- The Supreme Court ruling has determined that the limitation on the concept of labor subcontracting is justified due to its impact on labor rights and the public treasury.
- The Court believes that the STPS oversteps its bounds by attempting to regulate and define what specialized services are; it should solely adhere to the content of the legal reform from April 2021.
In recent days, the Second Chamber of the Supreme Court of Justice of the Nation (“SCJN”), when ruling on Amparo Directo en Revisión 687/2022, has pronounced on the constitutionality of the Labor Subcontracting Reform, published in the Official Gazette of the Federation on April 23, 2021. This stems from an Indirect Amparo filed before the Eighth District Court for Labor Matters in Mexico City.
In this regard, the Supreme Court analyzed the constitutionality of various amended articles in the Federal Labor Law (“LFT”), the Social Security Law, the Law of the National Workers’ Housing Fund Institute, as well as certain provisions of the “Agreement that discloses the general provisions for the registration of individuals or entities providing specialized services or executing specialized works referred to in Article 15 of the Federal Labor Law.”In other words, the document through which the Ministry of Labor and Social Welfare (“STPS”) laid down the groundwork for determining what specialized services are and how these should be considered for private contracting.
In this context, on the one hand, the Second Chamber has considered that the articles in the aforementioned laws are constitutional, among other reasons, because “the limitation on the concept of labor subcontracting is justified by the need to eliminate practices that harm the labor rights of workers and the public treasury; as well as reduce the obligations of employers to acknowledge their prerogatives.”
On the other hand, the Court has concluded that Article Second, Section VII of the Agreement containing the general provisions is unconstitutional. This provision states the following:
“ARTICLE SECOND. For the purposes of these provisions, the following shall be understood as:
…
… VII. Specialized services or works: those that have distinctive elements or factors of the contractor’s activity, which are supported, among others, by training, certifications, permits or licenses that regulate the activity, equipment, technology, assets, machinery, risk level, average salary range, and experience, all of which add value to the beneficiary.”
In this regard, the Second Chamber, in resolving the mentioned Amparo, has determined that the STPS has gone beyond its jurisdiction by establishing or defining specialized services beyond what the legislator envisioned in the LFT. This interpretation, as established in the current case, is adequately delimited and only considers two aspects:
- Those services and works different from the beneficiary’s corporate purpose; and
- Those services and works are different from the beneficiary’s predominant economic activity.
With this, the SCJN establishes a significant precedent in labor matters in Mexico, which will translate into limitations for the authority when inspecting and attempting to penalize specialized service subcontracting schemes. It is clear that meeting the two criteria established by the LFT will suffice for compliance with regulations.
Given this, if you require any consultation or review of subcontracting schemes within your company, do not hesitate to contact the Labor Department team at Vega, Guerrero & Associates, who can assist you in preventing any penalties and ensuring compliance.
