Issue #
September–October 2020

Listen to this issue

The CCN Mexico Report™ is now available in audio format. Listen to the podcast and follow us on Spotify or wherever you get your podcasts.

Economic Indicators

On October 28, 2020, updated financial indicators reflected:Peso/Dollar Exchange Rate: $20.8798 pesos per Dollar.Mexican Stock Exchange: The Mexican Stock Exchange (BMV) closed 37,393.71 points.Interest Rates: The Average Interbank Rate (TIIE) for a 28-day period was at 4.5215%.

The State of Nuevo León, Mexico Enacts Important Reform for Commercial Leases Following Declaration of Health and Sanitary Emergency

October 12, 2020

On October 2, 2020, Decree 358 was published in the Official Journal of the State of Nuevo León, adding a second paragraph to article 2326 of the Civil Code for the State of Nuevo León (“CCNL”), which reads as follows:"Art. 2326.- If the use of the property is impeded only in part, the tenant may request a partial reduction in rent, based on the opinion of experts, unless the parties elect to terminate the contract, if the impediment lasts as long as the time set forth in the prior article.Tenants of real property conducting commercial activities whose use and enjoyment of such real property was disturbed as a result of the declaration of a civil protection or sanitary emergency by authorities which ordered the cessation of its commercial activities may be entitled to a reduction in rent for the duration of the emergency declaration and prohibition against opening their business, for the territorial district in which the property is located, according to the terms of the agreement between the lessor and the tenant, or in the absence of an agreement, however the competent authority defines."Article 2325 sets forth that “If due to acts of God or events of force majeure, the tenant is completely prevented from using the property rented, no rent will be incurred for the duration of the impediment, and if it lasts for more than two months, termination of the contract may be requested." Additionally, article 2327 establishes that "The provisions of the two prior articles may not be waived."Article 2292 of the CCNL distinguishes among three types of leases: residential, commercial and industrial. Considering such, it is clear that the legislation meant only to include commercial leases in the reform, and it is also noteworthy that legislators did not include a specific definition of the scope of the commercial activities that fall under this reform, instead referring to those parties that receive an order to cease their activities.The reform implies that due to the declaration of emergency by the civil protection or sanitary authorities, a commercial tenant who is prevented from operating has the right to request a reduction in rent for the time that it is prevented from opening its establishment, with such reduction to be as agreed between landlord and tenant, or in the absence of an agreement, as defined by the competent authority. Based on such reform, it can be understood that with respect to the determination of the percentage of rent reduction, the agreement between landlord and tenant prevails over the determination of the authority and in that sense, it is not an inalienable right for purposes of article 2327.The amended article does not provide for a time frame during which the landlord and the tenant must agree on the reduction, nor rules to determine its percentage. For this reason, the agreement between landlord and tenant entered into prior to the emergency may be considered valid, as it would be when entering into the lease agreement or an amendment thereto. In the absence of an agreement, the competent authority may determine the amount of the applicable rent reduction during the emergency.

Legal Updates

Validation of Mexican Collective Bargaining Agreements during the COVID-19 Pandemic

October 1, 2020

As a result of the 2019 Mexican Labor Law reform and the signing of the USMCA, the Protocol for Validating Existing Collective Bargaining Agreements, which was published in the Official Journal of the Federation on July 31, 2019 (“Protocol”), entered into force on August 1, 2019. Based on such change, all unions in Mexico must validate their collective bargaining agreements within a maximum term of four years, which ends on May 1, 2023.The validation process involves unions consulting with their members and having them vote on whether to approve the contents of their collective bargaining agreement. It is important to note that wages under such collective bargaining agreements are reviewed on an annual basis, while the overall terms of the agreements are reviewed every two years. In order to comply with the validation requirement, and for unions to register and schedule their consultations, the Mexican Department of Labor and Social Welfare (“STPS” for its acronym in Spanish) created the online site Event Registration System for Validation of Collective Bargaining Agreements, which will be launched when the Federal Center for Labor Conciliation and Registration begins operations.Notwithstanding the above, due to the COVID-19 pandemic, Mexican unions’ ability to conclude the process of validating their collective bargaining agreements has been hampered by not being able to gather their union members to conduct the voting process. Therefore, to conduct this type of meeting, unions must not only comply with the legal requirements and those contained in the Protocol, but they must also comply with: (i) the Technical Guidelines for Health Safety in the Workplace Environment, published by the Department of Labor and Social Welfare on May 18, 2020; (ii) the Specific Technical Guidelines for the Reopening of Economic Activities, published in the Official Journal of the Federation on May 29, 2020; (iii) the Criteria for Vulnerable Persons Susceptible to Developing Complications or Dying from COVID-19 in the Reopening of Workplace Economic Activities, published by the Departments of Health and Labor and Social Welfare on July 17, 2020; and (iv) the protocols and other criteria published by local authorities of each Mexican state.It is also important to consider that these meetings may be held only when the Covid-19 signal light monitoring system of the city where the meeting is to take place is orange, yellow or green on the date designated for the meeting. Accordingly, unions will have to carefully schedule the voting, report in advance to the STPS when the vote is planned to take place, and must take into consideration that the meeting place guarantees accessibility, social distancing and protection of the safety and health of the unionized employees.

Labor and Employment