Mexico: New Regulatory Regime on Subcontracted Work | ZFZ Postcard Cases

On 23 April, the Mexican Official Gazette published a new regulatory regime concerning subcontracted work.

This new regime is a result of Mexico’s ongoing battle against companies’ misuse of subcontracted workforce, resulting in unfair labor conditions for the subcontracted employees. This misuse is due (among others) to the companies’ subcontracting of their workforce to avoid profit sharing, as per Mexico’s 10% profit share rule. The newly published regulations restrict companies’ use of subcontracted work exclusively to “specialized work or services”, services which are external to the contracting company’s primary business purpose and activities, in hopes of companies hiring this workforce as their own.

In order to incentivize companies to do so, the regime introduces a profit sharing cap per employee.

Finally, the regime requires service providers rendering specialized services to be registered with the Ministry of Labor and Social Welfare.

Read the full regulations here.