Faced with the expectation of recovery, the authorities will have to anticipate rules that allow the development of the population's activities without putting the health of the workers at risk. In this sense, the Technical Guidelines for Health Safety in the Work Environment (the "Guidelines") is the first document issued by the Federal Government that includes specific conditions to regulate the resumption of social, educational and economic activities, which are available on the website of the Ministry of Labor and Social Welfare. For their part, local health authorities must publish in their official Gazettes the guidelines issued on the resumption of activities, so that these can be enforced.

The actions and plans established in the Guidelines serve as support for companies in the preparation of the "Health Safety Protocol" (the "Protocol") that will govern each establishment; they are initially mandatory for companies considered essential in the construction, mining and transportation equipment manufacturing industry, and for those companies engaged in other essential activities they will constitute only a reference. On the other hand, those companies whose activity is suspended in terms of the Agreements issued by the health authorities, may be required to observe such guidelines, once the health alerts allow the resumption of work.

The Guidelines are part of the strategy for the reopening of social, educational and economic activities, and incorporate an annex where the conditions of manner, form and time in which the activities will be reactivated are described in general terms. These conditions are contained in the Annex to the Guidelines, which includes the following:

1. PHASES OR STAGES OF THE "NEW NORMAL”

The New Normal is a process that aims to reactivate socio-economic activities by avoiding the transmission of SARS-CoV-2, seeking (i) to privilege health and life, (ii) solidarity and non-discrimination; (iii) the economy and efficient means of production; and (iv) shared responsibility (public, private and social). The plan comprises three stages, namely:

Third stage. On 1 June 2020, the reopening stage will begin, subject to the implementation of a weekly"Health Alert”traffic light system by region. The traffic light alert levels are maximum, high, medium and low:

• Maximum level: Only essential activities originally defined on 31 March 2020, as well as those in the construction industry, mining and the manufacture of transport equipment.
• High level: Essential and non-essential activities are allowed with a reduced intensity of maximum 30%, such as manufacturing industry, commerce, restaurants, shopping centers and lodging.
• Medium Level: All activities with a maximum capacity of 60% are allowed, including corporate activities, professional and technical services, aesthetics and barber shops and maintenance and repair companies.
• Low level:Normal economic and work activity, including cultural and sport spaces, cinemas, gyms, bars, massive events, etc.

2. CONTROL STRATEGIES

The Health Authorities established control measures to be implemented in all workplaces, by:

A) The promotion of information that seeks to maintain health standards, and

B) The implementation of health protection measures which, among others, can be

1. healthy distance measures,

2. the dissemination of information,

3. ensuring the availability of medical devices in the workplace; and

4. establishing conditions and policies for health protection, asepsis, hygiene and ventilation.

Companies should implement guidelines that allow them to reduce exposure to the virus for people in vulnerable situations, according to the level of risk they are in, in accordance with the "Health Alert System" and the Guidelines themselves. With respect to people in this group, employers should try to prioritize distance work and establish, through the corresponding committee, measures that ensure the identification, care, protection and non-discrimination of these workers."Health Alert”” y con los propios Lineamientos. Respecto de las personas que se encuentren en este grupo, los patrones deberán procurar priorizar el trabajo a distancia y establecer, mediante el comité correspondiente, las medidas que aseguren la identificación, cuidado, resguardo y no discriminación de dichos trabajadores.

Gross domestic product Mexico

3. PLAN FOR RETURN TO THE WORKPLACE IN LIGHT OF COVID-19

The health authorities have established a sequence of actions that the workplaces will have to follow for the elaboration of the Protocol and that they will have to implement before and during the return to the activities, which comprises seven stages:

