In previous weeks, the controversial statements of the President of the Republic, Andrés Manuel López Obrador, about the "elimination" of the figure of Outsourcing in Mexico were trending, thereby announcing an initiative to reform the Federal Labor Law.
Although these statements made at the President’s morning conference caused a stir, as in the case of the extinction of trusts, the reform does not propose their elimination, but rather proposes a more effective regulation with the implementation of more rigorous locks to avoid bad practices in the application of said hiring strategy.
It should be remembered that this word is an Anglicism, which is used to refer to the outsourcing or outsourcing of services. The companies that perform this type of services offer their clients the management of their administrative processes of labor hiring, so that they can concentrate 100% on the development of commercial strategies for their business lines.
Since 2012, the Federal Labor Law contemplates this type of contracting scheme, as long as there is a contract that contains some locks to avoid subcontracting to third parties with similar activities.
The reality is that Outsourcing in Mexico has been abused, from the sense that some outsourcing companies seek to minimize hiring costs, leading to bad fiscal practices, such as non-registration of workers to avoid the distribution of profits, and even evade the collection of taxes established by law.
In addition, according to data from the Ministry of Labor and Social Welfare, of the 900 companies in Mexico that are known to offer the subcontracting service, only 100 are duly registered and certified by the corresponding agencies to operate normally. This means that more than 90% of outsourcing companies work and provide their services under irregularities, and are probably shell companies.
If only 100 companies have the regulatory permission to provide outsourcing services, it cannot be explained that there are around 8 million workers who have their contract under the Outsourcing scheme, which represents 40% of the total of formal workers in all Mexico. This gives us an indication that the outsourcing service is also widely requested by companies, and that it is in high demand.
Another bad practice carried out by some outsourcing companies that raises many suspicions in the authorities is that when carrying out the government inspections established by law, the inspectors are rejected and they are denied entry to the offices, thus weakening the figure of audits .
It is for these reasons that the Federal Executive aims once and for all to carry out a reform that carries out corrective measures to prevent these problems from continuing to spread, and that put tax collection in these sectors at risk.
Already in December 2019, there is a precedent that tries to regulate the activity of outsourcing, which was a reform to the Law of Value Added Tax, where a tax charge of withholding of 6% of the tax was imposed on the companies in charge to carry out this activity, to avoid tax evasion.
The Executive Branch seeks to specifically reform Article 15-A of Title One of the Federal Labor Law, which you can consult on page 5 of said document.
One of the most interesting proposals of this reform is that it seeks that subcontracting is limited, that is, that the companies that hire this service cannot put their entire workforce under this scheme. This guarantees access to prerogatives for company workers.
This reform also aims to strengthen inspections in the sector, in order to more efficiently audit the regulation and operation of these companies, and thus avoid tax evasions.
In addition, the creation of a federal registry is foreseen to make the contraction of this scheme transparent, since in this registry both companies that offer subcontracting and the companies that hire them will have to be registered.
It is very clear that Outsourcing needs more regulation, more efficient padlocks and that it is in harmony with the most recently updated legislation such as the one carried out in the Value Added Tax Law. With this it is clear that more abuses in this figure can be avoided, and that it is really used for the benefit of companies and workers, and not for the opportunism of a few.
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