Image credits: Tomas Gawlowski
News Article

Outsourcing Reform Deadline Extended

By Jorge Ramos Zwanziger | Tue, 07/27/2021 - 12:33

Last Friday, IMSS’s Technical Council authorized a deadline extension for the implementation of the changes required by the Labor Law Reform, announced IMSS. The initial timeline, published in the Official Journal of the Federation on April 23, 2021, had given companies 90 natural days to make necessary adjustments but many businesses had failed to meet all requirements by the original deadline of July 24. The institute authorized the extension to give those companies more time to make the necessary adjustments. President Andrés Manuel López Obrador applauded the decision to give an extension to companies saying “It is for companies to prepare and adjust to the new scheme,” as reported by MBN.

According to IMSS, the decision was made to “safe keep the rights of workers and their families, as well as to support employers or obligated subjects in the fulfillment of their obligations regarding social security.” An analysis of the impact of Outsourcing Reform in Mexico by Mercer Latin America published explains that it could be beneficial for collaborators and companies. “We must not stop seeing that these reforms are positive for the employee and a great challenge for companies looking to improve and that for others it prevents the poor practice of not declaring full wages [to IMSS] and to the Treasury, which affected the collaborator’s retirement plans and healthcare,” explained Mercer.

Before the Reform, outsourcing in Mexico was deemed problematic. Guido Van Der Zwet, General Manager-Commerce for IPS Powerful People, told MBN that many companies would use outsourcing to avoid a direct relationship with employees, shield themselves against lawsuits and employer responsibilities, avoid sharing profits and pay less in taxes and social security.

Has the Impact Been Positive?

According to Mercer, 24 percent of the companies it surveyed have tried to mitigate the financial impact of the outsourcing reform by avoiding raises, which negatively impacts collaborators. However, the company’s study does show that 85 percent of outsourced employees will be absorbed by the company. “Each company, project and employee is unique, and a personalized solution is out there for everyone, depending on the current situation and structure of the company, its future plans and outlook,” explained Van Der Zwet.

The data used in this article was sourced from:  
MBN, IMSS, Mercer
Photo by:   Tomas Gawlowski, Unsplash
Jorge Ramos Zwanziger Jorge Ramos Zwanziger Junior Journalist and Industry Analyst