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Mexican worker’s compensation – Part II: Premiums and Dispute Resolution

Mexican worker’s compensation – Part II: Premiums and Dispute Resolution

This brief article is the second installation in a two part series on Mexican workers’ compensation. It concerns itself with  an introduction of the methodology that the Mexican Social Security Institute utlilizes for setting the premiums that employers must pay into the fund that is reserved for use by employees that have either been injured on the job, or have suffered occupational illnesses.  It also addresses dispute resolution.

Employer Paid Premiums

In Articles 41-43, the Mexican Social Security Law addresses how rates of workers’ compensation premiums paid by employers are determined. To determine payment rates, the Mexican Social Security Institute (IMSS) takes into account base salaries, and the average premium paid in particular industries. This is commonly referred to as accessing and applying a “risk” factor. The more dangerous the activity, the higher the risk factor, and, accordingly, the higher the premium paid by the employer. Mexico workers’ compensation classifies businesses in one of five categories. Category I is comprised of engaging in activities that are considered least dangerous. Companies that are in this group engage in activities such as art promotion, retail sales, social services and office work in general. Employers pay low premiums relative to companies that are classified as Category V in risk. Category V activities that include working in private and public works construction, operating heavy machinery and transport equipment, applying pesticides and chemicals, as well as other comparatively dangerous activities such as piloting airplanes.

After determining an average risk factor premium for each category, the IMSS creates a high range and a low range for each. Companies that are new to Mexico begin by making premium payments into the Mexican workers’ compensation funds at the highest rate that is applicable to their respective category. Over time, and as the company establishes a history of safe operations with IMSS, premiums paid into the fund will be reduced to lower levels within the applicable range. If a company transforms itself, and undertakes another activity, IMSS reclassifies the establishment in order that it begins to pay premiums that are commensurate with those paid by others businesses that are classified similarly.

Dispute Resolution

Since all private sector employment and labor activities in Mexico fall under the legal purview of the Federal Labor Law, there is only one entity that has been established by the Mexican Federal Government to involve itself in disputes that pertain to matters of Mexican workers’ compensation. The Conciliation and Arbitration Board deals with both individual and collective matters at the national level. Most Mexican workers’compensation disputes, however, are dealth with by local entities called Commissions for Labor Cooperation. Commissions for Labor Cooperation consist of a government representative, as well as a representative or representatives of the employer and the employee that are parties to a dispute. Under this system of labor conflict resolution, Mexican workers are entitled to government provided legal representation and advice.

Should the Commission, the employer and the employee come to an agreement in a dispute, the matter is considered settled. If one of the parties to the disagreement is dissatisfied with the resolution arrived at by the Commission, an appeal may be made to a local civil court through what is referred to as a “writ of amparo.” If the dispute is not resolved through amparo, it may be brought before the Mexican Supreme Court on appeal on a constitutional basis.

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