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AMENDMENT BILL PROJECT FEDERAL LABOR LAW 2018

AMENDMENT BILL PROJECT FEDERAL LABOR LAW 2018

On December 22, 2018 a bill to amend and partially repeal various provisions of the Federal Labor Law submitted by the “Morena” Parliamentary Group was published in the Parliamentary Gazette.

The bill acknowledges and adopts the principles and directives set out in Chapter 23[1] of the United States-Mexico-Canada Agreement, also known as USMCA, and in Annex A thereto on collective bargaining, and in the Right to Organise and Collective Bargaining Convention, 1949 (No. 98)[2] of the International Labor Organization, which was ratified by Mexico´s Senate on September 27, 2018, thereby incorporating the amendments introduced to Mexico’s Federal Constitution in matters of employment-law justice in effect since January 24, 2017.

The proposed amendments to the Federal Labor Law are as follows:

  1. Conciliation Stage

The bill contemplates the bases for the creation and operation of a Federal Conciliation and Labor Registration Center (the “Federal Conciliation Center”), to be in charge of conciliation proceedings and the registration of labor organizations and union contracts at federal level. At state level, there would be Conciliation Centers (“State Conciliation Centers”) to be in charge only of conciliation proceedings.

Employers and employees would be subject to a procedural pre-requisite to attend and complete a conciliation stage prior to filing any judicial action with a labor court.

The conciliation stage would consist of a mandatory single hearing to be held on a specific date and time; any conciliatory negotiations would be held at times mutually agreed upon by the parties.

Any settlement agreement to be reached during conciliation stage at the Federal Conciliation Center or at any State Conciliation Center would be considered res judicata and would be enforceable in case of any breach.

No conciliation stage would need to be completed in any of the following cases: workplace discrimination claims, work during pregnancy, appointment of beneficiaries in case of death of any employee, social security benefits claims for occupational hazards, and any other social security claim, any violation to the freedom of association or effective collective bargaining rights, or any labor trafficking or child labor claim.

[1] The Labor Chapter of the United States-Mexico-Canada Agreement.

[2] Right to Organise and Collective Bargaining Convention, 1949 (No. 98).

2. Employment-Law Justice.

The Constitutional amendment on employment-law justice that became effective on February 24, 2017 provided that thenceforth any disputes between employers and employees would be settled by labor courts assigned either to the federal or to any state judicial branch of government; thus, the existing Conciliation and Arbitration Labor Boards are to disappear and be replaced by labor courts.

3. Freedom of Association and Effective Collective Bargaining Rights.

The bill expressly acknowledges that union members would be entitled to exercise the following rights of free affiliation and participation in labor organizations:

a) No one may be forced to join any labor organization.

b) The procedure for the election of members of the board of a labor organization would guarantee the free exercise of the personal, free and secret vote of each member.

c) Any disciplinary sanction imposed by a labor organization to its members should comply with the applicable employment law regulations and union bylaws, and members would have the right of due process to be heard and defend themselves.

d) The way in which union assets are managed are to be disclosed to union members.

4. Union Contracts.

The bill implements new measures for union contracts, ensuring the exercise of free association and effective collective bargaining rights.

The execution, filing and registration of a new union contract and any salary and benefit adjustments would be conditioned upon the securing of a so-called “union certification record”.

The union certification record would be a legal pre-requisite for the validity of a union contract, thereby evidencing that the union is the exclusive bargaining agent for a majority of the employees.

A union certification record issued by the Federal Conciliation Center should accompany any list of employees’ demands and notice of intention to strike, whenever a petition to enter into a union contract or an industry-wide labor agreement or a salary and/or benefit adjustment revision is filed.

To comply with the constitutional amendments and the international commitments on collective bargaining, all existing union contracts are to be subject to revision at least once during the four-year period following the effective date of the proposed amendments. Any revised union contract is to be filed with the Federal Conciliation Center. If a union contract is not subject to revision within such period, the union contract will be deemed terminated.

5. New Ordinary Labor-Law Rules of Procedure.

The bill introduces a new set of rules for the ordinary labor-law procedure, mainly oral, but with a written stage thereby expediting the process, and providing the parties with procedural transparency and promptness.

The procedure will begin by the filing of a complaint accompanied by all evidence supporting the alleged facts and the relief claimed by the plaintiff. The labor court will serve summons (including the Plaintiff´s complaint and evidence) on the defendant, and the defendant will be required to answer the complaint and offer evidence within 15 days following the date of service of summons.

Thereafter, the labor court will notify the plaintiff of defendant’s answer to the complaint and the evidence thereby offered, so that the plaintiff may file a rebuttal and challenge any evidence so offered, within the following eight days.

In turn, the court will notify the defendant of plaintiff´s rebuttal and any challenge to plaintiff’s evidence, so that the defendant may file a defendant’s rejoinder within five days following the notice.

