Resume on the last amendments of the COVID-19 situation legal framework in Mexico, and the direct effects for our clients.
Yesterday, March 30, 2020, a Formal Declaration from the General Health Council was announced. The Health Emergency under force majeure was established. A set of rules and guidelines was expected.
The period of application of the Health Emergency was set from March 30 until April 30 (subject to the evolution of the pandemic).
The set of rules was presented by the General Health Council, among others the Section X. of the regulation establishes that non-essential services of the private sector should adopt immediate measures to avoid on-site working activities. Work from home or teleworking are acceptable measures, for example.
According to Article 427, I. of the Federal Labour Law, a temporary suspension of the work could happen under force majeure grounds.
According to Article 429, I. of the Federal Labour Law, the cases of suspension due to force majeure should be presented before the Labour Court for approval. Until the suspension approval, the employer should cover the salaries in full. If approved (Art. 430) the Court will set a compensation for the employees that would not exceed the import of a month of salary.
It is important to note, at this time, the suspension of activities with full salary has been labelled as “Social Conscience”, while the authorities expect the private sector to support the measure, they cannot force that compliance. They have mentioned, however, administrative fines, closures or even criminal liability prosecution (in the case of employee infections due negligence).
At the end, the authorities are “appealing to the social conscience of the private sector enterprises”.
Resuming, at this point (and subject to further legal changes), we recommend the following options:
- To send people home with full salary and wait to the evolution of the legal frame;
- To negotiate with the people the “not working” condition with a percentage of the salary during a specific amount of time;
- To send people home and request the suspension approval – paying 100% of their salary until the approval and afterwards the resultant compensation; or,
- If the Health Contingency is formally declared, abide to the corresponding regulation.
All this is based on the authorities’ declarations and communications with lawyers in Mexico. As mentioned several times before, the legal frame is changing and adapting at a rapid pace.
SYMBIOSIS is actively advising Canadian companies with operations in Mexico on all aspects of the COVID-19 pandemic. We are tracking developments and are available to assist foreign investors with questions about Mexico’s legal framework and strict compliance options.
J.G.
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