AMENDMENT TO THE FEDERAL LABOR LAW

In the framework of the celebration of International Labor Day, this past May 1st, 2019, a Decree was published in the Official Gazette of the Federation whereby various provisions on Labor Justice, Freedom of Association and Collective Bargaining were amended,
added and repealed.

The three main precedents that led to this Labor Reform were; in the international legal scope, Appendix 23 A of the Bilateral Free Trade Agreement between the United States, Mexico and Canada (USMCA) and the International Labor Organization Convention 98; domestically, the Constitutional reform of 2017 regarding articles 107 and 123.

The reform promises to improve the current labor justice system and constitutes a necessary advance in response to changes in the social and economic context. The Conciliation Boards were initially created as a consequence of a prevailing need for attention to social
justice, given that, before their creation, labor law was considered a private law and, consequently, the judge knew and resolved the controversies of this matter considering the parties -worker and employer- in equal conditions.

By virtue of this, in order to provide broader protection to the worker and to promote the rapprochement between worker and employer, the Conciliation Boards were implemented, composed of an equal number of worker and employer representatives, as well as
a government representative. The creation of this body was carried out with the purpose of resolving labor conflicts with a conciliatory and negotiation approach, rather than a legal one.

Due to the growing need for a genuine attention to the legal aspect and, accordingly, the depth study of labor disputes in accordance with the applicable legal precepts, based on the orality tendency of the current judicial system, this labor reform defines a new stage to
the labor law in Mexico. This is reflected, mainly, in the new labor justice system, but also in the mechanisms for protection of freedom of association and collective bargaining, which maintain the protection of the social rights of the worker, but at the same time address the rights of the employer by shutting down labor union malpractices. In addition, impartiality is privileged in labor processes and in procedural matters promptness is guaranteed.

In terms of collective rights, the reform addresses the principle of freedom of association and collective bargaining through the recognition of the freedom of choice of the worker to either pertain or not to a union, as well as through the protection of personal, free and secret vote of said worker. Furthermore, for the purpose of processing the application to register a collective bargaining agreement, it is stated as mandatory to submit a certificate of representativeness of at least 30% of the workers, issued by the Federal Center for Conciliation and Labor Registration1. For the purpose of demonstrating the referred representation, such certificate shall contain the list of the workers, including the name, CURP (Unique Code of Population Registration), date of hire, and autographed signature.

Regarding individual rights, the amendment recognizes Internet Digital Tax Receipts (CFDI) as substitutes for the executed salary receipts and adds as a requirement for individual labor agreements the designation of beneficiaries for the payment of salaries and benefits accrued and not collected at the death of the worker, or those generated by his death or disappearance. Moreover, it recognizes the validity of private labor termination agreements, as long as they do not include waivers of the rights of the worker and, in the same sense, it establishes the possibility of claiming nullity only with respect to provisions containing waivers, recognizing the validity of the rest of the content.

In matters of labor justice, the Conciliation and Arbitration Boards are replaced, and Labor Courts2 are created, whereby the conflicts derived from labor relations will be resolved. Consequently, the tripartite labor dispute resolution body disappears for the creation of a jurisdictional body dependent of the Federal Judicial Branch, with a mandatory initial conciliation stage.

May 2019.
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