Although it is a fact that there are many skilled employees available in Mexico, employers will still need to devise a proper recruitment strategy for getting the best available talent on board with them. But the foreign investors coming to Mexico to set up businesses might find the recruitment process perplexing. This is particularly true for the case of the recruitment of direct labor in the country. There are certain channels available that are normally not used in Europe or the United States for the purpose. It might be a good idea to hire the services of a quality labor law attorney before you proceed to hire any workers.
All the employment-related association between the employer and the employee entered within the Mexican jurisdiction is governed by the FLL (Federal Labor Law). The law was enacted in the year 1970 and it was updated with newer reforms in the year 2012. The relationship is also subject to the social security law, safety and hygiene legislation, and most significantly the Mexican Constitution that goes way back to the year 1971. Here are the things you need to keep in mind while employing in Mexico.
Hiring foreign employees
The foreign nationals working in Mexico make up just 10% of the business workforce in the country. The business has to be formally registered for hiring foreign employees and supporting the required working visa. However, there is an exception to this rule and that is, for obtaining the administrators, general managers, and directors all the hiring restrictions are removed. This means that in such cases 100% of the employees can be foreign nationals.
Employing directly or indirectly
Compliance with Mexican social security and labor laws can be pretty difficult. Several employees choose to engage the services of a global payroll for this purpose. This decreases the obligations and exposure of foreign companies and can lead to a company being charged with taxes similar to a PE or a Permanent Entity.
Obligations Faced by the Employer
The obligations faced by the employer related to employee recruitment include these things:
Compliance with all legislation.
Entering into a formal written employment agreement.
Granting the employee all benefits according to the labor law.
Providing the employee with all the necessary equipment and tools.
Implement necessary health and safety protocols.
Paying the weekly or bi-monthly salary.
Retaining and paying money for social security, taxes, housing, and retirement funding.
Registering the company employees with the IMSS or Mexican Social Security Institute within five days of employment.
The contractual agreement between the employee and the employer is developed almost immediately after the engagement of employees. The responsibility and duty of establishing a formal contract lie with the employer. It means that even when you do not possess a written contract with the employee the law will consider one to exist. You are not required to register any agreement for the document to be enforceable.
The basic idea you need to keep in mind here is that the employees will get all the rights as per the labor law of the country irrespective of the kind of employment he has entered into. So, if there is litigation the burden of providing the proof lies on the employer for establishing that the working conditions were as described in the law. If there is employee termination and there is a trial subsequently the employer will have to prove some key things such as:
Date of employment.
Registration and payment to the National Housing Fund.
Following the correct dismissal procedure.
Payment of premium.
Payment of profit sharing
Holiday provision and pay.
Dealing with the unions
The employee unions operating within the business play an important role in the workplace in several businesses operating in Mexico. Foreign employers have to be aware of the regulations regarding the unions. These unions have the right to create and recruit members from the employees. The unions also have the power to get the employer to sign a bargaining agreement with them. Although foreign employees working in Mexico can join these unions they cannot become a part of the executive committee of any unions.