory forthe parties and will be responsibility of decentralizedagencies named Conciliation Centres, which will beprovidedwith legal capacity and own budget, aswellas with technical, operational, financial, deciding andacting autonomy. This new stage will consist in onesolemandatory hearing, which date and timewill bepromptlysetbythesenewdecentralizedagencies;thesubsequenthearingswillonlytakeplacewithagreementbetweentheparties.

c. A new decentralized agency of the Federal PublicAdministration is created, which will be in charge ofregistering all Collective Bargaining Agreements andunion organizations, as well as of the administrativeprocessesinherenttothosesubjects;furthermore,itwillbeinchargeoftheconciliatoryroleattheFederallevel.


02

B. Bill amEndinG divErsE provisions of thE fEdEral laBor law.

Also on April 28, 2016, theMexican President sent abill to the Senate to amend several provisions of theFederalLaborLaw,whichexplanatorystatementsrefertotheneedofstrengtheningCollectiveBargainingandupdating the rules to release theworkers’ headcountevidence.

a.FilingoftheCollectiveBargainingAgreement(CBA).

Among these issues, compliance of stricter rulesis proposed for the filing of Collective BargainingAgreements (CBAs), trending to verify the employees’consentfortheirexecution.

These provisions have as purpose certifying that thework centre and the workers protected by the CBAdo exist, aswell as that theworkers are familiarwiththe Collective Bargaining Agreement and support thesigningunion.

Their purpose is ensuring the Freedomof AssociationandtherighttoCollectiveBargaining.

b.Workers’headcountprocedure.

The other issue addressed by this initiative refers totheprocedure thatmustbe followed for theworkers’headcount,butratherthanaddressingthestriketopic,itseemstomakereferencetothelawsuitsforownershipof Collective Bargaining Agreements, provided by theFederalLaborLaw.


03

Ingeneralterms,theemployerhasthefreedomtoaskthequestionsitconsidersconvenienttoacandidateinallphasesoftherecruitmentprocess;inotherwords,thereisalmostnolimitationtothescopeofsuchquestionsfromalegalstandpoint.However,companypolicyandinternationalguidelinesmightrequireglobalcorporationstoadheretostricterproceduresintherecruitment,interviewandscreeningprocesses.

rEcruitinG. Given that there are no specific lawsor rules applicable to recruitment, employersmay, intheirownjudgmentor interestsor inaccordancewithcompanypolicyand interests;determineallnecessaryrequirementsforemployment.

LawsregulatingdiscriminationarenotextensivelydevelopedinMexico,buttheFLLstatesthatworkersshallnotbediscriminatedagainstongroundsofrace,nationality,sex,age,disability,religion,politicalopinion,migratorycondition,health,sexualpreferences,orsocialrank.EventhoughtheFLLprohibitsdiscrimination,inpracticethereisunfortunatelynoactionagainstemployerdiscrimination.

EmploymEnt applications. On the employmentapplication, employers can request information froman applicant regarding his/her socioeconomic data,educational background, prior employment, drugscreening,medicalconditions,familysituationandevencriminalbackground.

TheemployerisevenallowedtorequiretheapplicanttoprovideacertificateissuedbytheAttorneyGeneral’soffice(federalorstate)evidencingthattheapplicanthasnopriorcriminalrecord.

Notwithstandingtheabove,itisadvisabletoincludeaspecificprovisionintheapplicationformwherebytheapplicantacknowledgesandagreestothebackgroundcheckandtheemployeratteststhattheinformationprovidedwillbekeptconfidential.Employersshallalsobemindfulofcompliancewithdataprivacylawandregulations.

Pre-emPLoyment inquiries. As mentionedpreviously, employers have great flexibility regarding


04

ii. hirinG practicEs

theinformationthatmaybegatheredaboutapplicantsexceptpregnancystatusforworkingwomenoranyotherinformationthatmayimplyadiscriminatorypractice.

Pre-emPLoyment tests AnD exAminAtions. Drug screening and pre-employment physicals forapplicantsaregenerallypermitted,withtheapplicant’sconsent.Additionally,theresultsoftestsandinformationprovided in interviews must be kept confidential andinaccordancewiththePrivacyNoticedeliveredtotheemployeeorapplicant.

Employersmaymakeinquiriesregardingtheconsumptionofalcoholortobacco,withoutrestrictions.

BackGround, rEfErEncEs and crEdit chEcks. Letters of recommendation are usually required byemployers. Background and reference checks aregenerally allowed, but are subject to the applicant’sconsent; the law is silent to this particular respectbut it is recommended that theemployer secures theapplicant’s consent. The information obtained has tobehandledinaconfidentialmannerandinaccordancewith the privacy notice delivered to the employee orapplicant.

TheFLLallowsemployerstoterminateanyemployee,withoutanyfurtherliabilitytotheemployer,withinthirtydaysfollowingtheemployee’sfirstdayonthejoborhiringdate,iftheemployeeusedfalsedocumentationorfalsereferencestoobtainemployment,ordeceivestheemployeraboutqualificationsthathe/shedoesnothave.

intErviEwinG.Theemployerhasthefreedomtoaskanyquestionsinanyphaseoftherecruitmentprocess.There is no real limit set by law as to the pertinenceof the questions allowed, however common sense isappliedunder thesecircumstances.During interviews,employers may ask for and corroborate any financialinformation, educational or employment information,drugscreenresults,medicalcondition,familysituationandcriminalhistory.

hirinG procEdurEs.TheFLLdoesnotprovideforanyspecialhiringprocess;therefore,employersdonothave

tofollowanyspecificguidelines,unlessagreedwiththeUnionintheCBA(suchashiringonlyunionmembers).However, depending on the position, normal practicedictatesthatallpossibleemployeesmustfirstfilloutanemployment application,whereby all those interestedinworkingforacompanyprovidecertain information,such as personal information, academic background,references,qualifications,skillsandjobexperience.

Asecondphaseinvolvesaninterviewwiththeapplicantand,forsomecompanies,criminal,workhistoryandeconomicbackgroundchecks,directlyorthroughthirdparties.

Sincethecompanywillgatherpersonaldataontheapplicant,employersarealsorequiredtodeliveraprivacynoticetothesame,inordertocomplywiththeFederalLawfortheProtectionofPersonalDatainthePossessionofPrivateParties.


05


06

iii. EmploymEnt contracts

WrittenemploymentagreementsinMexicoaremandatory.Everyemployeemustenterintoanindividualemploymentagreementwiththeemployerandsetoutthetermsandconditionsoftheemployment(inMexico,there’sno‘employment-at-will’.Anemployermusthavejustifiedcause(asdefinedbytheFLL)inordertoterminatetheemploymentrelationship,ifnot,employermustcompensatetheunjustlyterminatedemployeeaccordingly(FLLstipulatestheamountforseverancepayments).Notwithstandingthepreviousstatement;inthegivencasethatanemploymentrelationshipexistsandthereisnowrittenagreement;theemployee’sconstitutionalandstatutoryrightsarenotwaivedoraffectedbythisomission.

InthecaseofUnions,thereisanadditionalagreementthatisnegotiatedandenteredintobytheUnionandtheemployerinordertopromotethecreationorimprovementofthelaborconditionsfortheemployeesasacollectiveandinturntheemployerobtainsaloyalandsolidworkforce.TheCollectiveBargainingAgreement(hereinafter‘CBA’)isrenewableandcannotcontainprovisionsthatstipulatethewaiverofthebasicconstitutionalandstatutoryrightsorbenefitsfortheemployeesasacollective.Itcanalwaysbemorefavourablethantheconstitutionalandstatutoryrequirementsbutneverlessthanthelatter.

1. MinimumRequirements

Article24oftheFLLprovidesthatworkingconditionsmustbeestablishedinwriting,andeachpartymustbeprovidedwithacopyoftheemploymentagreement.Inaddition,Article25statesthattheindividualemploymentagreementmustcontainthefollowinginformation:

• Name,nationality,age,sex,civilstatus,CURP,Tax IDnumber,anddomicileoftheemployeeandthe employer,ifapplicable;• Whetheremploymentisforaspecificjoborterm, initialtraining,permanent,andifitissubjecttoa probationaryperiod;

• Theserviceorservicestobeprovided,as specificallyaspossible(jobdescription);• Theplaceorplaceswheretheemployeewillwork;• Theworkschedule;• Amountofsalaryandanyfringebenefits;• Dateandplacewheresalaryistobepaid;• Anindicationthattheemployeewillbetrained accordingtotheplansandprogrammes establishedbytheemployer;• Amountofrestandvacationdays,andany otherconditionsagreedtobytheemployeeand theemployer.

Everyemploymentagreementcontainsanimpliedrelationshipofmutualtrustandconfidence.

Furthermore,employmentagreementscannotcontainanemployee’sacceptancetowaivethenecessarylegalgroundsforjustifieddismissalonthepartoftheemployerandtheminimummandatorybenefitsprovidedbytheFLL,describedinSectionIV.1below.

Ontheotherhand,CBAsmustalsobeinwritingandcontainthefollowinginformation:• namesanddomicilesofthepartiesexecutingthe CBA;• theaddressofthefacilitieswheretheCBAwillbe applicable;• durationorwhetheritisforanindefinitetermor specificjob;• workschedules;• restdaysandholidays;• salaryamounts;• employeetraining;• initialtrainingfornewhires;• integrationandoperationoftheEmployee/ EmployerCommitteesasestablishedbylaw;• otherconditionsagreeduponbytheparties.

