TAX and LABOR. Unconstitutionality of the concepts of Services or Specialized Works defined by the Ministry of Labor and Social Welfare August 16, 2023

In connection to our Newsletter of June 29th, 2023, the Mexican Supreme Court of Justice (MSCJ) recently published the final resolution that resolved the “Amparo” Review 687/2022, with which it confirmed the constitutionality of several legal provisions that prohibit labor subcontracting in general, with the exception of cases of specialized services or execution of specialized works.

However, in said final resolution it was determined that the Ministry of Labor and Social Welfare (MLSW) is not entitled to define the concepts of specialized services or works.

Comments

From the analysis of the aforementioned final resolution, we highlight the following premises and conclusions of the MSCJ:

  • From article 13 of the Federal Labor Law (FLL), the elements that allow to define what is the type of subcontracting allowed are derived, by expressing in said provision that the services or works should not be part of the corporate purpose or the predominant economic activity of the beneficiary.
  • In such a way, the “specialization” is linked to the analysis of the corporate purpose and the predominant economic activity of who would benefit from the services or works, and these must not coincide with the contracted services or works.
  • However, the “Ruling by which the general dispositions for the registry of individuals and companies that render specialized services or execute specialized works set forth in article 15 of the Federal Labor Law are specified” (Ruling) exceeds the provisions set forth in the article 13 of the FLL.
  • Although article 15 of the FLL empowers the MLSW to issue general rules, this only entails the issuance of the administrative regulation of the registration procedure before the Register of Contractors of Specialized Services or Specialized Works (REPSE). In other words, said authorization in no way implies that the MLSW is empowered to define what should be understood by specialized services or works.
  • The fact that the MLSW intends to establish or develop the material content of the specialized services or works is not reduced to a technical aspect of the registration procedure before the REPSE but allows the cases in which subcontracting is possible to be expanded or restricted.
  • In addition, the FLL does not indicate as distinctive factors those set forth in the second article, section VII of the Ruling; that is, the training, certifications, permits or licenses that regulate the activity, equipment, technology, assets, machinery, risk level, average wage range and experience.
  • Due to the above, the MSCJ resolved that the second article, section VII of the Ruling through which the MLSW defines what should be understood by specialized services or works, is unconstitutional.

In addition with the foregoing, we consider that the “Guide for complying with the obligations regarding the registry upon the Register of Contractors of Specialized Services or Specialized Works for individuals or legal entities that provide specialized services or carry out specialized works within the framework of the amendments in labor subcontracting matters” issued on August 26th, 2021 by the MLSW is illegal, considering that specialized services or works are configured according to the space or place in which the contractor’s workers provide such services or execute those works.

Recommendations

It is important to continue expediting pertinent preventive actions, as well as the review and analyze the contracting schemes for the provision of services implemented or to be implemented, considering the previous comments, due to the escalation of coordinated inspections carried out by the Tax Administration Service, the Mexican Social Security Institute, the National Institute Housing Fund for Workers and the MLSW according to the Bulletin 39/23 issued by the latter.

If you have any questions regarding the foregoing, please do not hesitate to contact us

Mexico City, August 16th, 2023

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