The Department of Labor and Social Welfare (“STPS” per its acronym in Spanish) has announced that during the course of 2022 it will perform audits of companies to verify possible violations of the Federal Labor Law (“FLL”) in outsourcing matters. The STPS has created a new questionnaire containing 12 questions, which it will use to ensure companies’ compliance with outsourcing rules. The STPS will conduct a first evaluation using the Specialized Services and Works Provider’s Registry (“REPSE” per its acronym in Spanish) to identify any red flags.
Based on the above, it is vital for companies to comply with new outsourcing regulations. On this point, bear in mind that such regulations forbid the outsourcing of personnel for the entire workforce of a contracting employer company which shares the same or similar commercial activity of the outsourcing contractor.
Likewise, the amendments to the FLL allow the subcontracting of specialized services or works that are not part of the corporate purpose or main commercial activity of the company, only by contracting individuals or entities that render specialized services that are properly registered with the REPSE. Such registration must be renewed every three years, and specialized services providers are required to file periodic notices with the Mexican Social Security Institute and the National Institute for Employees Housing Fund.
The amendments also provide that in case of a provider’s violation of its labor, social security or tax obligations in connection with its employees rendering specialized services, the beneficiary company will be considered as jointly liable for all corresponding fines and penalties. Penalties for breach to the outsourcing regulations are: (i) a fine equal to 2,000 to 50,000 Measure and Update Units (UMA per its acronym in Spanish) (from $179,240.00 a $4,481,000.00 pesos), for carrying out the outsourcing of personnel without proper registration, at the authority’s discretion; and (ii) that tax invoices issued for unallowed personnel outsourcing services are considered without legal effect, and therefore expenses for such services would not be deductible for income tax purposes. Further, value added tax paid would not be credited.
The above information outlines why it is important for companies to verify their current and future contracts with service providers to avoid potential instances of non-compliance under new regulations.
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