1. Planning:Necessary actions to achieve a correct implementation of the sanitary measures; it is mandatory to appoint a committee or responsible for the implementation, follow-up, surveillance and supervision of the measures for the New Normal. They will determine the actions and determine the company’s position in the contingency traffic light system.
2. Definition of health promotion measures:The activities by which health care will be disseminated are established.
3. Choice of health protection measures:This is the designation of the activities aimed at protecting health.
4. Information and training:Actions that are carried out with the objective of informing and teaching the personnel about safety, hygiene, cleanliness, care and in general the indications of the authorities throughout all the stages of the New Normal.
5. Temporary policies:These are measures that are established during the New Normal for the use of spaces and establishment of specific schedules and measures for the prevention of outbreaks in the company. These measures will depend on the Health Alert System; the guidelines provide a table with policies that are recommended according to the level of alert.
6. Advice and support:The Mexican Social Security Institute (IMSS) acts as an advisor in the implementation of the "Guidelines". If applicable, the IMSS must, within 72 hours, issue a qualification of the self-evaluation: i) approving, ii) requesting its extension or clarification (with respect to various aspects or the entire "protocol"), and iii) denying the origin of the protocol, with the possibility to reattempt the procedure. IMSS approval is required to restart activities
7. Completion of the self-evaluation document:The companies will comlete, for each work centre, the document called "Self-evaluation of the Health Safety Protocol", on the digital platform established for this purpose, following the dates and guidelines established in the "New Normal" stages.

Projected unemployment rate

All companies in "Municipios de la Esperanza" can reactivate their functions, without having to validate the protocol, from 18 May 2020 onwards. During the period from May 18 to 31, companies or industries dedicated to essential activities, including those recently approved, which adopt and validate their protocols, will be able to continue their activities. During this period, companies with non-core activities will only be in a period of preparation for the implementation of the protocol.

As of June 1, 2020, the reopening phase will begin for other non-essential activities. The return to activities in the workplaces will depend on their geographical location, and the particular conditions of each municipality, in accordance with the "Health Alert System".

Business Confidence Indicator for the Manufacturing Sector

Micro, small, medium and large enterprises must comply with various obligations, depending on the magnitude of their activities, the number of personnel and the characteristics of the property where they carry out their activities.

The Guidelines provide checklists of measures that synthesize the Health Safety Protocol developed by the Companies and Industries for a safe return to work, prioritizing those related to: i) structural engineering measures; ii) administrative or organizational measures; iii) protection equipment; iv) training; and v) health promotion; planning and management.

At MGGL we are working with our clients so that they can a) determine their situation within the "New Normal" program, b) design the necessary measures to establish their protocols in accordance with the Guidelines and c) begin the implementation of the same, having integral plans for the resumption of work within a legal framework that protects the health of their employees and allows for an orderly reactivation of operations.

AGREEMENT modifying the similar agreement establishing extraordinary actions to attend the emergency.

Yesterday, on April 21, 2020, the Agreement modifying the similar agreement establishing extraordinary actions to attend the health emergency generated by the SARS-CoV2 virus, published on March 31, 2020" was published and entered into force.

This agreement modified and extended the period of suspension of non-core activities until 30 May 2020; this was the only modification made to the previous similar agreement (agreement of 31 March 2020). It is worth mentioning that, by means of this agreement, the Ministry of Health does not issue new measures that could have an impact on labor relations and neither do they modify the scope of the measures published last March 31st. However, the state governments could implement the measures in accordance with the general criteria issued by the Ministry, which have been analyzed in previous bulletins issued by our firm.

The agreement published yesterday foresees that the measures implemented previously by the Ministry of Health will cease to be implemented as of May 18, 2020 in those municipalities of the national territory that at that date present low or no transmission of the SARS-CoV2 virus.

To this end, it states that the Ministry will be the one to define the criteria for evaluating the intensity of virus transmission, as well as any other factor related to the risk of the spread of the disease and the vulnerability of affected populations. Likewise, the Authority will establish guidelines to reduce mobility between municipalities with different levels of propagation, in order to avoid the dispersion of the disease.

The aforementioned Agreement orders that, in all cases, regardless of the intensity of transmission, the protection measures for persons in risk groups implemented on 31 March of this year will be maintained until further notice.

It should be noted that this Agreement orders that the state governments will be responsible, among other things, for establishing and implementing mechanisms to reduce the mobility of inhabitants between municipalities with different degrees of propagation. We estimate that in the next few days, the mechanisms for reducing mobility that each of the local governments deem relevant in order to prevent the spread of the COVID-19 virus will be published in the various official gazettes or periodicals.

At MGGL we reiterate the recommendations and suggestions made in our previous communications, since the legal scope of the measures published on March 31st are still in force and have not been modified. In each particular case we will continue to evaluate and suggest mechanisms to respond to the contingency, however, in case you have any immediate concerns, our legal team remains available for any advice you may need.