CBAsmustbefiledintheLocalorFederalConciliationandArbitrationBoard,dependingoncompetenceandjurisdiction.CompetenceandjurisdictionoftheConciliationandArbitrationBoardsisdeterminedbytheemployer’smainbusinessactivitiesinaccordancewiththeapplicableFLLprovisions.


07

2. Fixed-term/Open-endedContracts

Any individual employment relationship is subject tothe principle of ‘job stability’, that is, subject to theemployee’s right tokeephisorher jobas longas theemploymentrelationshipsorequires.

The FLL assumes, as a general principle, that anemployment agreement has been executed for anindefinite term, unless the nature or the particulartypeofservicetobeprovidedcallsforanemploymentagreement for a specific jobor term,or if thepartiesagreetoexecuteanemploymentagreementfor initialtrainingorsubjecttoaprobationaryperiod.

The New FLL provides that employment agreementsforanindefinitetermareforcontinuouswork,butthepartiesmay agree that the services be provided for afixedandperiodicworkwithadiscontinuouscharacter,incaseswheretheservicesarerequiredtobeprovidedduring a season or are not required to be providedduringalltheweek,monthoryear.

3. TrialPeriod

The initial training employment relationship is therelationshipwhereby the employee agrees to providehis/her subordinated personal services, under thecontrol and supervision of the employer, in order toacquirethenecessaryknowledgeandskillstoperformtheservicesforwhichhe/she ishired.Thisagreementmustestablishatrainingperiodof3months,asageneralrule,and6months,forexecutivepositions.

Finally,forthoseemploymentagreementsexecutedforanindefinitetermorforaspecificjobortermofmorethan180days, theNewFLLestablishes that thesamemaybesubjecttoaprobationaryperiodof30days,orupto180daysforexecutivepositions,inordertoverifythat the employee has the necessary knowledge andskillstoperformtheservicesforwhichhe/shehasbeenhired.

Both, the initial training agreement and thoseagreements subject to a probationary period, cannotbe executed on a consecutive basis and their termcannotbeextended. It ismandatory toexecute theseagreements inwriting,establishing that theemployeewillbeentitledtoallsocialsecuritybenefits.Ifthelaborrelationshipcontinuesoncetheeffectivetermoftheseagreementshaselapsed,thelaborrelationshipwillbe

consideredforanindefinitetermandtheseniorityaccrued during the training and probationary periodshallberecognized.

4.NoticePeriod

There is no notice period under FLL. However, theemployermustnotifytheworkerinwritingofthecauseorcausesfordismissal.Noticemaybedelivereddirectlybytheemployeratthemomentthedismissaltakesplaceor communicated to the Conciliation and ArbitrationLabor Board within 5 work days, in which case theemployer must provide the employee’s last domicileregisteredinitsfilessotheconciliationandarbitrationlaborboardnotifiestheemployeeinperson.Ifneitherisdone,thedismissalwillbeconsideredunjustified.

Failure to execute a dismissalwithin onemonth aftertheemployerknewabouttheeventthatgaverisetothecausefordismissalwillinvalidatetheaction.


08

iv. workinG conditions

1. MinimumWorkingConditions

The FLL provides for the followingminimumbenefits,whichmaynotbewaivedwhatsoever:

(a) Social security benefits. All employees must beregisteredwithandcontributetothe: – MexicanInstituteofSocialSecurity(IMSS); – NationalWorkersHousingFundInstitute (INFONAVIT); – RetirementSavingsProgramme;and – NationalFundInstituteforWorkers’ Consumption(INFONACOT),whichisa governmentalinstitutionthatprovidesfinancial aidtoemployeesfortheacquisitionofgoods andservices.Thisismandatoryasof1December 2013.(b) ProfitSharing. Employeesareentitled to share inthe employer’s profits, currently fixed at 10% of thecompany’sgross,pre-taxincome;(c) Paid Mandatory Holidays. The FLL requires thatemployeesbepaidforgovernmentholidays;(d) Vacation Premium. Employees are paid an extra25%ofthesalarytowhichtheyareentitledduringtheirvacationperiod;(e) Christmas Bonus. Employees have the right to abonusofatleastfifteendaysoftheirdailybasesalary,whichmustbepaidbynolaterthan20thDecemberofeachyear.

2. Salary

a. minimum salaryTheminimumsalaryisdefinedasthelowestminimumcash payment that a workermay receive for servicesrenderedinagiventimeperiod.SinceOctober1st,2015,minimum general salaries and minimum professionalsalariesareestablishedinoneuniqueregionthroughoutthecountry. Asof January1, 2014, theminimumgeneral salary inZone A wasMXN$67.29 (approximately US$3.60) perday, and the minimum general salary in Zone B wasMXN$63.77(approximatelyUS$3.41)perday.

Asof January1, 2015, theminimumgeneral salary inZone A wasMXN$70.10 (approximately US$3.75) perday, and the minimum general salary in Zone B wasMXN$66.45(approximatelyUS$3.56)perday.

As of October 1, 2015, the minimum general salaryin the Unique Zone was MXN$70.10 (approximatelyUS$3.75)perday.

AsofJanuary1,2016,theminimumgeneralsalaryintheUnique Zone is MXN$73.04 (approximately US$3.91)perday.

The minimum general salary is set by the tripartiteNationalCommissionforMinimumSalaries,takingintoaccountthebasicamountnecessaryforthesatisfactionof, among other things, the following needs of eachfamily:

• materialneedssuchashousing,household furnishings,food,clothing,andtransportation;• needsofasocialandculturalnature,suchas attendanceatathleticevents,trainingschools, libraries,andotherculturalpresentations;and• needsrelatedtotheeducationofchildren.

The minimum salary is set annually and becomeseffectiveonJanuary1st.Underspecialcircumstances,itmaybemodifiedduringtheyearattherequestofoneof theparties in the tripartiteNationalCommission, ifit is deemedby the Commission as awhole, that theeconomiccircumstanceswarrantit.

B. othEr rEquirEmEnts concErninG salariEsSalaryincludescashpaymentsforwages,plusbonuses,housing provided by the employer, premiums,commissions, in-kindbenefits,and“anyotheramountorbenefit that isgiven to theworker forhiswork”; itdoesnotincludeprofit-sharingpayments.

Asdiscussedabove,salariesofworkersmaynotbesetbelow the minimum established by law. Salaries areestablishedontheprincipleofequalpayforequalwork,providedproductivityisthesame.

Manual laborers must be paid at least weekly; otherworkers must be paid every two weeks. A Christmas


09

bonus,consistingofatleast15days’salary,isconsideredaspartofthesalaryandshouldbepaideachyearbeforeDecember20.

Therighttocollectasalaryisirrevocable.Salariesmustbe paid directly to theworker in cash, in currency oflegal tender.Workers need to authorize in writing analternativepaymentoptionlikedirectdepositorcheck.In-kind benefits (e.g., lodging and board) must beappropriateforthepersonaluseoftheworkerandhisorherfamily.Finesmaynotbecollectedfromworkers’salaries, and only some specific deductions, listed inArticle110oftheFLL,arepermitted.

Under no circumstances may an employer chargeinterest on workers’ debts to the employer, nor mayworkers’ salaries be garnished except for alimonypaymentstoaspouseorotherfamilymembers.Inthecase of insolvency of a business, salaries earned overthe last year of operation and the compensation dueworkershavepriorityoveranyothercredit,“includingthosebackedbyrealestate,taxliabilities,andamountsowed the Mexican Institute of Social Security, andespeciallyoveralltheassetsoftheemployer.”Workersmaycollectdebts fromtheemployerdirectly, throughtheconciliationandarbitrationboards,withoutneedofbecoming party to insolvency, bankruptcy, or probateproceedings.

3. MaximumWorkingWeek

Theworkshiftisthetimeinwhichtheworkerisatthedisposaloftheemployerinordertoperformwork.Inmostinstances,theworkshiftcorrespondstothetimeintervaltheworkeractuallyspendsworking,butthetwoconceptsmaydifferwheretheworkerisunabletocompletetheworkshiftbecauseofreasonsoutsideofhisorhercontrol.

a. work shiftsMexicanlaborlawrecognizesthreeworkshifts,asfollows:• thedayshift,withalengthofeighthours,between 6:00a.m.and8:00p.m.;• thenightshift,lastingsevenhours,between8:00 p.m.and6:00a.m.;and• theswingor“mixed”shift,lastingsevenandone- halfhours,dividedbetweenthedayandnight shifts,providedthatlessthanthreeandone-half hoursofthetimeisduringthenightshift.

B. rEst pEriodsWorkersaregivenarestperiodofatleastone-halfhourduringaworkshift.

c. hours pEr wEEkTheprincipleofa48-hourworkweek,whichpresupposesonecompletedayofrestwithfullpay,isofficiallythelawoftheland.However,insomeemploymentrelationships,suchasingovernmentservice,thebankingsector,andinmuchoftheprivatesector,a40-hourworkweekhasbeenestablished.Thearrangementofthe40hoursofworkmaybeoverfiveandone-halfdaysoranyotherequivalentarrangement.

4. Overtime

Itisincumbentontheemployertomaintainrecordsoftheeffectivelengthoftheworkdayshouldtheworkerclaimtohaveworkedovertime.

