On April 23, 2021, the reforms to the labor subcontracting regime, which had been under discussion, were finally published in the Federal Official Gazette.

The reformed laws which affect the private sector are: the Federal Labor Law (“LFT”), the Social Security Law (“LSS”), the Law of the National Workers’ Housing Fund Institute (“LINFONAVIT”), the Federal Tax Code (“CFF”), the Income Tax Law (“LISR”) and the Value Added Tax Law (“LIVA”).

The following are the most relevant aspects of the reform:

I.1. LFT

  • It includes the express prohibition of the subcontracting of personnel, which consists of “an individual or legal entity providing or making available its own workers for the benefit of another”.
  • Recognizes the participation, without employer liability, of employment agencies and intermediaries in the recruitment, selection, training and qualification of personnel.
  • Excludes from the concept of subcontracting of personnel the rendering of specialized services and the execution of specialized works, which are not part of the corporate purpose or the predominant economic activity of the beneficiary thereof.
  • It considers specialized the complementary or shared services and works rendered between the same business group, provided they are not part of the corporate purpose or the main activity of the company receiving them.
  • It establishes that the contracting of specialized services and the execution of specialized works must be formalized through a written agreement, establishing the purpose of the services or works to be executed, as well as the approximate number of workers that will participate in the performance of said agreement.
  • Establishes the joint and several liability of the contracting party regarding the contractor’s failure to comply with the obligations arising from the relationship with its employees.
  • The contractor must be registered with the Ministry of Labor and Social Welfare (“STPS”) and it will be included in a public registry that will be available on an internet website. The registry shall be understood as granted by an automatic or express affirmative decision of the STPS. The STPS shall deny or cancel at any time the registration of those contractors that do not comply with the requirements of the law. The aforementioned registry must be renewed every 3 years.
  • It establishes a sanction of 2,000 to 50,000 times the Unit of Measurement and Update (“UMA”) ($174K to $4.4 Million Pesos approx.), to those subcontracting personnel or providing specialized services or performing specialized works without the corresponding registration, as well as to the beneficiaries thereof.
  • It establishes a limit for the Employee Profit Sharing (PTU) of the company, consisting of 3 months of salary or the average of the participation received in the last 3 years, whichever is more favorable for the employee.
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