Inspections to workplaces to verify wage payments and operation of the companies; technical guidelines of essential activities.

We foresee inspections and an active role of the Federal and State Labor Prosecutor offices to attend clams and grievances.

On March 31st and April 1st, 2020, the General Department of Labor Inspections, through the Office Bearer of the Unit of Dignified Employment, issued the criteria for: (i) the development of inspections for the verification of wage payment and (ii) the development of extraordinary inspections arising from the agreement declaring SARS-CoV2 epidemic (COVID-19) a health emergency.

Furthermore, on April 6, 2020, the Agreement issued by the Ministry of Health, establishing technical guidelines applicable to companies which (a) the suspension of activities may have irreversible effects to its operation (b) are engaged in the courier services and (c) are necessary for the conservation, maintenance and repair of critical infrastructure for the production and distribution of electric energy, was published in the Federal Official Gazette and entered into force.

For order matters, we will analyze first the criteria issued by the General Department of Labor Inspections, in accordance with the following:

(i) Applicable Criteria for the development of inspections during the operation of wage payment or minimum wage payment as of March 30th to April 30th, 2020.

The compliance of the rules issued by the General Labor Department will be enforceable to the workplaces of federal jurisdiction (article 527 of the Federal Labor Law “FLL”), with respect to those which by claim or complaint is known that exists a possible breach of the wage payment or its decrease.

The review term will cover from February 15th to the inspection date.

The aspects and documents subject of inspection, are the following:

1.- Record proving the payment of integrated wage.

2.- The inspector will verify that the payroll deductions, are in accordance with the provisions set forth in the FLL and with the limits set forth by the Law or those carried out as consequence of a judicial resolution (alimony).

3.- List of positions of the workplace and wage for each position.

4.- The inspector will verify, that the wage payment is effectively paid in accordance with each position.

5.- In the event that the inspector detects that the company did not pay the wage or paid a lower amount, the minutes will identify the data of the employee and will request copy of document subject to review.

6.- In the event that the company incompletely provides documents or do not provide any, a term of 5 days will be granted to the company to develop observations and offer evidence in connection with the facts contained in the inspection minutes.

In the event the labor inspector determines the existence of breaches to the wage payment or its decrease, he/she shall communicate such event to the competent prosecuting authority. In addition to the foregoing, the FLL establishes the possibility to impose a sanction taking into account the intent, gravity, possible damage, economic capacity, and the number of affected workers, which may be from 50 to 5,000 UMAs (Unidad de Medida y Actualización - $86.88 Mex.Cy. daily UMA).

In accordance with what we have established in several articles, we consider that the execution of agreements between the parties may justify salary adjustments, as long as they are proportional and consistent, during the emergency period, and must be presented to the Authority, in case they are required in an eventual Inspection.

(ii) Applicable criteria for the development of extraordinary inspections arising from the agreement declaring the SARS-CoV2 epidemic (COVID-19) a health emergency due to force majeure.

Considering the “Agreement establishing extraordinary actions to address the health emergency generated by the SARS-CoV2 virus (COVID-19)”, the Ministry of Labor and Social Welfare (“MLSW”), issued the criteria to carry out such inspections, based on the following:

A.- Verify the compliance of provisions issued by the Ministry of Health regarding the health emergency.

B.- The inspections that will be carried out by the Authority, will have the nature of “extraordinary”, which means that no previous notice or legal summon will be given to employers and companies. It should be expressly noted that Labor Inspectors may not interview employees in the workplaces that will be inspected.

C.- The companies and employers will be inspected when the Authority has knowledge of the existence of any possible breach to the labor provisions or, in the event of any claim or complaint that the employees are working in conditions that risks their health due to COVID-19 virus.

D.- For the corresponding inspection purposes, the Labor Authority most take into account the existence of workplaces with essential activities and workplaces with non-essential activities.

