Mexico Increases the General Minimum Wage

New Legislation Enacted

On December 16, 2020, the National Minimum Wage Commission (CONASAMI for its acronym in Spanish) announced that Mexico’s minimum wage would increase to $141.70 Mexican pesos per day, effective January 1, 2021. It appears the new minimum wage was determined by adding $10.46 Mexican pesos through the so-called Independent Recovery Amount (MIR) and applying a 6% percentage increase. The MIR is a fixed peso amount intended to maintain the purchasing power of the minimum wage. Therefore, the minimum wage in force for 2021 implies a global increase of 15%.

The CONASAMI also agreed to increase the minimum wage for the Free Economic Zone of the Northern Border to $213.39 Mexican pesos per day, effective January 1, 2021, representing a 15% increase.

Mexico’s President Introduces Proposed Subcontracting Reform with Important Implications for the Business Community

Proposed Bill or Initiative

On November 12, 2020, Mexico’s President Andrés Manuel López Obrador announced in a press conference that he is officially introducing an initiative to Congress to reform subcontracting. If approved, the proposal would modify various laws, including the Federal Labor Law (LFT), the Social Security Law, the Law of the Institute of the National Housing Fund for Workers, the Federal Fiscal Code (CFF), the Income Tax Law and the Value Added Tax Law. This bill will have to pass the legislative process before it is published in the Federation’s Official Gazette. With Morena, the President's political party, having a majority in both chambers of Congress, however, it is likely that the initiative will pass through without much opposition or amendments.

Among other proposed changes, the proposed bill expressly prohibits subcontracting, defined as the practice of providing or making available workers for the benefit of another person or legal entity. To adopt this new definition, articles 15-A to 15-D of the LFT—which have been regulating subcontracting since the reform of December 2012—would be repealed. Further, a contractor would be allowed to provide services or perform specialized works that are not part of the corporate purpose (or core business) or the economic activities of the beneficiary (customer) only if it is duly authorized as a provider of specialized services by the Ministry of Labor and Social Welfare (STPS). Moreover, the beneficiary would be held jointly and severally liable for any of the contractor’s violations under the labor, social security, or tax laws.