On April 23, 2021, a Resolution to amend numerous provisions of the Federal Labor Law (LFT) was published in the Federal Official Gazette (DOF); the Social Security Law; the Law of the Institute of the National Housing Fund for Workers; the Federal Fiscal Code; the Income Tax Law; the Value Added Tax Law; the Federal Law of Workers at the Service of the State, Regulatory of Section B) of Constitutional Article 123; the Regulatory Law of Section XIII Bis of Section B; and Article 123 of the Constitution (the Resolution).

The Resolution establishes that the outsourcing is prohibited, being understood as such when an indivual or an entity provides or makes available their own employees for the benefit of another. The outsourcing of specialized services or the execution of specialized works that are not part of the corporate purpose or the predominant economic activity of the beneficiary of these is allowed, provided that the contractor is registered in the public registry referred to in article 15 of the LFT.

Individuals or legal entities that provide subcontracting services must be registered before the Ministry of Labor and Social Security. To obtain the registration, they must prove that they are in compliance with their tax and social security obligations. Individuals or legal entities that provide outsourcing services without having the corresponding registry may be imposed a fine from 2,000 to 50,000 times the Unit of Measurement and Update.

To avoid a breach of the provisions of the Resolution, an employer substitution of the service company to the productive company shall be carried out. For the employer substitution to take effect, the goods that are object of the company or establishment shall be transferred to the substitute employer. This is a very important issue of the Resolution, since it deals with the right of employees to participate in the profits of the productive company for which they work, thus avoiding the intermediation of service companies as had been handled. The right of employees to participate in the distribution of profits, is established at the Constitutional level and now it must be adjusted to norms and rules that are very clear in the Resolution.

The Resolution entered into force the day following its publication in the DOF (i.e. April 24, 2021); except for certain points of the Resolution applicable to employees under the regime of Section A of Constitutional Article 123, which entered into force on September 1, 2021. Derived from the entry into force of the Resolution, employers must carry out an analysis to determine if they comply with the provisions of the Resolution, in order to, where appropriate, carry out modifications to the business model and applicable contracts in order to avoid the imposition of fines by the authority.

At Trejo Gutiérrez Abogados, we have a group of experts in labor matters with more than 20 years in the market. Please do not hesitate to contact us, we will be glad to provide more information regarding the content of the Resolution and its application, as well as any personalized legal advice you may require.