Background

On December 1 2012 a substantial amendment to the Federal Labour Law became binding. The reform included several important modifications to the regulation of employment relationships in Mexico.

The amendment to the Federal Labour Law introduced Article 101(2), which provides:

"Salary in cash shall be paid precisely in legal currency, not being permitted to do so with goods, vouchers, tokens or any other representative sign intended to substitute the currency.

With previous consent of the worker, payment of salary can be made by means of deposits in a banking account, debit card, wire-transfers or any other electronic means. The expenses and costs originated by these alternative means of payment shall be covered by the employer."

This provision was almost immediately challenged by certain unions by means of amparo trials (ie, constitutional appeals) before the federal courts, which claimed that it was unconstitutional and violated workers' rights:

  • to receive their salaries on working days and at the workplace;
  • to dispose freely of their salaries; and
  • not to incur deductions from their salaries, especially due to commissions charged by banks.

These claims were mainly based on the following arguments:

  • The new provision was contrary to Article 123(A)(X) of the Constitution, which states that "salary shall be paid precisely in legal currency", and this should be interpreted in the sense that salary must necessarily be paid in cash, as set out in Articles 3, 5, 6, 8, 9 and 13 of the Protection of Wages Convention 1949.
  • If considered otherwise (ie, that a different system could be implemented to pay salaries, such as bank deposits or wire transfers), workers' abovementioned constitutional rights would be violated.

Supreme Court decision

On February 12 2014 the second chamber of the Supreme Court of Justice issued a final resolution (published in the Weekly Judicial Gazette on June 6 2014) which confirmed that Article 101(2) of the Federal Labour Law is not unconstitutional; nor does it violate workers' abovementioned constitutional rights. The court based its conclusions on the following grounds:

  • The fact that Article 123(A)(X) of the Constitution states that "[s]alary shall be paid precisely in legal currency, not being permitted to do so with goods, vouchers, tokens or any other representative sign intended to substitute the currency" does not mean that salary should necessarily be paid in cash, or that it is impossible to implement as a system of payment deposits or wire transfer into bank accounts. Rather, the provision simply prohibits the payment of salary by means of representative signs intended to substitute for currency.
  • The foregoing interpretation is consistent with the conclusion of the Committee of Experts in Application of Conventions and Recommendations regarding payment of salary by means of wire transfer, in accordance with Article 3(1) of the Protection of Wages Convention 1949. The committee established that payment of salary via wire transfer is considered payment made in legal currency and not an excluded payment method under the convention.
  • Article 101(2) of the Federal Labour Law simply presents a catalogue of possible means by which salary can be paid to workers.
  • Payment of salary through bank deposit, wire transfer or other electronic means constitutes an option for workers, since the new provision clearly states that the worker's consent is required. Thus, if a worker does not consent to such payment methods, he or she may receive his or her salary in cash.
  • Mexican legislation in general offers reasonably sufficient guarantees to protect workers' salaries deposited into bank accounts. Specifically, if a worker consents to receiving his or her salary by means of wire transfers into a bank account, Article 48bis2 of the Law on Credit Institutions states that banking institutions must offer a basic payroll product that is exempt from commission charges for opening an account, making withdrawals or any other transaction. Mexican law also requires banks to be able to transfer salaries paid to workers to any bank chosen by them, without a commission charge for the transfer.

The Supreme Court's final resolution produced jurisprudence – Court Precedent 2a/J 50/2014 (10a).

Comment

Although the Supreme Court ruled that Article 101(2) of the Federal Labour Law is not unconstitutional and does not violate workers' constitutional rights regarding payment of their salaries, the interpretation of the final resolution raises the following issues:

  • It has been confirmed that payment of salaries through bank deposit, debit card, wire transfer or other electronic means is completely optional for workers and thus requires their express consent.
  • Workers have the legal right to refuse at any time to receive their salaries through such electronic means, even if they have previously agreed to it.

Consequently, employers are advised to:

  • include in all employment agreements (existing and future), as well as in all payroll receipts, specific acknowledgment that by signing the agreement/receipt, the worker expressly consents to receiving his or her salary and benefits through bank deposit, debit card, wire transfer or other electronic means; and
  • have workers sign all payroll receipts.

For further information on this topic please contact Fernando A Gonzalez Arriaga at Santamarina y Steta by telephone (+52 664 633 7070) or email (fgonzalez@s-s.mx). The Santamarina y Steta website can be accessed at www.s-s.mx.

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