SectionXIofArticle123oftheConstitutionlimitsovertimeto3hoursperdayandprovidesthatitmaynotbeperformedonmorethan3consecutivedays.However,pursuanttoabindingopinionissuedbytheSupremeCourtofJustice,overtimemustbecalculatedandpaidonaweeklybasis;thismeansitshouldnotexceed9hoursaweek.

Furthermore,overtimemustbepaidattwicethehourlyrateofpay.Article68oftheFLLestablishesthatifovertimeextendsbeyond9hoursperweek,theovertimebeyond9hoursmustbepaidattriplethehourlyrate.

Personsunder16yearsofageandpregnantornursingmothers,ifitendangerstheworkerorthechild’slife,arenotpermittedtoengageinovertimework.

5.Holidays

Article74oftheFLLestablishesthefollowingmanda-toryholidays:• January1st;• thefirstMondayinFebruary,in commemorationofFebruary5th;• thethirdMondayinMarch,incommemoration ofMarch21;• May1st;• September16;


10

• thethirdMondayinNovember,in commemorationofNovember20;• December1stofeverysixyears,onthedayof thenationalpresidentialinauguration;• December25;and• theelectiondayscheduledbyfederalandlocal electorallaws.

Workerswhoarerequiredtoworkonamandatoryholidayareentitledtodoublepayinadditiontotheirregularpay.

6.Employer’sObligationtoProvideaHealthyandSafeWorkplace

Article123oftheMexicanConstitutionplacestheburdenonemployerstoprovideworkerswithasafeworkplace:

Anemployershallberequiredtoobserve,intheinstal-lationofitsestablishments,thelegalregulationsonhygieneandhealth,andtoadoptadequatemeasuresforthepreventionofaccidentsintheuseofmachines,instruments,andmaterialsoflabor,aswellastoorgan-izethesameinsuchawayastoensurethegreatestpossibleguaranteeforthehealthandsafetyofworkersasiscompatiblewiththenatureofthework,underthepenaltiesestablishedbylawinthisrespect.

TitleIXoftheFLLalsodealswithoccupationalsafetyandhealth.Undertheseprovisions,employershavetheobligationtosetupenterprisesinaccordancewiththeprinciplesofworkersafetyandhealth,andtotakenecessaryactionstoensurethatcontaminantsdonotexceedthemaximumlevelsallowableundertheregu-lationsandinstructionsissuedbycompetentauthori-ties.Employersalsoareobligated,whenrequiredbytheauthorities,tomakephysicalmodificationsinfacili-tiestoaccommodatethesafetyandhealthofworkers.

Likewise,employersmustkeepfirstaidmedicationsandmedicalsuppliesattheworkplaceandinstructper-sonnelonhowtoadministerthem.Iftherearemorethan100workersinagivenenterprise,aninfirmarywithappropriatestaffmustbeestablished.Enterprisesemployingmorethan300workersmusthaveahospitalstaffedwithadequatemedicalandauxiliarypersonnel.

TheprovisionsoftheFLLhavebeenimplementedthroughthenewFederalOccupationalSafetyandHealthRegulations,issuedbytheSecretaryofLabor

andSocialWelfarein2014,toenterintoeffectonFeb-ruary2015.Inaddition,manytechnicalrulesregardingoccupationalsafetyandhealtharesetoutinworkplacesafetystandardsknownasOfficialMexicanStandards(NOMs).

TheFederalSafetyRegulationsobligateemployerstoensureworkers’safetyandtokeeptheminformedofrisksintheworkplace.Inaddition,theRegulationsre-quireperiodictestsonvariousequipment,riskstudiesconcerningmatterssuchasnoiselevelsandairquality,communicationwithworkersconcerningrisks,workertraining,andinsomecases,thepurchaseofadditionalequipmenttocomplywiththevariousrequirements.TheRegulationsalsocovertransportationofprimarymaterialsandhazardousmaterials,includingbiohaz-ards,andsafetyintheagriculturalsector,andestablishrulesconcerninglaborbypregnantwomenandminors.

Companieswithmorethan100workersarerequiredtohaveapreventiveprogramforsafetyandhygiene;companieswithfewerworkersmustprovidetheSTPSwithalistoftheirsafetyandhygieneobligations.Companiesnotincompliancecouldbegivenuptoayear’sgraceuponsubmissionofawrittenplandetailinghowtheyplantocomeintocompliance.Independentprivatesectorunits,suchasinsurancecompanies,maycertifycompliancewithworkplacestandards,follow-ingauthorizationbytheSTPS,forestallingtheneedforinspections. TheFederalConciliationandArbitrationBoardisre-sponsibleforresolvingconflictsthatarisefromemploy-ernoncompliancewithoccupationalhealthandsafetyresponsibilities.Thestateauthoritiesmustcooperatewithfederalauthorities.

Also,theFLLmandatesthatsafetyandhealthcommis-sionsbecreatedineveryenterpriseorestablishment.Thecommissionsaremadeupofequalnumbersofla-borandmanagementrepresentativesandareresponsi-bleforinvestigatingthecausesofaccidents,proposingmeasurestoavoidtheiroccurrence,andmonitoringcompliancetherewith.


11

V. Anti-DiscriminAtion LAws

1.BriefDescriptionofAnti-DiscriminationLaws

InMexico,discriminationlawsinlabormattersarenotextensively developed. The FLL states that no workermay be discriminated against on the grounds of race,nationality, gender, age, disability, religion, migratorycondition, health, sexual orientation, religion, sexualpreferences, political opinion or social status. Article3of the FLL establishes as a general principle, amongother matters, that: ‘any distinction made againstemployeesbasedonrace,nationality,sex,age,disability,religion,migratorycondition,health,sexualorientation,religion, political affiliation or social status is strictlyprohibited’. Article 132, VI further requires employersto: ‘treatemployeeswithdueconsiderationandavoidmistreatmentbywordorconduct’,whileArticle133, Iprohibitsemployersfrom:‘refusingemployment(toanapplicant)basedonageorgender’.Article164providesthat: ‘womenhave the same rightsandobligationsasmen’.

Employers who violate any of the abovementionedprovisionsshallbesubjecttoafineof250upto5,000daysoftheminimumwageineffect.

TheFederalLawtoPreventandEliminateDiscriminationprohibits any discriminatory practice that infringeson the principle of equal opportunity. The federalgovernment’s interpretation of this law must beconsistentwithinternationaltreatiesondiscriminationtowhichMexicoisparty.

Notwithstanding the above stated laws and legalprovisions; there are no stipulations with respect toconcretesanctionsorlegalactions,shouldtheemployerincurindiscriminatoryacts.Therefore,regardlessoftheexistence, in paper, of these laws and provisions, thelackofenforcementthereofrepresentsastandstillintheevolutionofnon-discriminatorylegislationinMexico.

2.ExtentofProtection

Protectedcharacteristicsincludeethnicornationalorigin,gender, age, disability, social or economic condition,health, pregnancy, language, religion, opinions, sexualpreferences,marital status or any other that impedesornullifiestherecognitionorexerciseofrightsandrealequalityofopportunitiesamongindividuals.

The law does not prohibit retaliation; however, mostcompaniesincludesuchaprovisionintheircomplianceprogrammesandpolicies.

Employers must avoid any practice such as askingfor non-pregnancy certificates to women or healthcertificates toemployeesand, ingeneral, anypracticethat may imply a distinction between two or moreindividualswhoapplyforthesamejob.

3.ProtectionsAgainstHarassment

The General Law for the Equity of Men and Womenaimstoregulateandguaranteegenderequality.Itsetsuptheguidelinesandmechanismsforthefulfilmentofequalityinthepublicandprivatesector,byencouragingwomen’sempowerment.

The FLL however, does not specifically regulate sexdiscrimination aside from general discrimination. Seesection17.1.above.

The FLL provides that an employeemay be dismissedwithout liability for the employer if he/she incurssexualharassmentintheworkplace.Amongtheseveralprohibitions that the FLL imposes on employers, istolerationof sexual harassmentwithin theworkplace.Thebreachofthisprovisionmayresultintheimpositionofafineof250upto5000timestheminimumwageineffect.

Federal and state criminal codes have establishedharassmentasanoffence.UndertheCriminalCodeforthe FederalDistrict, it is an offence for any person toharassanotherpersonrepeatedlyforsexualpurposes.

Furthermore, Article 1916 of the Federal Civil Code(FCC)statesthatapersonmustbeindemnifiedincashfor ‘moral damages’whenheor she is affected inhisor her feelings, affections, beliefs, honour, reputation,private life, shape and physical appearance, or inthe consideration that others have of such person.Furthermore, the same provision assumes thatmoraldamageexistswhenaperson’sfreedomorphysicalorpsychologicalintegrityisviolatedordiminished.Despitethis assumption, in practice it is difficult to prove theessential elements of the action that causes moraldamage,takingintoconsiderationitssubjectivity.

4.Employer’sObligationtoProvideReasonableAccommodations

InAugust2009,theGeneralLawforHandicappedPeoplewaspublished.Thislawstatesthatthosewithaphysicalhandicapmustbeincludedinsocietyonequalgrounds.Nonetheless,theFLLdoesnotprovideanythingspecificregarding disability discrimination, except that it fallsintothegeneraldiscriminationprohibitedbytheFLL.

Despite the above mentioned, in order to promoteequity and diversity within the workplace, the FLLestablishes the obligation for employers with morethan fifty employees to have appropriate facilities forthe performance of the services of employees withdisability.