E.- Carried out these extraordinary inspections, the Labor Inspectors will require the companies to be provided with the following information to determine if the company may be considered as a workplace to continue activities:

1.- General Information of the Workplace (name or corporate name, domicile, telephone, fax, electronic mail, commercial activity, deed of incorporation and its amendments, real activity of the company in the workplace, economic activity in the NAICS (North American Industry Classification System), social security scheme, number of Employer Registry, class and risk premium, Federal Taxpayer Registry (RFC, for its initials in Spanish), type of establishment, form of integration of workplace, its measures, information in case of having a contractor, number of employees, employer chamber, union, type of contract, date of the Collective Bargaining Agreement, equity and tax domicile).

2.- Description of the productive procedure or economic activity (description of the productive procedure or economic activity, products or by-products obtained, waste and residues, machinery and equipment).

In the event the Inspector considers that the workplace is authorized to continue activities, he/she will verify that the following measures are respected:

1.- Avoid congregations of more than 50 people.

2.- Employees must wash hands frequently.

3.- The persons must apply the respiratory protocol when sneezing or coughing.

4.- No kiss, hug or shake hands greetings.

5.- Compliance of all measures of healthy distance issued by the Ministry of Health.

If the Labor Inspector detects people over the age of 60, pregnant women or in immediate postpartum, or with a diagnosis of high blood pressure, diabetes mellitus, chronic heart or lung disease, immunosuppression (acquired or caused), renal or hepatic insufficiency, in all events, will order that such persons retire from the workplace to stay at home. Furthermore, the Inspector will be authorized to implement physical tours in the workplace and will prepare the inspection minutes in accordance with NOM-030-STPS-2009.

In the event that the Inspector considers that the workplace does not comply with the requirements to continue activities, the Inspector will solely require the employer to suspend activities immediately, instructing the employees to stay at home. If it is regarding a workplace that carries out complex industrial procedures that merit certain areas or activities to continue, the Inspector shall report such event to his/her hierarchical superior to receive the corresponding indications.

The analyzed document foresee that in the event the employer denies to suspend activities, the Inspector shall inform such situation to the person in charge of the Office of Federal Labor Representation, who, in turn, will file the corresponding complaint before an official of the Prosecutor´s Office.

Meanwhile, in connection with the technical guidelines of certain activities related to the extraordinary actions to address the generated health emergency, the Ministry of Health determined the following:

(a) Companies which suspension has an irreversible effect to its operation. These are the companies of steel, cement and/or glass production, as well as services of technology of the information that guarantee the continuity of the informatic systems of the public, private and social sectors. To be able to continue with the activities that impede the affectation of the suspension, these companies shall inform the Ministry of Economy in a term no longer than 24 hours as of the publication of the Guidelines, the total number of the indispensable workers in order to do not compromise its operation. It should be emphasized the exception to the compromised companies in the projects of Dos Bocas, Maya Train, Felipe Angeles Airport, Railway Bridge (Corredor Transístmico – Istmo de Tehuantepec); as well as the existent agreements considered indispensable for Petróleos Mexicanos and the Federal Commission of Electricity.

(b) Courier Services. The courier services include the companies and platforms of electronic commerce, provided that they comply with the measures issued by the Ministry of Health.

(c) Minimum activities of the companies that ensure the production and distribution of indispensable services: electric energy. The mines and companies that distribute coal will maintain their minimum activities to satisfy the CFE’s demand, informing to the Ministry of Economy, the form and terms described before, the number of minimum workers required for such purposes and shall comply with the measures issued by the Ministry of Health.

On March 31st, 2020, in the afternoon edition of the Federal Official Gazette, it was published and sanctioned the Agreement determining specific measures in the public, social and private sectors in accordance with the following:

In the first instance, non-essential activities should be immediately suspended until April 30th, 2020 to prevent the spread and transmission of the virus and the consequent effects that could result.

Secondly, the following sectors may continue their activities:

1. Participate in the national health system and related technology services, the pharmaceutical industry, manufacturing of medical supplies and equipment, as well as those involved in the treatment of biologically infectious waste and the cleaning and sanitation services of medical units.
2. Involved in public security and the procurement and administration of justice, as well as legislative activity.
3. Considered relevant in terms of their economic activity, including financial services, tax authorities, energy and water supply, food and beverage, supermarket, transportation, agriculture, fishing and livestock production, agro-industry, chemical, cleaning products, hardware stores, messenger services, private security, elderly homes, day care centers, funeral homes, those where the suspension of activities compromises their resumption of work once the contingency is completed, as well as those responsible for upholding the contingency itself.
4. Related to the government's social programs.

