New agreement on Outsourcing Reform

On April 5, 2021, The Mexican President Mr. Andres Manuel Lopez Obrador, Union and business leaders reached a new Outsourcing and Profit Sharing agreement.

The following is included in this new agreement:

  • Personnel outsourcing is banned,
  • Regulation of subcontracting of specialized services other than the corporate purpose and the main economic activity of the hiring company,
  • Registration in the STPS and in the Companies Subcontracting Specialized Services and Works Public Registry,
  • Joint and several liability in case of non-compliance; and
  • Grant of a three-month term for the subcontracted workers to become part of the current employer’s payroll.

Also, an agreement on Profit Sharing issue (PTU) was reached in order to prevent possible distortions on capital intensive companies thus creating two modalities for profit sharing calculation – limitation to three months of salary or the share average received in the last three years.

According to an analysis by the Ministry of Labor and Social Welfare (STPS), benefits for workers are as follows:

  • On average, workers will receive 57 days salary for PTU. Currently, workers are allowed to 22 days salary.
  • This accounts for $18,500.00 MXN in average.
  • This represents 2.59% increase compared to what they currently receive.

Has the outsourcing and profit sharing initiative already been approved?

No, it has not been passed again to the plenary of the Congress of the Union. Therefore, this new agreement may still undergo further changes before it is duly approved by the Legislation Chamber.

Is this a new law?

As a matter of fact, this is not a new law, this is an amendment to the initiative previously submitted in November last year.

When will it be discussed and, if necessary, approved?

Although there is still no specific date, it is expected to be approved before the Federal and Local elections which will be held on June 6, 2021.