5.Remedies

a. intErnal disputE rEsolution procEssCompanies may have internal dispute resolutionprocesses; however, they are not mandatory, as thepartieswillalwaysbeentitledtoraisetheiractionswiththeConciliationandArbitrationBoards.

B. mEdiation and conciliationThere is no mediation and conciliation except forthe formal conciliation process performed by theConciliationandArbitrationBoards.

c. arBitrationArbitration is performed by the Conciliation andArbitrationBoards,as it isnotpossible for thepartiestoagreeonathirdpartyarbitration.Foralabor-relatedruling to be enforceable, it must be issued by thecompetentlaborauthority,ConciliationandArbitrationBoardoraCourtofAppeals.

d. litiGationConciliationandArbitrationBoardsaretheadministrativeagencies in charge of solving labor disputes. Whendealing with individual litigation cases, a Board willencouragethepartiestoreachasettlementagreementbeforetheactualproceedingstakeplace.

If the parties refuse to reach an agreement, a Boardwillinitiatetheprocess;however,thepartiesmayreachanagreementatanymomentbeforethefinalawardisissued.

E. finEs, pEnaltiEs and damaGEsTheSocialandWelfareDepartmentcanimposefinesofdifferentamountsonemployersforbreachtotheFLL.


12


13

vi. social mEdia and data privacy

In Mexico, there is no comprehensive legislation onsocialmedia;however,theFederalLawontheProtectionofPersonalDataheldbyPrivateParties(the“Law”)andits secondary regulations, amongother laws, apply totheprocessingofpersonaldatathatiscarriedoutwithinsocialmediaplatforms (including job advertisements),as well as to the processing of personal data that isobtained from socialmedia. Processing is understoodasthecollection,use,disclosureorstorageofpersonaldatabyanymeans.

All processing of personal data must observe theprinciplesoflegality,consent,information,dataquality,purpose specification, loyalty, proportionality andaccountability.

1.Cantheemployerrestricttheemployee’suseofInternetandsocialmediaduringworkinghours?

AccordingtotheFLL,employeesshouldbecommittedto perform their jobs with the utmost diligence andefficiency, aswell as to safeguard thoseworking toolsprovidedbytheemployertoeasetheaccomplishmentoftheirduties,whicharenotintendedforpersonaluse.Thus,employeesmayhaveaccesstosocialmediaiftheemployer so allows, either during their work shift oroutof it.Breachoftheforegoingmayleadtojustifiedterminationofemployment.Dependingon thenatureofthejob,accesstosocialmediamaybenecessary.

On theotherhand, theemployermayhaveaccess tothe employees’ communicationsby thesemeanswithsupervisionpurposesandonlyifagreedinwritingwiththeemployees.

Itmust beborne inmind that, according to themostrecentopinionsissuedbytheSupremeCourtofJustice,therighttoprivacyofprivatecommunicationsincludessocialmedia.

2.Employee’suseofsocialmediatodisparagetheemployerordivulgeconfidentialinformation

Employeeshaveadutyofloyaltytowardstheemployer,whichmeansthatemployeesmustrefrainfromcarryingoutactionsthatmayharmcompany’sreputation,otheremployees, or the company in general. The contrarymaygivegroundsforterminationwithcause.


14

TheFLLallowsfortheemploymentofforeignnationalsinMexico.Article7oftheFLLstatesthat“ineveryenterpriseor establishment, the employer shall employ at least90per centofMexicanworkers.” This sameprovisionstatesthatwithregardtocategoriesoftechniciansandprofessionals, “the workers shall be Mexicans unlesstherearenoneinthatparticularspecialty,inwhichcasetheemployermayemployforeignworkerstemporarily,inarationottoexceed10percentofthoseemployedin that specialty.” There are two additional conditionsinArticle7: (1)employersand foreignworkershaveajointobligationtotrainMexicanworkersinthespecialtyof the foreign workers; and (2) physicians working inenterprisesmustbeMexicans.TheprovisionsofArticle7oftheFLLdonotapplytodirectors,administrators,orgeneralmanagersofenterprises.

The FLL’s limited authorization for foreign nationalstowork inMexico is also subject to the requirementsof the Migration Law, in force as of May 25, 2011.The Migration Law establishes the following types ofimmigrationstatusforforeignnationalsininMexico:

• Visitors: Theimmigrationstatusofvisitorsmainlysubdivides into a) tourists (and other non-businessrelated visitors); and b) businesspersons.Neithermaypursue employment in Mexico. The maximum lengthof stay for foreign nationals arriving inMexico underthis type of status is 180 continuous days. The statusof visitor tourist describes itself. The status of visitorbusinessperson allows foreign nationals to engage inbusiness-related activities; however, they may not bepaid,eitherincashorinkindfortheseactivities.

• temPorAry resiDence: This type of residencyisgrantedtothoseforeignnationalswhohaveafamilybond (either Mexican or foreigner) or otherwise inMexico. Theymay not pursue employment—althoughtheymay file forwork permission—and the length oftheirstayislinkedtothepersontowhomtheyarelinkedinMexico,nottoexceedfouryears.

• temPorAry resiDence with work Permission: Thistypeofresidencyisgrantedtothoseforeign workers whose work visa is sponsored by a

Mexicancompany.Themaximumlengthofatemporaryresidence card is four years. The Mexican companyis the one to start the process and request theworkpermissiononbehalfoftheworkerbeforeentranceoftheforeignnationaltoMexicansoil.Oncethemaximumfour-yearperiodhaselapsed,theforeignnationalmaypursueapermanent-residentstatus.

• stuDents: Students fall into the category oftemporaryresidents.Theymayfileforworkpermission,as longasthe joboffer is relatedtothefieldtheyarestudying inMexico. Their stay in the countrymay beextendeduntil theycomplete their studiesandobtainthenecessarycredentialsattestingtothecompletionoftheirschooling,nottoexceedfouryears.

• PermAnent resiDence: This typeof residencyis granted to those foreign nationals who meet thefollowingrequirements:

• theyhavebeenmarriedtoaMexicannationalfor morethantwoyears(andthemaritalbondpersists);• theyhaveMexicanchildren;or• theirtemporaryresidencyhasreachedthefour- yearperiod.

All foreign nationals holding a status of permanentresidenceareallowedtoworkinMexico.Apermanentresidencecarddoesnotexpire.Foreignnationalsunderthisstatusmaystartaccruingtimeinordertofilelaterforthenaturalizationprocess.

Article 33 of the Constitution grants foreign nationalsthe same individual guarantees as Mexican citizens,but it also authorizes the Executive of theUnion (thePresident of the Republic) to force them to leave thecountry “immediately and without a trial” wheneverthePresidentdeemstheirpresencetobeinconvenient.Undernocircumstancesmay foreignnationalsengageindomesticpolitics.

vii. authorizations for forEiGn EmployEEs


15

viii. tErmination of EmploymEnt contracts1. GroundsforTermination

An employer may dismiss an employee only wherethe latter gives cause for dismissal. Under Mexicanlabor law, “integrity atwork” ismandatory behaviourfortheemployee.Anemployeeisdeemedtoactwithintegrity when the work is carried out with intenseeffort, care, and attention, in the agreed-upon time,place,andmanner.“Lackofintegrity”isagenericcausefordismissal.Additionally,Article47oftheFLLspecifiesparticularkindsofconductthatarecausesfordismissal:

• useoffalsedocumentationtogainemployment;• dishonestorviolentbehaviouragainsttheemployer ortheemployer’sfamily;• dishonestorviolentbehaviouragainstco-workers thatdisruptsworkdiscipline;• actsofharassmentorsexualharassmentdirected towardanypersonintheworkplace;• sabotageoftheworkplace;• negligence;• carelessnessthatthreatensthesafetyofthe workplaceandofotherworkers;• immoralactsintheworkplace;• disclosureoftradesecrets;• morethanthreeunexcusedabsencesina30-day period;• insubordination;• failuretoadoptpreventivemeasuresortofollow procedurestoavoidaccidentsorillnesses;• reportingtoworkundertheinfluenceofalcoholor narcoticdrugs;and• incarceration.

2.CollectiveDismissals

AccordingtotheFLL,theremustbealegallypermittedcause of termination that substantiates the collectivedismissal.Theseverancepaymentandthesubsequentprocedurewillbedetermineddependingonthecause.

The first step is to determine whether the companyhasunionizedworkersandconfidentialemployees.Ifitdoes,theworkingconditionsoftheunionworkersaregovernedbytheCBA.Therefore,boththetermination

oftheunionworkersandtheCBAmustbenegotiatedwiththeUnion.

Concerning the termination of individual employmentrelationswithunionworkers,theFLLsetsforthaformulatocalculatetheamountofseverancetobepaidtoeachemployee,asdescribedinSection3.abelow.

The aggregate salary of union workers must include:(1) thebasesalary; (2)anyotherbenefit incashor inkind(suchaslifeinsurance,savingsfund,foodcoupons,vacation premium, year-end bonus, etc.); and (3) anyother benefit provided to the employee for servicesrendered.

Inpractice,somelaborunionsclaimthepaymentofafour-month indemnity plus twenty days of aggregatedailysalaryforeachyearofservicesrendered,arguingthattheterminationoftheemploymentrelationshipisaconsequenceofthe implementationofnewworkingproceduresbytheparentcompany.Inothercases,theunion claimsanadditionalpremium for theclosingofindustrialoperations thatmay representanadditionalpercentagetotheindemnitycontemplatedbylaw.

