The Second Chamber of the Supreme Court of Justice of the Nation in Mexico recently issued guidance establishing that outsourcing does not violate the constitutional principles of legal certainty and freedom.
According to the guidance, outsourcing protects employees’ right to work. It covers issues regarding payment of employees’ wages and benefits (including social security). It also protects employees by requiring that the contracting party (or client) be considered the employer and cover the employees’ unpaid benefits in cases where the contractor does not comply with the obligations stipulated in the Mexican Labor Law.
The resolution issued by our Supreme Court agrees with our standard criteria. Outsourcing is a legal institution intended to protect employees so they can receive the appropriate benefits (including a profit sharing bonus). However, the parties must comply with all of the requirements in Mexico’s Federal Labor Law and the interpretation of outsourcing established by the Federal Labor Board.
Outsourcing occurs when a contractor (or employer) allows a contracting party (or client) to use its employees to execute work or provide a service for the contracting party. In this type of situation, the contracting party has the authority and the right to set the tasks of the contractor’s employees and to supervise and control the services rendered.
According to the Federal Labor Law, outsourcing is considered to be legal so long as:
- the hired services do not cover all of the activities—the same or similar in their entirety—that are performed in the workplace;
- the hired services have a specialized character; and
- the hired employees do not perform the same or similar tasks as the employees who provide direct services to the contracting party or client.
In addition, the following two criteria must be met:
- the outsourcing contract must be in writing; and
- the contracting party or client must verify that the contractor or employer is in compliance with all workplace security, health, and safety requirements.
The recent guidance used by the Court establishes that an outsourcing relationship must satisfy all of the requirements mentioned above because, in case of default (labor and/or social security obligations), the contracting party or client will be responsible for paying the hired employees’ benefits in order to protect the rights of those employees.
Hector G. Sada Miramontes is a 2015 graduate of the Universidad Anahuac del Norte and is currently awaiting his license to practice law issued by the Education Ministry in Mexico.