Following the labor reform paseed in November 2012, and numerous precedents established by national andinternational authorities, Mexican labor authorities (better known as Conciliation and Arbitration Boards or LaborBoards) may currently hear and issue resolutions as to: (i) possible employee claims against company officers orwork colleagues in the companies where they render their services and (ii) possible personnel employmentterminations, without any liability for the companies, as a result of [mobbing] or workplace harassment and/orsexual harassment that employees were subject to, in order to remedy physical or emotional damage, as well asdamage to individual physical integrity or psyche, including non-pecuniary damages as a result of constantpressure from workplace or sexual harassment.Based on the foregoing, labor claims arising in the workplace and/or sexual harassment have increased. Some ofthese cases are justified, while others have no legal basis. As a result, it is essential to understand the terms andscope of possible indemnifications on this subject in order to prevent indiscriminate abuse of legal guaranties andlegal security for company employees. Abuse and/or sexual harassment in the labor reform appears in the decreepublished in the Official Journal of the Federation on June 6, 2011, which reforms, adds to and repeals variousprovisions contained in Articles 94, 103, 104 and 107 of the Mexican Constitution in order to update the amparoappeal lawsuit in labor matters in an effort to seek protection of the rights and personal guaranties of employeesand grant improved labor conditions for the working class, certainty regarding their employment, a sufficientsalary, a humane work schedule, breaks and vacations that promote good health and increased work productivity.As a result of the above, Article 2 of the Federal Labor Law establishes that dignified or decent work isunderstood to be that which fully respects the human dignity of the employee. Furthermore, discrimination basedon ethnic origin, nationality, gender, age, disability, social status, health conditions, religion, immigration status,opinions, sexual orientation or marital status are prohibited. Article 3 Bis of the Federal Labor Law defines: (i)harassment as the exercise of power in a relationship of subordination of the victim before the aggressor in theworkplace expressed through verbal or physical conduct or both; and (ii) sexual harassment as a form of violencewhere while subordination may not exist, there is abuse of power leading to a state of helplessness and risk forthe victim, independently of whether such is carried out in one or two events.Article 132, section VI of the Federal Labor Law imposes on employers the obligation to have properconsiderations for their employees, abstaining from verbal or physical mistreatment, meaning that the workenvironment should be free of any treatment that goes against the dignity, integrity and safety of the employees.It should be noted that the previously mentioned labor reform also modifies and adds various provisions relativeto non-discrimination for reasons such as gender, sexual orientation and provisions the purpose of which is toavoid and penalize workplace harassment and sexual harassment, including: (i) The authority of the employer torescind the employment relationship with its employees, without any liability, when the employees commitimmoral acts or sexual harassment against any person at the facility or workplace; (ii) The provision establishingthat in no event may work conditions be inferior to those set forth in the law, and such must be in proportion tothe importance of the service and the same for similar work with similar conditions of efficiency, withoutestablishing differences due to ethnicity or nationality, gender, age, disability, social status, health conditions,religion, opinions, sexual orientation or marital states; (iii) those that authorize employees to rescind the laborrelationship with the employer and request the payment of indemnification in accordance with that established bythe law when the employer, the employer’s family members or any other representatives, within the scope ofwork, engage in indecent or dishonest conduct, acts of violence, threats, injuries, harassment and/or sexualharassment, bad treatment or other similar conduct against the employee, his/her spouse, parents, children orsiblings and when the employee is asked to carry out acts, conduct or behavior that diminish or go against thedignity of the employee; (iv) those that prohibit employers or their representatives from refusing to hire employees due to ethnicity ornationality, gender, age, disability, social status, health conditions, opinions, sexual orientation, marital status orany other criteria that could result in a discriminatory act or to carry out acts of harassment and/or sexualharassment in the workplace; (v) those that prohibit employees from sexually harassing any person, or fromcarrying out immoral acts in the workplace; (vi) those that establish that the employer is jointly and severallyliable along with its employees to indemnify against any damage when it allows, tolerates or fails to investigatethe facts presented by an affected party or in the absence of such, fails to advise the Labor Inspector or theconduct. Furthermore, it is worth noting that the Article 179 of the Penal Code or the Federal District providesthat “sexual harassment with threats to cause the victim harm as to the activity that binds them will carry apenalty consisting of a term of six months to three years in prison”.Notwithstanding the payment of indemnification indicated in point (iii) above, it is possible that in systematiccases of workplace or sexual harassment, in addition to the deprivation of employment, non-pecuniary damageresults from the termination of the employment relationship in the form of emotional distress, harm to the beliefs,honor, reputation, private life and physical aspects of the employee. The Supreme Court of Justice has affirmedthat workplace harassment or [mobbing] suffered by employees is that which looks to “intimidate, subdue, scare,or emotionally or intellectually consume the employee with the purpose of excluding him/her from theorganization or to satisfy the need to attack, control or destroy by the harasser”. Given the previous, thefollowing conclusions result: (i) the Conciliation and Arbitration Boards or Labor Boards, taking into accountthe background of the case, the lack of responsibility on the employee’s part, and the economic situation of theemployer, such could establish the indemnification that corresponds to the employee due to [mobbing], workplace or sexual harassment that he/she was subject to in order to remedy the damage produced; (ii) sexualand/or workplace harassment is a reality in Mexico and may cause damage to the dignity of the victim; (iii) theConciliation and Arbitration Boards or Labor Boards may establish the amount of labor indemnifications in theevent of workplace or sexual harassment given that such are not regulated by the Federal Labor Law, except inthe event of rescission by the employee, which is not convenient for the employer; and (iv) to determine the corresponding indemnification for non-pecuniary damage, it is necessary that the cause for such is duly evidenced, systematic and occurs at theworkplace, given that the Labor Law does not regulate conduct occurring outside the workplace.