Theemployeralsohastheobligationtopayasenioritypremium to each employee being terminated. Thispremium is equal to twelve days of salary for eachyearof service rendered,withacapat theequivalentof two times the minimum daily salary. Mandatoryfringe benefitsmust be paid in arrears at thetimeoftermination.

Uponconclusionofthenegotiations,anagreementwillbe filed before the Local Conciliation and ArbitrationBoardfortheliquidationofallunionworkers.Theabovewill enable the employer to freely dispose of its realestateandgoods(machinery,rawmaterials,buildings,etc.).

Additionally, it is a common practice to liquidateconfidential employees using the same basis as fortheunionworkers. In some cases, thosewho activelyparticipateintheclosingoperationswillreceivea‘stay-on’bonus.


16

3.IndividualDismissals

a. is sEvErancE pay rEquirEd?

Terminationpaymentiscalculateddependinguponthecauseoftermination:

• Voluntary resignation: The employermust pay allduebenefits, including sales incentives,onaproratedbasisuptotheterminationdate.Iftheemployeehasatleastfifteenyearsofseniority,heorsheisalsoentitledtoasenioritypremiumoftwelvedays’salary foreachyear of service capped to twice the minimum dailysalaryinforce.

• Termination with cause: The employer must payallduebenefits, includingcommissions,onaproratedbasis until the date of termination, and the senioritypremiumoftwelvedaysofsalaryforeachyearofservice(butwithacapoftwicetheminimumdailysalaryinthesametermsasexplainedbefore).

• Termination without cause: Employees thatare terminated without cause are entitled to thefollowinglumpsumseverance:(1)threemonthsoftheemployee’sdailyaggregatesalary,plus:(2)twentydaysoftheemployee’sdailyaggregatesalaryforeachyearofservice; (3)asenioritypremiumof twelvedays’salaryfor each year of service (but with a cap of twice theminimumdaily salary in the same terms as explainedbefore),(4)duebenefits.

4.SeparationAgreements

AccordingtoArticle53,SectionIoftheFLL,themutualconsentofthepartiesisacauseforterminationoftheemployment relationship with no responsibility oneithertheemployerortheemployee.

Thiscauseforterminationisthereforesubjecttothewilloftheparties.

a. is a sEparation aGrEEmEnt rEquirEd or considErEd BEst practicE?

As mentioned above, the execution of a SeparationAgreementcomesdowntotheparties’consentprovideditdoesnotcontainawaivertotheemployee’sminimumrights, earned salaries, indemnities and any otherbenefitsderivedfromtheservicesrendered,regardlesshowitischaracterizedorthenamegiventoit.

Furthermore, in termsofArticle33of theFLL foranyagreementorsettlementtobevalid,itmustbeenteredintoinwritingandcontainadetaileddescriptionofthefactsthatmotivateditandtherightsthereincontained.It must be ratified before the competent ConciliationandArbitrationLaborBoard,whichwillapproveitasfarasitdoesnotcontainawaiveroftheemployee’srights.

Byvirtueoftheabove,aSeparationAgreementmaybeconsidered best practice.However, itmust be ratifiedbeforeandapprovedbytheConciliationandArbitrationLaborBoardinordertobevalid.

B. what arE thE standard provisions of a sEparation aGrEEmEnt?

TheStandardprovisionsofaSeparationAgreementare:

• Reciprocalacknowledgementoftheparties’status andrepresentation,andlegalcapacity.• Employee’sstatementcontainingtheemployer’s name,hiringdate,position,workshiftandsalary.• Expressconsentbythepartiestoterminatethe employmentrelationshipandtheterminationdate.• Totalsettlementofobligationsandacknowledgement ofreceiptonbehalfoftheemployeeofthenet andgrossamountsduebytheemployer,including abreakdownoftheconceptsthatarebeingpaid, applicabletaxesanddeductions.• Fullreleasebytheemployeeofalllaborandsocial securityobligationsinfavouroftheemployer, itsparents,subsidiariesoraffiliates,predecessors, successorsorassigns,aswellastheirrespective currentand/orformerpartners,directors, shareholders/stockholders,officers,employees, attorneysand/oragents,allbothindividuallyandin theirofficialcapacities.• Employee’sstatementunderoathoftheworking conditionsandbenefitsenjoyedwhileinservice withtheemployer.• Confirmationbytheemployeeofthelastday workedfortheemployer.• RatificationoftheAgreementandrequestofthe LaborBoard’sapproval.

c. doEs thE aGE of thE EmployEE makE a diffErEncE?

No,theemployee’sagemakesnodifference.

d. arE thErE additional provisions to considEr?

Other provisions to consider in the SeparationAgreementarethoserelatedwith:

• Company’sfiles,documentsandproperty.• Nodisparagement.• Confidentialityclause.• Non-competeand/ornon-solicitation.

5.Remediesforemployeeseekingtochallengewrongfultermination

According to the FLL, employees who have beenwrongfully terminated can file a complaint with theConciliationandArbitrationBoardfor:(a)constitutionalseverance consisting of three months of aggregatesalary;or(b)reinstatementtothesamepositionhe/sheheld,plusbackwages(whichisthesalarytheemployeeisnotearningduring the laborproceedingscappedtooneyear, ifthelitigationisnotconcludedaftertwelvemonths, the plaintiff will be entitled to request 2%monthlyinterestoverafifteen-month’ssalarybase).


17


18

iX. rEstrictivE covEnants

1.DefinitionofRestrictiveCovenants

Although Mexican legislation does not provide for aspecific concept of restrictive covenants, theymaybedefinedasanycontract,covenant,oragreementhavingasscopetherestriction, lossor irrevocablesacrificeofthepersonalfreedom.

Mexican law does not expressly prohibit clauses orcovenants of this nature during the employmentrelationship.Infact,ifaworkerengagesinactivitiesthatresult in competition against the employer’s businessduringthecourseofemployment,thatconductwouldconstitute just cause for termination of the workrelationship, even in the absence of a non-competecovenant.

Covenantsnottocompetemaybeincorporatedasoneamong various clauses in an individualwork contract,or may take the form of an altogether separate orstandaloneagreementbetweentheemployerandtheworker.

Ontheotherhand,boththevalidityandenforceabilityof covenants not to compete that seek to survive anindividual’s work relationship are more difficult toascertain. Mexico’s Constitution protects its citizens’freedom to engage in lawfulwork.Moreover, the FLLexpresslyprovidesthatworkconstitutesa“socialrightandduty”and,assuch, to“precludeanyperson fromcarrying out work, or from engaging in a profession,industry or trade of choice, so long as it is lawful,” isnot permitted in principle. As a general rule, otherthan the self-evident requirement that the work,profession, industry, or trade be considered lawful,therighttofreelychooseworkmayonlybelimitedordenied“byresolutionofcompetentauthoritywhentherightsofa thirdpartyare infringed,orwhen thoseofsociety are offended.” Notwithstanding the foregoing,pursuant to an opinion issued by a Circuit Court onCivilMattersinMexicoCity,Covenantsnottocompetearefullyenforceableprovidedtheyarelimitedintime,geographical scope, clients and activity, products andservices,andconsiderationispaidinexchange.

Byvirtueoftheabove,Mexicanemployersthatrequirecertainworkers to enter into non-compete covenantsmust narrow down the scope of the worker’s post-employment restrictions by (a) setting limits to theduration of the covenant, such as amaximumof oneyearafter the conclusionof thework relationship; (b)defining the typeof competitive activities fromwhichtheformeremployeeistorefrain;and(c)specifyingthecompetitorsandthegeographicareaormarketsegmentinwhichtheformerworkercannotacceptemployment.

In addition, employers must make a payment to theformerworkerinexchangeforthecommitmentnottoengageindirectcompetitionwithitsbusiness.Anotheralternative for the parties is to agree on dividing anoverall payment into periodic “instalments” after pre-definedperiodshaveelapsedinwhichtheformerworkerhasoptednottoacceptemploymentwithacompetitorortoengageindirectcompetition.Ultimately,however,the absence of express regulation on this subject canalwaysleadtolegitimatequestionsregardingthevalidityorenforceabilityofcovenantsnottocompete.

2.TypesofRestrictiveCovenants

Non-Competes, Non-solicitation of customers andNon-solicitation of employees are clear examples ofRestrictiveCovenants.Executionofrestrictivecovenantshas becomemore common inMexico as a means toprotect the employer’s confidential information andtradesecrets,aswellastoensurethecompanies’righttoloyalcompetition.

3.EnforcementofRestrictiveCovenants—processandremedies

Inprinciple,RestrictiveCovenantsareonly“enforceable”during the employment relationship as a cause forterminationandwithoutliabilityontheemployer.

Froma labor standpoint, post-employmentRestrictiveCovenantsarenullandvoidunderMexican legislationand, therefore, unenforceable; the only possibility for“enforcement”isbeforetheCivilCourtsasexplainedinSectionIX.1above.

IftheNon–CompeteandNon-SolicitationagreementisdeclarednullandvoidforthereasonsprovidedinArticle5oftheMexicanConstitution,bothpartiesareabletoretrieve their prior status,meaning the employeewillberequestedtopaybackanyandallmoneysreceivedfor performance of the obligations established in theagreement.

