25 Nov Compliance with the Outsourcing Reform
As of September 1st, 2021, the authority is verifying compliance with the new provisions of the Labor Reform regarding outsourcing hiring scheme regulation, and therefore, it may sanction companies that continue operating under such contracting schemes.
The reason for the verification of compliance is the result of the labor reform enacted on April 23rd, 2021, and upon the conclusion of the extension term originally granted to employers to regulate their hiring schemes.
The main aspects contemplated by the reform, were the following:
· Outsourcing: Prohibits the implementation of the Outsourcing of Personnel. This is understood when an individual or legal entity provides or makes available its own employees for the benefit of another.
· Specialized services and/or works: Foresees the possibility to render and/or provide specialized services to any legal entity if said services are different from the beneficiary’s core businesses or economic purposes.
· Complementary and/or Joint Services: Foresees that the services or complementary services provided between companies of the same business group will also be considered as specialized if those are not services similar and/or identical to the contractor’s core business (corporate purpose) or economic purposes.
· Employment agencies or intermediaries: Employment agencies or intermediaries that are involved in the personnel hiring process may participate in the recruitment, selection, and training, among others. These will not be considered employers since this character belongs to those who benefit from the services.
· Profit Sharing: The amount of the Employee´s Profit Sharing is capped to three months of the employee’s salary, or the average of the participation received in the last three years; the amount that is most favorable to the employee will be applied.
In consequence, to protect the interest of companies doing business in Mexico, and to prevent liabilities with labor, tax, and social security authorities, it is important to take the following actions:
COMPANIES PROVIDING SPECIALIZED SERVICES
a) Have an authorization certificate issued by the Ministry of Labor and Social Welfare (STPS, by its acronym in Spanish), that validates the specialized character of the services to be rendered and its complete fulfillment to labor, social security, and tax obligations, which must be renewed every three years.
b) Execute a Specialized Services Agreement for the provision of services.
c) Submit quarterly reports to the STPS, the Mexican Institute of Social Security (IMSS, by its acronym in Spanish), and National Workers Housing Fund Institute (INFONAVIT, by its acronym in Spanish), regarding the executed Specialized Services Agreements.
d) Provide the contractor with the following documents: STPS authorization certificate, payment of salaries tax receipts, payments of withholding taxes receipts on employer contributions, etc.
COMPANIES CONTRACTING SPECIALIZED SERVICES
a) Verify that the provider of services has a certificate issued by the STPS that validates the specialized character of the services to be rendered.
b) Verify that the specialized services are different from those of the company’s core businesses or economic purpose.
c) Confirm that the service provider has its own resources to fulfill their labor, social security, and tax obligations, including a physical address and economic capacity to comply with commercial obligations.
Finally, the following are the most relevant sanctions or fines provided in the labor reform:
a) VAT and Income tax will not be deductible or creditable on the invoices issued by the subcontracting entity.
b) Not complying with outsourcing obligations or the use of simulation schemes for the provision of specialized services will be subject to criminal liability (deemed fraud).
c) Not complying with outsourcing obligations or the use of simulation schemes for the provision of specialized services will qualify as evasion of social security contribution payments.
d) If more than 3 individuals participate in fraudulent outsourcing schemes, the Public Prosecutors Office may deem such participation as organized crime.
e) The employer who does not allow the inspection and supervision of these new provisions by the labor authorities, will be subject to a fine ranging from 250 to 5000 times the Unit of Measurement and Update (approx. from $1,125.39 USD to $24,512.29 USD).
f) Fine ranging from 2,000 to 50,000 times the Unit of Measurement and Update (approx. of $9,002.42 USD to $225,060.47 USD) to individuals or legal entities that provide subcontracting services and/or develop specialized services or works in favor of a third party without having the corresponding registry.
If you have any additional questions or comments, please do not hesitate to contact us.
Contact
Gerardo Valencia García de Quevedo
gvalencia@cuestacampos.com
Karla Paola Jiménez
kjimenez@cuestacampos.com
Sandra Chávez
schavez@cuestacampos.com
José Antonio Gallástegui Bazúa
jgallastegui@cuestacampos.com
The above is provided as general information prepared by professionals with regard to the subject matter. This document only refers to the applicable law in Mexico. While every effort has been made to ensure accuracy, no responsibility can be accepted for errors or omissions. The information contained herein should not be relied on as legal, accounting or professional advice being rendered.