Once the defendant files the rejoinder, the court would set a date and time for a preliminary hearing at which the matters at issue would be determined, together with the admissible evidence offered by the parties and the steps to be followed for preparing the production of evidence.

Then, the court would set a new date and time for a trial hearing, at which the admissible evidence would be presented; if at all possible, the trial would be completed in a single hearing.

After all evidence has been presented by the parties the court will declare that the trial has been completed and prepare the case for final judgment.

6. Notification and Communication System Between the Court and the Conciliation Center or different Labor Courts.

The bill proposes a notification and communications system using information technology for expediting the procedure. The Conciliation Center and the court would have a digital platform for notifications by electronic means. For this purpose, the court would assign an electronic inbox to the parties and, subject to their consent, any subsequent notifications would be posted by using such inbox.

In addition, the court would have the technological means and applications to facilitate the processing of letters of request and any other court actions.

7. New Rules of Procedure for Certain Evidence.

The bill specifically modifies the procedure to hear testimony of any of the parties to the action (prueba confessional) or any third-party testimony (prueba testimonial).

For the testimony of a party to the action open questions may be posed by either the court or the opposing party, provided they relate to the matters at issue, so as to find the true nature of the facts.

For third party testimony, both direct and cross-examination would not be subject to any special rules, although certain guidelines are provided for objecting to specific questions.

8. New Obligations for Employers.

A proposal is made to impose an obligation to employers to implement a protocol or internal policy to prevent and handle violence and sexual harassment claims, so as to ensure a work environment free of discrimination and violence.  A second obligation would be to deliver to all employees a copy of the union contract, as amended.

9. Printed or Electronic Receipts of Salary and Benefit Payments.

The bill provides that the employer may deliver to the employee receipts evidencing the payment of salary and benefits, either in printed form or by any other means. This implies that digital receipts for tax purposes (CFDI for their Spanish acronym) may replace printed receipts, upon prior agreement between the employer and the employee, which in the event of a court action would constitute prima facie evidence.

10. Beneficiaries of a Deceased Employee or Absent Employee due to Criminal Behavior.

No obligation to complete an investigation on economic dependency would be required in any of the following cases (as there is a legal presumption in their favor): beneficiaries of a deceased or absent employee, including the surviving spouse, minor children under 18 years of age or children above 18 years of age with a disability above 50%, or children up to 25 years of age still studying, or ascendants, or common-law husband or wife, or a partner with whom the employee has had a child.

However, an investigation on economic dependency is to be completed when the death of an employee is due to a work accident.

11. Social Security Disputes.

Neither a conciliation stage needs to be completed nor a record thereof needs to be produced to file a social security benefit complaint in the following cases: the granting of benefits, either in cash or in kind, from the various types of insurance covered by the social security mandatory system, or those benefits payable by the National Workers’ Housing Fund Institute, or by any retirement fund management institution (AFORE for its Spanish acronym).

12. Measuring and Updating Unit (UMA for its Spanish acronym).

The minimum wage would be replaced by the UMA concept, as a unit to determine the amount of any fines, or the amount of the compensation payable to employees due to the introduction of new machinery in the workplace, or the permanent disability or death of an employee.

In accordance with the provisions of the transitory articles of the bill, the amendments to the Federal Labor Law would become effective on the immediately following date of its publication in the Federal Official Gazette.

The Federal Congress, within six months following the publication of the amendments, should issue the Organic Law of the Federal Conciliation Center. Also, the Federal Congress together with the state legislatures should allocate the necessary funds for implementing the amendments to the new labor-law justice system.

The second transitory article of the bill provides that the registration of union contracts and labor organizations with the Federal Conciliation Center must start within a term not to exceed two years from the effective date of the amendments.

However, the sixth transitory article provides that the Federal Conciliation Center will start the conciliation stage efforts simultaneously with the date on which the new labor courts are to be open for business, but without exceeding four years from the effective date of the amendments.

State Conciliation Centers and state labor courts must be open for business within three years from the effective date of the amendments.

Any labor-law action currently being processed with or by the Department of Labor and/or any Conciliation and Arbitration Board, either federal or state, would be completed in accordance with the rules of procedure contemplated by the Federal Labor Law in effect at the time the amendments become effective.

Any individual, collective or registration action filed after the amendments become effective would be handled by a Conciliation and Arbitration Board, either federal or state, until the Federal Conciliation Center, the State Conciliation Centers and the new labor courts start working, within the terms contemplated by the transitory articles.

SINCERELY

Jorge de Presno (Mexico City) jorgedepresno@basham.com.mx
Sofía Gómez (Mexico City) sgomez@basham.com.mx
Álvaro González (Monterrey) agonzalez@basham.com.mx
Ernesto Fernández (Querétaro) efernandez@basham.com.mx

Mexico City, January 10th, 2019.


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