Theemployercouldalsoexerciseacivilactionclaimingdamagesderivedfromsuch infringementoreventakecriminalactioniftheemployeehadaccesstoconfidentialinformationand/ortradesecretswhileperforminghis/herduties.

Note that an injunction to prevent someone fromrenderingservicesorworkinginacertainfieldoractivitycannot be issued because, asmentioned in SectionAabove,Article 5 of theMexican Constitution and 4 oftheFLLbarsuchrelief.

4.UseandLimitationsofGardenLeave

TherearenogardenleavesunderMexicanlegislation.


19


20

X. riGhts of EmployEEs in casE of a transfEr of undErtakinG1.Employees’Rights

Inconnectionwiththesaleofabusinessortransferofundertaking, the FLL generally requires the acquiringentitytoretainthesellingentity’sworkers,aswellastoassumeexistingbenefitliabilities,regardlessofwhetherthe benefits are privately sponsored (e.g., company-sponsoredmedicalinsurance)orlegallymandated(e.g.,paid vacation and vacation premium). This is knownunderArticle41oftheFLLasasubstitutionofemployer:The substitution of the employer shall not affect thework relationsof theenterpriseor theestablishment.The substituted employer shall be jointly responsiblewith thenewemployer for the liabilitiesderived fromthe work relations and the Law, which originatedprior to thedateof the substitution, fora termofupto sixmonths;uponexpirationof such term,only theresponsibilityofthenewemployershallsubsist.

The six-month term referred to in the precedingparagraphshallbecomputedasofthedateofnoticeofsuchsubstitutiontotheunionortheworkers.

Asacorollaryofthisretentionobligation,theacquiringentity must recognize the workers’ length of service,so as to ensure that changes in the legal structure ortheownershipof theemployerdonotunderminetheworkers’vestedrights.

IfthesaleofabusinessinMexicoisstructuredasastockpurchaseor amerger agreement that does not affecttheseller’scorporateentity,asubstitutionofemployerdoes not come into play. In these cases, the buyerautomatically becomes the employer of the seller’sworkers.

Article41oftheFLLlikewisecontemplatescontinuityoftheworkrelationsintheeventofanassetsale.

When thebuyer, or substituteemployer, assumes theworkers’termsandconditionsofemploymentineffectprior to the substitution, the FLL does not requireconsentfrom,orconsultationwith,theworkers.

Forasubstitutionofemployertoapply,pre-substitutionterms and conditions of employment—as establishedin the individual employment contract or collectiveagreement—must remain unaltered. If the substituteemployerunilaterally implementsdetrimentalchangesto existing employment conditions, the employee canrescind the employment relationship and demandstatutoryseverance.Duringthefirstsixmonthsfollowinganemployersubstitution,bothemployersremainjointlyliableforlaborclaims.

2.RequirementsforPredecessorandSuccessorParties

However, in order to consummate the transfer ofworkersthroughanemployersubstitutionandproperlyallocate responsibility for labor liabilities associatedwiththeassetsaletransaction,boththesellerandthebuyerarerequiredtocomplywithimportantproceduralformalities,includingthefollowing:

• deliveryofanoticeofemployersubstitutionto individualworkersandtotheunion,iftheworkers arecoveredbyacollectiveagreement;thenotice ofsubstitutionistypicallysignedbyboththeseller (substitutedemployer)andbuyer(substitute employer);• deliveryofnoticestotheMexicanSocialSecurity Institute(IMSS)toensureamendmenttothe existingregistrytoshowthesubstituteemployeras employeroftheexistingregistry;• deliveryofsimilarnoticestotheNationalFundfor WorkerHousing(INFONAVIT)andtheNational FundforDevelopmentandGuaranteeofWorkers’ Consumption(INFONACOT);• withrespecttolaborclaimsagainsttheseller (substitutedemployer)pendingbeforethecourts orbeforeanarbitrationandconciliationboard, eachparties’legalrepresentativesmustnotifythe correspondingauthorities.

The procedural requirements listed above areaccompaniedbyahostofadministrativeactivities,suchas changes to personnelmanagement documentation

(e.g.,paychecks,businesscards,identificationbadges,newemploymentandotherformagreementsforpost-substitution hiring, vacation documentation, facilities’signage, permits, shifts, attendance records, loandocuments,andthelike),revocationofpre-substitutionpowersofattorney(bythesubstitutedemployer),andissuanceofnewpowersofattorney(bythesubstituteemployer) for representation in labormatters, amongothers.


21


22

Xi. tradE unions and EmployErs associations1.BriefDescriptionofEmployees’andEmployers’Organizations

Article356oftheFLLdefinesaunionas“theassociationof workers or employers for the study, advancement,and defence of their respective interests.” It followsfromthisdefinition that laborunionsmaynot includebothworkersandmanagementmembers.

Laborunionscanbeorganizedasfollows:• tradeunions,encompassingworkersofthesame profession,skill,orspecialty;• enterpriseunions,encompassingworkersemployed inthesameenterprise;• industrialunions,encompassingworkerswhowork intwoormoreenterprisesinthesameindustry;• nationalindustry-wideunions,formedbyworkers employedinthesameindustrybutwhoarelocated intwoormorestates(includingtheFederalDistrict) andvarioustrades;and• multi-craftunions,establishedinmunicipalitiesthat donothave20ormoreworkersofthesame profession,trade,orspecialty.

Similarly,therearedifferenttypesofemployers’unionsorassociations,asfollows:

• thoseformedbyemployersinonelocalitywhoare engagedinoneormoreactivities;and• nationalassociations,comprisingemployersin severalstates.

Among other activities, labor unions may do thefollowing:

• challengetheannualtaxdeclarationsfiledby employers;• initiateacollectivedisputeoneconomicissues;• signcollectiveagreementsonbehalfofworkers;• determineparticipationofindividualworkersin profitsharing;• overseetheoperationoftrainingsystems;• establishgeneralseniorityscales;• participateinthedraftingofworkrules;and• dealwithoccupationalsafetyandhealthproblems.

Aunioncanbeestablishedwithat least20workersinactive service, or by the association of at least threeemployers. Previous authorization is not required fortheestablishmentofalaborunion.Workersoccupyingpositions of trust cannot belong to the same laborunionswithotherworkers,althoughtheymayestablishtheirownlaborunions.

2.RightsandImportanceofTradeUnions

Trade unions are a substantial and important sectorin the political organisation of Mexico. The unionshave become a very strong force within the officialpoliticalparty(the‘InstitutionalRevolutionaryParty’or‘PRI’) andwithin theMexicanCongress. They stronglyinfluence the Mexican Congress and have introducedand supported most of the social legislation. TradeunionsinMexicohaverepresentativesonallthebodiesresponsiblefortheelectionofmembersofstateandthefederallaborboards.

Trade(orcraft)unionsmayenterintotheirowncollectiveagreementsprovidedtheyrepresentthemajorityoftheworkersengagedinthattradewithinthecompany.

Alaborunionmayloseitsrighttorepresentworkersinacollectiveagreementiftheconciliationandarbitrationboarddeterminesthatitnolongerrepresentsamajorityof the workers, and, in such cases, another unionacquiresthatright.

InMay 1999, the SupremeCourt held that provisionsof the Federal Law of Workers in the Service of theState (LFTSE),whichallowonlyoneunionwithineachgovernmentagency,wereunconstitutional.

TheCourtconcludedthat the limitsonrepresentationviolated Article 123 of the Constitution, because theyrestrictedtherightsofworkerstoassociatefreelyandnegotiate collective agreements. However, the Courtupheld a requirement that aminimum of 20workerswas required to form a union. Following this ruling,

therehasbeenatendencytoformnewunions(e.g.,theairtrafficcontrollers)andthistrendislikelytocontinue. Ina2000decision,theSupremeCourtheldthatArticle75 of the LFTSE, which prohibited any automaticrenewal of appointments within a trade union, wasunconstitutionalbecauseitpreventedthere-electionoflaborunionleaders.Thiswasthefirstsuchruling,soitdoesnotconstituteacompulsoryruling.

3.TypesofRepresentation

Unionsmayrepresentitsmembersateitherthenationalor local levels. In order to gain official recognition,unionsmustregisterwiththeSecretariatofLaborandSocialWelfare in caseswhere the federal governmenthas jurisdiction, and with the local conciliation andarbitration board in cases of local jurisdiction. Legalregistrationofaunionrequiresthefollowing:

• acertifiedcopyofthebylaws;• inthecaseoflaborunions,thenamesandaddresses ofthemembersandtheiremployers;• acertifiedcopyoftheminutesofthegeneral meetingatwhichtheunionwasconstituted;and• acertifiedcopyoftheminutesofthegeneral meetingatwhichtheboardofdirectorswaselected.

Once these documents are submitted, the registeringauthority (i.e., STPS or the local conciliation andarbitrationboard)has60daystoissuetheregistration.Registration may be denied only in the followingcircumstances:

• theuniondoesnotfulfilthelawfulpurposesspelled outinArticle356(i.e.,forlaborunions,“thestudy, advancement,anddefence”ofworkers’interests);• theuniondoesnothavetheminimumnumberof members(20workersorthreeemployers)required byArticle364;or• theunionfailstosubmitallthedocumentsrequired byArticle365.

