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Mexican labor law changes increase workforce flexibility

Mexican labor law changes increase workforce flexibility

After decades of employment-restricting regulations that many argued were a drag on the growth of Mexico’s economy, particularly in the realm of foreign direct investment, in 2012, the federal government passed sweeping Mexican labor law changes in a series of amendments that gave employers more freedoms and discretion in hiring and firing practices, in particular. Below is a brief look at some of the more significant amendments.

New obligations for employers
Employers have been given new obligations. They are required to register work centers with the National Fund Institute for Workers’ Expenditures (INFONACOT), provide handicap-friendly facilities if over 50 employees, withhold alimony payments from payroll checks, provide ongoing skills training, provide specific profit-sharing mechanisms for employees, and follow federally defined health and safety measures to ensure a safe workplace.

Wage changes
Dismissed employees in Mexico are now limited to 12 months of unpaid wages, if their termination is overruled. As a result of Mexican labor law changes, wages may now be determined by an hourly structure rather than by a daily calculation.

Employment agreements
New types of agreements were instituted under recent Mexican labor law changes, including:

Probationary Agreements
Employers now have the freedom to hire on a temporary basis (thirty days for general staff and up to 180 days for management candidates) not to be extended more than once per employee. Employment may be terminated without liability to the employee if the candidate did not prove worth.

Initial Training Agreement
Employers may now hire on a temporary basis (three-six months) not to be extended more than once per employee. Employment may be terminated without liability to the employee if the candidate did not prove worth.

Seasonal Agreements
Employers have the freedom to hire seasonal workers with all the rights of continuous employees and discontinue employment at season’s end without liability.

New termination causes
Causes for terminating employment without employer liability have been multiplied to include poor behavior in front of clients/customers, any harassment, and failure to provide required documentation for a period of over two months.

Maternity/Paternity leave
Six weeks leave is provided to mothers, even in cases of adoption, up to four of which may be used prior to birth. Nursing mothers receive a rest period of six months during which daily shifts are to be reduced by one hour, and two 30-minute nursing breaks are required during each shift. Fathers must receive at least five paid days of leave as well.

Subcontracting
Subcontracting is to be defined as the legal relationship by which an entity, known as a “contractor”, carries out works or renders services through its own employees in favor of a contracting party/client (individual or entity), which specifies and supervises the activities to be carried out by the contractor. Subcontracted work bust be demonstrably unique from that performed by employees, not all duties may be outsourced, and several other criteria must be met or the subcontractors will be considered employees.

Hearings
In the event of conflict, the hearing process has been simplified as a result of Mexican labor law changes by division into two more focused hearings, rather than one: the first for settlement, demand, and exceptions, and the second for the offering and admission of evidence.

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