On April 23, 2021, a Decree was published in the Official Gazette of the Federation (“DOF”) amending, adding and repealing several provisions on Labor Subcontracting (the “Decree”), which prohibits labor subcontracting except for the provision of specialized services or execution of specialized work, indicating the obligation of individuals who provide such subcontracting services to obtain a registration before the Ministry of Labor and Social Welfare (the “Ministry”).
Subsequently, on May 24, 2021, the Secretariat issued the Agreement by which the General Provisions for the Registration of individuals or legal entities that provide specialized services or perform specialized works referred to in Article 15 of the Federal Labor Law (the “Provisions”) were published, by which the guidelines, criteria and processes applicable to the Registry of Specialized Services or Specialized Works Providers (“REPSE”) were established. However, in practice and seven months after its issuance, there are doubts as to what is understood by a specialized service or a specialized work by providing or making available to the client its own workers and when an individual or legal entity must obtain its REPSE.
Therefore, the purpose of this article is to point out some assumptions or criteria that are observed in practice and that have become the work of many lawyers to support their clients.
In the first place, the Federal Labor Law distinguishes that subcontracting of specialized services is allowed when such services are not part of the corporate purpose or the predominant activity of the client that benefits from such services. Therefore, this situation has led legal entities, beneficiaries of specialized services, to modify their corporate purpose in order to be in a position to receive them. Such modification of bylaws was the result of a corporate and administrative practice that was used in the past of indicating broad corporate objects that allowed to celebrate any type of legal act or perform any activity through the company, which fell under the prohibition of receiving specialized services; however, the Decree came to eliminate this practice by forcing companies to define and distinguish the main object and predominant activity to which such legal entity will be dedicated. Additionally, the reform published through the Decree resulted in the merger or liquidation of some insourcing companies, converging the internal service provider companies with the main companies and/or carrying out a process of employer substitution.
Secondly, the service providers had to enter into a process and analysis regarding their activities, determining whether the services they provide can be considered as independent professional services or specialized services. In this regard, it is useful as a starting point to understand what is meant by “making one’s own workers available”:
Providing or making available own workers for the benefit of another (a client/contractor) implies that the contractor’s workers, regardless of whether it is one or several, carry out the provision of services in a space, facilities or work center of the client/contractor and which is different from that of the contractor. Such provision of services must be on a permanent, indefinite or periodic basis in order to have the character of being made available. Therefore, this is the first criterion that can define whether or not the contractor should obtain its REPSE.
The second criterion is to define the nature of the services to be provided. To date, the Secretariat has analyzed several activities that individuals intend to register in the REPSE, which have a specialized nature and are complementary and different from the activities of other companies seeking to benefit from these services. For example, companies providing cleaning or security services, obtain a specialized character as opposed to a real estate company that will receive the benefit of such services.
Thirdly, it has been the task of both clients and service providers to properly document the provision of specialized services. Therefore, lawyers play an important role in the preparation of contracts, amendment agreements and other legal acts necessary for this purpose.
A common practice has been to re-enter into service contracts to bring the commercial relationship in line with the Decree and Provisions whenever possible. This is because it is important that the contract has: (i) the description and justification that it is a specialized service, stating that such services are not part of the client’s corporate purpose or main activity; (ii) the inclusion of the provider’s REPSE; (iii) an approximate number of workers to be made available; (iv) the place where the services will be provided; (v) scope of the labor obligations of each party, among other characteristics.
In the event that it is not possible to enter into a new contract or that it is not convenient, in practice a modification agreement or addendum to the original contract is executed, adjusting it to include the minimum: (i) the REPSE of the provider; (ii) the approximate number of workers to be made available; and (iii) the place where the services are to be provided.
Therefore, this firm is committed to its clients to guide and recommend the necessary actions to implement the Decree and Provisions in its commercial relations with its clients and suppliers. Therefore, the lawyers of the corporate area of the Firm are at your service for any questions or comments related to the scope of this article, however, this article should not be considered as binding legal advice or opinion.
Daniela Cervantes Escamilla
Enrique López Méndez