The Mexico Supreme Court issues a criterion regarding the 2021 subcontracting reform and its application.

Hogan Lovells

[co-author: Juan Pablo Vázquez, José Pablo Saenz]

In recent days, the Mexican Supreme Court of Justice ruled on the constitutionality of the Labor Reform on Subcontracting Matters, effective as of April 2021, and issued an important precedent in this regard.

The Supreme Court has resolved that the Labor Reform is constitutional because it considers that "the limitation to the figure of subcontracting is justified by the need to eliminate those practices that diminish labour rights of workers and the public treasury; also because they reduce the obligations of employers to recognize their rights".

Likewise, the Supreme Court has ruled on the Accord that was issued by the Ministry of Labor and Social Welfare ("STPS") in May 2021, that determined which categorized specialized services and how these should be considered for its engagement between private parties.

In particular, the Supreme Court established that the STPS exceeded its powers by establishing or defining specialized services beyond what was provided by the legislator in the Labor Reform, since in an interpretation of the Federal Labor Law specialized services are comprised solely and exclusively by two items:

  1. Those services and works different from the corporate purpose of the beneficiary of the services; and.
  2. Those services and works different from the core business activity of the beneficiary of the services.

With the foregoing, the Supreme Court sets an important precedent by concluding that the STPS does not have the authority to define what should be understood as specialized services or works.

We believe that this criterion should be taken into account by the authorities when inspecting and sanctioning specialized services subcontracting regimes, making it clear that it will be enough to comply with the two elements provided by the Federal Labor Law for it to be duly adjusted and in compliance with the regulations.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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