The Ministry of Labor and Social Welfare publishes inspection protocol on subcontracting

The Ministry of Labor and Social Welfare published a technical instrument with the aim of ensuring compliance and also providing certainty to employers regarding the elements that will be reviewed by the authority during an inspection related to subcontracting.

Scope of the protocol

The “Subcontracting Inspection Protocol” establishes the criteria and documentation that will be used and reviewed by inspectors when conducting inspections at various workplaces that use or intend to use a specialized services subcontracting scheme. For example, the protocol will be used in the following procedures:

REPSE verification visits to workplaces for individuals or legal entities that request registration or are already registered in the registry.
Inspection of subcontracting at the workplaces of the contractor and the beneficiary of the specialized services.
Regular and special inspections regarding General Working Conditions, Health and Hygiene, and Training and Education, including a cross-cutting approach to subcontracting.

It is important to mention that the scope of application of this protocol falls under the jurisdiction of the Federal Labor Inspectorate. Therefore, the technical instrument applies to all workplaces that provide specialized services within the Mexican Republic.

Finally, with the aim of expanding the analysis of information and correctly integrating the various risk factors that may lead to possible non-compliance in terms of subcontracting by a workplace, the General Directorate of Federal Labor Inspection may use information provided to it by the IMSS, SAT, and INFONAVIT.

About REPSE verification visits

The purpose of REPSE verification visits is to verify compliance with labor regulations on subcontracting established in Articles 12, 13, 14, and 15 of the Federal Labor Law. Consequently, both the General Directorate of Federal Labor Inspection and the Federal Labor Representation Office will certify compliance with the general working conditions related to the provision of specialized services or works, and the information collected will be included in a verification report.

Regarding the inspection of subcontracting to contractors and beneficiaries

This procedure is unique in that the authority may verify general compliance with working conditions in relation to subcontracting both at the contractor's premises and at the premises of the beneficiary of the services provided. This is why, specifically, this enforcement action by the authority requires effective coordination between both parties. Finally, it is important to mention that the contractor and the beneficiary of the services provided are jointly and severally liable for any breach of labor and social security obligations.

Recommendations

Check that the documents relating to general information about the workplace are in order. Example: Articles of Incorporation, Proof of Address, Tax Status Certificate, and REPSE Notice.
Ensure that contracts for the provision of specialized services meet the necessary formal requirements.
Keep documentary evidence of compliance with labor, social security, and tax obligations. Example: Have payment receipts or payroll records, tax assessment certificates, and individual employment contracts stating the applicable working conditions.
Accurately identify the persons providing specialized services within the workplace.
Prepare and raise awareness among staff about questioning by the authorities based on the questionnaire included in the Protocol.

Main risks

Failure by the contractor or beneficiary of specialized services to comply may result in the following consequences:

Cancellation of REPSE registration.
Significant fines.
Joint and several liability for compliance with labor and social security obligations.

It is essential that workplaces that use specialized service outsourcing schemes comply with the standard established by the “Outsourcing Inspection Protocol” to avoid possible future contingencies arising from inaccurate fulfillment of labor and social security obligations.

At Hogan Lovells, we are ready to assist you.

Authored by Mary Carmen Fuertes, Hugo Hernández Ojeda, José Pablo Saenz, and Juan Pablo Vazquez.