Inthosecaseswheretheregisteringauthorityhasnotreachedacertificationdecisionwithinthe60-dayperiod,theprospectiveunionmaydemandthatregistrationbecarriedout.Iftheauthoritydoesnotactwithin3daysofthedemand, the registration is automatically granted,and theauthority is required to issue theappropriatedocumentation. However, a problem arises when theabove procedure is followed and the authority does

not formally grant registration. Article 692, Section IVprovidesthat:

union representatives will accredit their status by means of the certification issued by the Secretariat of Labor and Social Welfare or the local Conciliation and Arbitration Board, indicating that the Board of Directors of the union has been registered.

Clearly,ifregistrationhasnotoccurred—andtheSTPSorlocalconciliationandarbitrationboardhasnotissuedacertification—thentheunionwillnotbeabletopursuelegal proceedings, which include, for a labor union,callingastrikeorenteringintoacollectiveagreement.Where certification has been delayed, the unionmayinitiateawritofamparosuit(juiciodeamparo)againsttheauthoritythathasdenieditsregistration.

Aunioncannotbedissolvedorsuspended,norcanitsregistration be cancelled, by administrative decision.Cancellingtheregistrationrequiresalegalprocessthatdemonstratesthattheunionhasbeendissolvedoritnolongercomplieswithlegalrequirements.Aunioncanbedissolvedonlywhenitissoagreedbytwo-thirdsofitsmembership orwhen the term specified in its bylawshasexpired.

4.NumberofRepresentatives

TheFLLdoesnotprovidehowaunion’sboardofdirectorsshould be constituted, although reference ismade to“general,”“internal,”and“recording”secretariats.Thisinformationismostcommonlycontainedintheunion’sbylaws.Non-Mexicannationalsmaynotbemembersoftheboardsofdirectorsof laborunions.Theboardsofdirectorsmustrenderanaccounttothefullmembershipatleastevery6monthsregardingtheadministrationofunionfunds.

Some labor unions—especially the larger ones—aredivided into sections representing specific groups ofworkers, work areas, specialties, etc. These sectionsdonothave,asageneralrule,theirownlegalstandingandincollectivemattersmustactthroughtheboardofdirectorsoftheprincipalunion.

Unionsarerepresentedbytheirsecretarygeneralorbyapersonappointedbytheboardofdirectors,unlessthebylawsprovideotherwise.Ifamemberoftheboardofdirectorsofalaborunionisterminatedbytheemployer,orceasestoworkforreasonsimputabletotheemployer,


23

the worker will continue to exercise his or her unionduties,exceptwherethebylawsprovideotherwise.

The general membership meeting is the supremedecision-making body of a union. The bylaws mustspecify the manner in which general membershipmeetings should be convened, the intervals at whichthey should beheld, and the requiredquorum. If theboardofdirectorsdoesnotholdageneralmembershipmeetingasspecifiedinthebylaws,inatimelymanner,one-thirdofthetotalmembershipoftheunionorthesectionmayrequestthatsuchameetingbeconvenedwithin a period of 10 days. If this is not done, in thecase of labor unions, the workers may convene themembership meeting. Such a general membershipmeetingshallbedeemedtobevalidonlyiftwo-thirdsofthetotalmembershipoftheunionorthesectionattend.

5.AppointmentofRepresentatives

TheFLLdoesnotprovidehowaunion’sboardofdirectorsshould be constituted, although reference ismade to“general,”“internal,”and“recording”secretariats.Thisinformationismostcommonlycontainedintheunion’sbylaws.

6.TasksandObligationsofRepresentatives

Unions are under a permanent obligation to reportperiodicallytothelaborauthoritiesanynewmembers.They must also advise the labor authorities of anychanges in the board of directors or amendments totheirbylaws.Thedeadlinefordoingso10daysfromthedateinwhichthechangeoccurs.Moreover,unionsmustfurnishauthoritieswithreportsthatmayberequestedwithregardtoanyactionstheyhavetaken.

7.Employees’RepresentationinManagement

Workers have no representation in the company’sManagement.


24


25

Employees also have the right to designaterepresentativestobepartofmixedcommissions(safetyand health, profit-sharing, training, productivity anddevelopment,andthelike),forwhichtheyneednotbeunionized.Meetingsofworkersforthesepurposesare,strictlyspeaking,temporaryaccordsfortheprotectionoftheirmutualinterests—thatis,coalitions.

These possibilities generate the potential that groupsof workers could pursue claims collectively in theconciliationandarbitrationboards,although,inpractice,theseactionshardlyeveroccur,atleastatthepresenttime.

Xii. othEr typEs of EmployEE rEprEsEntativE BodiEs


26

1. LegalFramework

ThesocialsecuritysysteminMexicoisgovernedbytheSocialSecurityLaw(LSS)of1995,whichwentintoeffectonJuly1st,1997.TheMexicanSocialSecurityInstitute(IMSS) is responsible for administering social securityprograms. The IMSS is a quasi-official entity, undertripartite(government-worker-employer)management,whoseexecutivedirectorisappointedbythePresidentoftheRepublic.

a. covEraGEIngeneral,socialsecuritycoverageiscompulsoryforallworkers,includingmembersofproductioncooperatives,worker-run and joint worker-management-runcompanies,traditionalagrariancommunitiesofcommonownership (ejidatarios), joint property communities(comuneros), small farmers (colonos), small propertyownersorganizedingroups,andlocalsocietiesorcreditunionscoveredbytheAgriculturalCreditLaw.

2. RequiredContributions

Thesocialsecuritysystemisfinancedfromcontributionsby workers, employers, and the government. Thecontributions are based on salary levels. However,workers do not make contributions if they earn themonthly minimum wage in their geographic area.Themaximum salary amount used to calculate socialsecuritycontributionsis25timesthemonthlyminimumwageinMexicoCity. Within this minimum/maximum range, employeecontributionsare2.00percentofearningsforretirementbenefits,plus3.15percentofearningsfordisabilityandsurvivorbenefits.Foremployers,thecontributionrateis5.15percentofcoveredpayrollforretirementbenefits.Governmentcontributionsamountto7.43percentofcoveredearnings,plusanaverageflatrateofMXN$4.07(depending on salary range) for each day a workercontributes for retirementbenefits, and .125per centofcoveredearningsfordisabilityandsurvivorbenefits.

Contribution rates, limited to earningsup to 25timestheminimumwage,forsickness,medical,andmaternitybenefitscurrentlyareasfollows:

Contributionsforday-carebenefitsarepaidentirelybythe employer and are equal to 1 per cent of coveredpayroll,subjecttotheminimumandmaximumearningslimits.

Workers with at least 52 weeks’ worth of paymentsinto the social security system, and who withdrawfor whatever reason, are entitled to continuemakingvoluntarypayments.Shouldtheworkerobtainsalariedemploymentagain,theworkermayreturntothesystemandmaintainallbenefits.

The compulsory nature of social security means thatworkers are automatically covered by virtue of beingworkers, whether or not they are registered in thesystem. If there isanomission in registeringaworker,theemployerisresponsible.

3.Insurances

The social security system protects workers in thefollowingmatters:• occupationalaccidentsandillnesses;• old-age,retirement,andsurvivorpensions;• disability;• sickness;• medicalbenefits;• maternity;• daycareforchildrenofinsuredworkers;and• socialservices

Xiii. social sEcurity / hEalthcarE / othEr rEquirEd BEnEfits

Salaries Up to 3 Times

Minimum Wage

Salaries Over 3 Times

Minimum Wage

Employer 20.40% 1.10%

Employee N/A .40%

Government 13.255% National CPI

Total 33.65% 1.50%


27

4. RequiredMaternity/Sickness/Disability/AnnualLeaves

a. prEGnancy lEavEWorking mothers are entitled to forty-two days priorto childbirth as pregnancy leave, and the IMSS paysthem100%oftheirregisteredsalaryduringsuchleave.Moreover,workingmothersmayrequesttheemployertransferuptofourweeksofpregnancyleaveinordertoenjoythemafterchildbirth.

B. matErnity lEavEWorking mothers are entitled to forty-two days afterchildbirth as maternity leave, with the IMSS payingthem100%oftheirregisteredsalary.

Statutorymaternityleavemaybeextendedasnecessaryifworkisnotpossiblebecauseofthepregnancyorthedelivery. During the maternity leave, the employeereceivesherregularsalary.Duringthenursingperiodof6months,thenewmotherisentitledtotwoadditional thirty-minuterestperiodsperdaytofeedthechild, inanadequateandhygienicplacesetasidebytheemployer.

Whenreturningfrommaternityleave,theemployeeisentitledtoreinstatement,providedthatnotmorethanoneyearhaspassedsincethedateofdelivery.Maternityleaveisincludedinthelengthofservice.

c. mEdical or sick lEavEAnemployeeisentitledtosickleavedependingonthetypeofillnessanddegreeofdisability.Incaseofillnessor injury, an employee must obtain a doctor’s orderfrom the IMSS. The IMSS determines the employee’sentitlementtosickleaveaswellastheamountpaidtotheemployeeduringtheillnessorinjury.TheIMSS,nottheemployer, pays theemployee’s incomeduring theleave.

