Guidance Helps Navigate Labor Law ComplexitiesWed, 05/08/2019 - 12:51
Q: In which areas do companies usually face the most legal issues and how does Pizá Attorneys at Law assist them?
A: Bureaucracy is always the first obstacle that companies face. Mexico puts up too many administrative obstacles for a new company to be legally constituted. Regarding labor issues, companies must not neglect the execution of a collective bargaining agreement. In Mexico, there is a conciliation hearing that forces employers to sign a collective bargaining agreement at risk of facing a labor strike. This contract is one of the first things that a company should have in Mexico before it starts doing business.
Once the company is established, the hiring process begins and employers must decide not only who they want to hire but how they want to hire them. The Federal Labor Act outlines many types of contracts that must be used according to the needs of the company, such as seasonal or hourly contracts. Our function is to provide clients with the guidance to understand their needs and what is best for them. If companies do not hire people properly, it is likely that they will end up in a lawsuit. On the contrary, if companies have adequate hiring practices and are ethical and professional, they are less likely to experience problems when deciding to terminate an employment relationship.
Q: How can you adapt what can be seen as a rigid law for employers to meet the current needs of businesses?
A: The Mexican Labor Law approved in the 1970s was designed to protect the employee from the employer. The employer referred to by the law is the archaic figure of employers who owned everything and tried to underpay their workers or exclude them from IMSS and other benefits. However, employers have evolved since the law was approved. Our firm provides advice to companies on how to work with the law. For instance, if you hire a new employee, the first problem you will find is IMSS and that you must pay between 28 and 35 percent of a worker’s salary to the institution. This means that you must register your employees with IMSS, a process for which it is necessary to meet more than 100 requirements. The difficulty of these processes reinforces the desire of companies to contract outsourcing companies to avoid this administrative burden.
Q: What impact will the proposed changes to the outsourcing model have on the Mexican labor market?
A: It is difficult to say since we are waiting for secondary regulation, but with the general law we have today there is already an impact. The only form of outsourcing allowed is for specialized tasks, which means that the outsourcing companies that can operate are those that act as intermediaries. However, the legal consequence of this situation is that companies that hire intermediaries automatically become employers. At the end, employers want to protect themselves because the federal law protects the employee, so the government needs to balance this. The way that employers have found around this situation is through subcontracting companies. As in any other sector, there are good and bad outsourcing companies. The law must identify which ones do not pay the corresponding taxes or that do not do their work according to the current law.
Q: What paradigm should the country follow to guarantee a modern labor law?
A: We need legislation in which the employer and the employee, depending on the industry, agree on how they will operate. Our law is very protectionist. What people want is to be able to work and for that, the law should allow employers and employees to decide on those issues, always respecting a minimum standard.
Q: What role does Pizá Abogados wants to play in the coming years?
A: We have experienced significant growth over the past eight years. We are very practical with companies and we do not lie to them. We need to prevent employers and employees from acting contrary to the law and to be very strict in this regard. Although it might be harder, companies need to act according to the law and we want to be their ally in this process.