The Federal Labor Law (Ley Federal de Trabajo or LFT) contains, in Articles 76 through 81, express provisions stating that for each year ofwork an employee completes, such employee shall have the right to paid vacation time. Vacation time consists of paid days at normal salaryrates, it being the spirit of the Federal Labor Law to a vacation day for each year of services provided to the employer, which results in anobligation on the part of the employer to grant such vacation days within a maximum timeframe of six months after completion of the year ofservice. The Law does not contemplate compensation for an employee not taking vacations. In this manner, after an employee completes oneyear of service, the employer must give six days of paid vacation and two additional days for each year of service until reaching 12 days total,after which fourth year, vacations are increased to two days per five-year period of time worked. In the case of non full-time employees,whether working on a temporary basis or for a fixed project term, such employees may enjoy vacations in proportion to the number of days theywork during the year. Mexican law requires employers to publish annually a list of employees and seniority, including the dates suchemployees will have vacations. In addition, in case an employee meets all his or her obligations, the vacation period must take place within sixmonths after the first anniversary of employment, which must be taken during such six-month period. On top of full payment of salary duringpaid vacation time, employers must pay a 25% vacation bonus, which is consistent with the LFT’s policy of providing employees withadditional income to offset special expenses incurred during vacations. While this article mentions the vacation periods and minimum amountsthat are obligatory under the LFT for vacation pay and vacation bonuses, some companies pay more than the legal minimums discussed herein.
As mentioned in prior editions, Mexico recognizes that one who demonstrates first use of a trademark has priority rights to register such markand has exclusive rights to use of the mark. It is also important to note that given the fact that since in Mexico there is no legal means to opposeregistration of a trademark that is in the process of being registered, it becomes essential to register the mark as soon as one decides to put themark into use. Article 9 paragraph XVI of the Mexican Industrial Property Law provides that “a mark that is identical or similar in grade ofconfusion to another mark already presented for filing or already registered and in force, applicable to the same or similar products or services,may not be registered”. In effect, if upon submitting a trademark for registration the applicant has used it previously in Mexico or abroad, thepresence of another similar mark covering similar products or services that has not been previously used, but is in the process of beingregistered, the legitimate applicant of the desired mark will be required to wait until a trademark registration has been granted to the firstapplicant party, and then seek to nullify such mark claiming prior use, which process can be lengthy and costly, and avoidable if the legitimatefirst user of the mark applies for registration as soon as possible after first use.
Various interpretations exist as to the maximum amount of deductibility of payments made for the temporary use of automobiles. In thisregard, Article 32 paragraph XIII of the Income Tax Law (Ley del Impuesto sobre la Renta or LISR) provides that “amounts paid for thetemporary use of automobiles are deductible only in amounts not exceeding $165.00 pesos per day per automobile, so long as the requirementsfor deductibility of automobile expenses established in paragraph II of Article 42 of this Law have been met, which shall be strictly applied tothe taxpayer’s activity”. In addition, the Fourth Article of the Decree for Exemption of Tax Payments, Forgiveness of Fiscal Credits andGranting of Fiscal and Administrative Facility Stimulants to Certain Taxpayers published in the Official Journal of the Federation on April 23,2003 increased the amount of the deduction to $250 pesos per day per vehicle. Finally, Article 42 paragraph II of the LISR provides that“investments in automobiles may be deductible only up to the amount of $175,000 pesos”.
The concept of expenses in Mexican law is understood to be those costs regulated by the law that the losing party must pay to the prevailingparty in a civil or commercial lawsuit, which are indispensable for initiating, prosecuting and concluding any such lawsuit. These expensesmust be directly related to the legal proceeding in such a way that the legal proceeding could not be concluded without them. Based on theforegoing, the concept of costs does not include unnecessary expenses or expenses prohibited by law. In this way, costs in Mexico have nottranslated to a requirement that the losing party reimburse the prevailing party for its legal fees and expenses, since the determination of such costs is regulated by published schedules, which vary depending on the Mexican state in which the lawsuit is prosecuted, as well as if theamount claimed was a fixed amount, in which case the fee tabulator relates to a percentage of the amount claimed, or if an indeterminateamount is claimed, certain portions of the schedule exist to signal the amount for total payment of expenses that must be paid in favor of theprevailing party. It is important to stress that the obligation to pay expenses only exists when the judgment expressly orders the losing party topay such. If the judicial decision omits references to this concept, the prevailing party is required to appeal the decision to a higher court andrequest that legal fees and expenses be charged to the losing party, which sums are normally lower than the expenses actually generated in thelegal proceeding.
On September 5 and 6, 2007 decrees promulgating the Treaty relating to International Guaranties on Air Transport Equipment adopted in CapeTown on November 16, 2001 were published in the Official Journal of the Federation, which will take effect on November 1, 2007. Thepurpose of such treaty is to provide security and certainty in international aircraft finance transactions involving the purchase of aeronauticalequipment (airplanes, engines and helicopters), railroad rolling stock and other specialized equipment. The treaty provides for recognition andassurance at the national level of its member countries regarding guaranties granted to finance the acquisition of said movable equipment. Theresult of this development is to confer recognition of a creditor’s rights, and potential control and enforcement of guaranties, with respect toloans made for the acquisition of these types of movable assets.