Companies with employees in Mexico are subject to the Mexican Federal Labor Law, which provides in certain situations for the temporary suspension of employment relationships.
The crisis brought about by the COVID-19 pandemic has affected virtually every sector of the international economy including transnational companies with a large presence in Mexico.
Companies with employees in Mexico are subject to the Mexican Federal Labor Law (FLL), which provides in certain situations for the temporary suspension of employment relationships. This entails the possibility for the employee to refrain from providing their services, and consequently, the possibility of the employer to refrain from paying the respective salary.
The following is a summary of important provisions of Mexican labor law that should be considered in light of the current situation caused by the COVID-19 pandemic.
The FLL allows employers to implement mandatory testing of company employees if such examinations are set forth in the company’s internal labor rules, policies or employment agreements. If those conditions are met, employers can take employees’ temperature, with the caveat that employers should make sure that the privacy notice provided to employees covers employees’ health information.
Employees with COVID-19
The provisions relating to nonprofessional sickness set forth in the FLL and in the Social Security Law are applicable to those employees who have tested positive for the disease. That means employees who have contracted COVID-19 in the exact same manner in which these provisions apply to any other nonprofessional sickness contracted by an employee. In this regard, if an employee is absent from work after being diagnosed with COVID-19, the employment relationship with the employee will be suspended and the employer will have no obligation of paying him any salary or benefits until the termination of disability and once the employee returns to work (the disability may last up to 78 weeks). As of the fourth day following the disability being declared by a doctor of the Mexican Social Security Institute (IMSS), the IMSS will pay to the employee a subsidy in an amount equal to 60 percent of the employee’s latest salary declared to IMSS. The payment of this subsidy and the duration of the disability may last no more than 78 weeks.
Work from Home
On March 25, Mexican Deputy Health Minister Hugo Lopez-Gatell announced that Mexico's federal government would suspend all nonessential activities beginning on the following day. The government also asked the private sector to allow employees to work from home to slow the spread rate of the COVID-19 virus. If an employer allows or instructs its employees to cease attending the employer’s premises or working centers in order to work from their homes or any other place, this will not affect the terms of the employment relationship. The rights and obligations between employee and employer will remain unaltered. In this regard, the employees will continue to be obligated to render their services in the same manner, although now remotely, and the employer will continue to be obligated to pay them their salary and benefits as set forth in the respective employment agreement.
If certain employees may not work remotely because the nature of their work and an employer decides to suspend the work and office attendance of employees who have yet to be issued with a disability by the IMSS for COVD-19, the employer must continue paying the salary and benefits of such employees as this unilateral decision from the employer does not qualify as a reason to suspend the employment relationship under the FLL.
Proclamation of a Sanitary Contingency
Should the government authorities proclaim a phase 3 sanitary contingency that decrees the suspension of work in all work centers, employers will be relieved of their obligations to pay salaries and benefits throughout the duration of the contingency, and employees will not be obligated to render service. Currently, the Mexican authorities have issued phases 1 and 2 sanitary contingencies and it is expected that a phase 3 sanitary contingency could be announced in the near future. The FLL expressly indicates that sanitary contingencies are events that may suspend employment relationships. In such an event, employers will, however, be obligated to pay their employees an indemnity consisting of one minimum daily wage up to 30 days counted as of the date in which the sanitary contingency comes into effect. The minimum daily wage is currently set at MX$185.56 in the Free Zone of the Northern Border and MX$123.22 in the rest of the country.
About Duane Morris
Duane Morris has created a COVID-19 Strategy Team to help organizations plan, respond to and address this fast-moving situation. Contact your Duane Morris attorney for more information. Prior Alerts on the topic are available on the team’s webpage.
For More Information
If you have any questions about this Alert, please contact Eduardo Ramos-Gómez, Rosa M. Ertze, Miguel de Leon Perez, any of the attorneys in our Mexico Business Group, any member of the COVID-19 Strategy Team or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.