Thereisnomandatoryunpaidmedicalleaveofabsencein Mexico. If the employee needs an unpaid medicalleaveofabsenceduetoaconditionnotrecognizedbytheIMSS,thentheemployerhasthediscretiontogranttheleave.

d. injury at workTheFLLprovidesleavedueto:

(1) Occupational Injuries: defined as any accident ordisease to which the employees are exposed in the

course of their employment, or any consequencesthereof;

(2) Industrial Accident: defined as any organic injury,functional disturbance (whether immediate orsubsequent)ordeath,occurringsuddenlyinthecourseoftheemploymentorasaresultthereof(i.e.,theplacewhereorthetimewhentheaccidentoccursisrelatedtotheemployment);or

(3)OccupationalDiseases:definedasanypathologicalconditionarisingoutofthecontinuedactionofacausethathasitsoriginormotiveintheemploymentorintheenvironmentinwhichtheemployeeisobligedtorenderhisorherservices.

The consequences of any of the injuries describedabove,andthetermtheymaylast,accordingtotheSSL,areasfollows:

TheeconomicbenefitspaidbytheIMSSdueto illnessarebasedon60%of theemployee’s registeredsalary,andtheyarepaidasofthefourthdayofabsence.

TheSSLestablishestheperiodsof leavedependingonthedivisionofthecompulsorysocialinsuranceplan:

E. annual lEavEWorkers are entitled to 6 vacation days after beingemployed for one year, and to 2 additional days foreachsubsequentyear,uptoamaximumof12days.Asofthefifthyear,theworkerisentitledto14workdays’vacation; for each additional group of five years, twomorevacationdaysareadded.

Employers must pay workers a vacation premiumequivalent to 25per cent of the salary earnedduringthevacationdays.

Vacationsmustbe takenon thedate indicatedby theemployer, within 6 months following the worker’sanniversarywiththeemployer.

Injury Period of Leave Temporary disability 52 weeks (which may be extended to an additional period of 52

weeks). Permanent partial disability

Permanent leave. Payment is through the IMSS according to the amounts established in FLL.

Permanent total disability

Permanent leave. Payment is through the IMSS according to the amounts established by the FLL.

Division Period of Leave Workers compensation insurance for job-‐related injury and illness

According to the above-‐mentioned outline.

Illness 1 day to 52 weeks.

5.MandatoryandTypicallyProvidedPensions

a. disaBility BEnEfitsFordisabilitybenefits,theIMSSretainsresponsibilityforthe management and collection of contributions, butprivateinsurancecompaniesprovidebenefits.

Workerswhowerefirst coveredby the social securitysystempriortoJuly1st,1997areeligibleforadisabilitypension if theyareassessedwithapermanent50percentreduction innormalearningcapacityandhaveatleast 150 weeks of contributions. Other workers areeligible for a disability pension if they are assessedwithapermanentlossofatleast75percentofnormalearningcapacityandhaveat least150weeksofsocialsecuritycontributions,oriftheyareassessedwithalossof50–74percentofnormalearningcapacityandhavealeast250weeksofcontributions.TheIMSSassessesthelevelofreducedearningcapacity.

Disabilitypensionbenefitsareequal to35percentoftheworker’saverageadjustedearningsduringthelast500weeksofcontributions.Inaddition,15percentoftheworker’spension ispaidforawifeorpartner,and10percentispaidforeachchildyoungerthanage16(age25ifastudent,noagelimitifdisabled).Ifthereisnowife,partner,orchild,10percent ispaid foreachdependentparent.Aworkerwhorequirestheconstantattendanceofotherstoperformdailyfunctionsisalsoeligible to receivea constantattendanceallowanceofupto20percentofthepensionamount.

Adisabilitypensionissubjecttoaguaranteedminimum.AsofJanuary1st,2013,themonthlyminimumpensionamountwasMXN$1,969.78(approximatelyUS$106.07),for workers covered by the pre-1997 system, orMXN$2,253.76(approximatelyUS$121.36),forworkerssubject to the reformed system.Benefitsareadjustedannually inFebruaryaccordingtochanges inthepriceindex.DisabledworkersalsoareentitledtoaChristmasbonus equal to 15 days of pension benefits withoutsupplements.

Ifaworkeriseligibleforadisabilitypensionandhasanindividual retirement account with a balance greaterthan theminimum pension, he or shemaywithdrawtheamountexceeding theminimumpension, use theexcess amount to purchase an annuity, or apply theexcessamounttosurvivorbenefits.

B. rEtirEmEnt BEnEfitsEffective July 1st, 1997, the Mexican pension systemwas reformed fromadefinedbenefit system,withoutany change for workers who were pensioned beforethat date. The current pension system inMexico is afullyfundeddefinedcontributionsystembasedonthreepillars:

• aminimumguaranteedpensionforlow-income workers;• mandatoryindividualsavingsaccountswith competitivemutualfundmanagement;• voluntarysavings.

Normal retirementbenefitsareavailable tobothmenandwomenwhohavereachedage65andwhohaveatleast 1,250 weeks of social security contributions. Anearlyretirementbenefitisavailableatage60.

The first pillar of the Mexican pension system, theminimumpensionguarantee isequal to theminimumwage on July 1st, 1997, indexed for inflation. As ofJanuary1st,2013,themonthlyminimumpensionwasMXN$2,253.76(approximatelyUS$121.36).

Thesecondpillarisbasedondefinedcontributionsandindividualaccounts.TheIMSScollectsthecontributionsand places them in the worker’s account, but theaccounts are managed by private retirement fundadministrators(AFOREs).Atretirement,theworkerhastwooptions:

• receiveperiodicpaymentsoralumpsumdirectly fromtheAFORE;or• transfertheaccountbalancetoaninsurance companyandbuyanannuity

Various factors determine the amount of the pensionbenefit: the number of contribution years; the periodover which the pension is distributed; the annualaverage investment yield on the individual’s account;andtheAFORE’sfees.

Workers who started contributing prior to the 1997reformcanchoose,atthetimeofretirement,thehighestbenefitscomputedunderthetwosystems.

c. survivor BEnEfitsSurvivorbenefitsarepayableprovidedthatthedeceasedworkerwasapensionerandmadeatleast150weeksofcontributionsatthetimeofdeath.


28

Survivorbenefitsarepayabletoasurvivingwidoworapermanentlyandtotallydisabledwidowerinanamountequal to 50 per cent of the pension thatwould havebeenpaidtotheworker.Eachsurvivingchildunderage16receivesabenefitequalto20percentoftheworker’spension,or30percentifthechildisanorphan.Ifthereisnoeligiblespouseorchild,abenefitequalto20percent of the worker’s pension is paid to each person.Survivorbenefitsmaynotexceed100per centof thepensionthatwouldhavebeenpaidtotheworker.

Uponthedeathofacoveredworker,thesocialsecuritysystempaysafuneralbenefittothefamilyequaltotwomonths’oftheworker’ssalary.


29


30

DeLaVega&MartinezRojasS.C. (DLMVR) isdevotedexclusively to representing management in MexicanLabor Lawmatters. DLVMR is led by prominent laborand employment law partners Oscar De La VegaGomez and Dr. Ricardo Martinez Rojas. A team ofseventeen associates lends support to DLVMRs laborand employment law practice. DLVMRs network ofspecialists inMexicoCityand throughout thecountry,offersmultinationalsinnovativelaborandemploymentlawsolutions,withspecificexpertiseinlitigation,adviceand counseling, benefits planning and negotiatingcollectiveagreements.

www.dlvmr.com.mx

This memorandum has been provided by:De La Vega y Martínez Rojas, S.C.Carretera Federal México – Toluca 5422, Piso 4Colonia El Yaqui, Delegación CuajimalpaCiudad de México, C.P. 05320P +5255 4163 2100

contact usFor more information about L&E Global, or an initialconsultation,pleasecontactoneofourmemberfirmsor our corporate office.We look forward to speakingwithyou.

L&EGlobalAvenueLouise221B-1050,BrusselsBelgium+3226432633www.leglobal.org

dE la vEGa & martinEz rojas, s.c. l&E GloBal mEXico

Thispublicationmaynotdealwitheverytopicwithinitsscopenorcovereveryaspectofthetopicswithwhichitdeals.Itisnotdesignedtoprovidelegalorotheradvicewithregardtoanyspecificcase.Nothingstatedinthisdocumentshouldbetreatedasanauthoritativestatementofthelawonanyparticularaspectorinanyspecificcase.Actionshouldnotbetakenonthisdocumentalone.Forspecificadvice,pleasecontactaspecialistatoneofourmemberfirmsorthefirmthatauthoredthispublication.Thecontentisbasedonthelawasof2017.

L&EGlobalCVBAisacivilcompanyunderBelgianLawthatcoordinatesanallianceofindependentmemberfirms.L&EGlobalprovidesnoclientservices.Suchservicesaresolelyprovidedbythememberfirmsintheirrespectivejurisdictions.Incertaincircumstances,L&EGlobalisusedasabrandorbusinessnameinrelationtoandbysomeorallofthememberfirms.

L&EGlobalCVBAanditsmemberfirmsarelegallydistinctandseparateentities.Theydonothave,andnothingcontainedhereinshallbeconstruedtoplacetheseentitiesin,therelationshipofparents,subsidiaries,agents,partnersorjointventures.Nomemberfirm,northefirmwhichauthoredthispublication,hasanyauthority(actual,apparent,impliedorotherwise)tobindL&EGlobalCVBAoranymemberfirminanymannerwhatsoever.

http://www.dlvmr.com.mx

http://www.leglobal.org


2017

employment law overview · pdf fileb. bill amendin divgers provisions of the e federal labor...

Documents