Based on the information and resolution discussed, we must consider as part of the essential activities those companies that participate in the supply chain and are directly related to the sectors defined. Those who carry out essential activities must avoid congregations of more than 50 people and follow the hygiene and prevention protocol of the Secretary of Health.

Stay-at-home measures (understood as voluntary limitation of mobility, staying at one’s private residence) is imposed on the entire population that does not participate in essential work activities, and should be strictly followed by those over 60 years of age and in a state of pregnancy or immediate postpartum, or with a diagnosis of high blood pressure, diabetes mellitus, chronic heart or lung disease, immunosuppression (acquired or caused), renal or hepatic insufficiency, regardless of whether their work activity is considered essential.

However, essential public interest personnel may voluntarily apply to work, so we suggest that the express request of the worker be obtained before they continue their services.

Finally, it suspends the censuses and surveys, and integrates the General Health Council with the Secretaries of the Interior, Foreign Affairs, National Defense, Navy, Security and Citizen Protection, as well as the the Ministry of Labor and Social Welfare.

As for those companies that are not essential but comply with the preventive measures imposed by the Ministry of Health, and can operate remotely through home office arrangements, they do not compromise public health in any way, and would not violate the sanitary and health rules established to date.

On the contrary, those who engage in non-essential activities outside of this assumption, and who decide to continue activities, pursuant to Article 416 of the General Health Law, will be exposed to potential administrative sanctions, which may be a warning or reprimand, a fine, temporary or permanent closure (partial or total), and arrest for up to thirty-six hours.

In relation to the controversial nature or cause of the suspension, as we have stated in previous communications, we consider that a strictly legal interpretation of the suspension of relations in accordance with article 427 section VII, and the payment of compensation of up to one month's minimum wage, in accordance with section IV of article 429, is applicable in those areas not considered essential. However, the agreement published by the Authority is silent on the labor issues raised by Secretary Marcelo Ebrard Casaubón, in the presentation of the emergency declaration, denying that the health contingency provided for in the Federal Labor Law is applicable to the case.

Even though MGGL anticipated that, as of the declaration of emergency, specific agreements would come from the labor, economic and even fiscal sectors through the Official Gazette of the Federation, nothing else has been published to date in this regard.

However, an informal Q&A bulletin issued by the Ministry of Labor and Social Welfare, has been circulated, in which it is determined that the case of temporary suspension is due to force majeure, and a video in which the Secretary of Labor suggests full salary payment during the suspension, or reach alternate agreements considering the circumstances, disregarding the health contingency and the minimum wage severance foreseen in the labor law.

In each particular case, we will evaluate and suggest mechanisms to respond to the contingency, including total or partial suspension of activities, leaves of absence, rotation and reduction of working hours, programmed technical stoppages, home office arrangements, agreed salary adjustments, in those areas not considered essential or with the groups at risk in essential work activities, trying to reach agreements that allow the protection of the health of the collaborators and the companies, a situation that is not prohibited by law, and is suggested by the Ministry of Labor and Social Welfare.

On March 31, 2020, the Agreement that declared the SARS-CoV2 disease epidemic (COVID-19) a health emergency due to force majeure was published in the Federal Official Gazette and entered into force, alongside the Decree sanctioning it.

Countrywide, there is uncertainty regarding the labor law effects of this declaration. Beyond the fact that it is issued by a health authority in accordance with the legal procedures required for such purpose, this uncertainty derives from the federal government's statement that the suspension announced until April 30 this year, would be without prejudice or impact on the wages of employees.

In this note, we address the scope of the declaration of health emergency due to force majeure, and whether it materializes the suspension of labor relations.

The health emergency by definition constitutes a major cause in itself, as expressly stated in the Agreement of reference. Beyond speculation as to whether the force majeure described in section I of article 427 of the Federal Labor Law would apply as a cause for the suspension of labor relations, we note that section VII of that article provides a specific budget for the health contingency.

The fractions are not mutually exclusive, but the health contingency, as a cause of force majeure, by its very nature deserves extraordinary treatment, in which it exempts the employer from suspending and promoting a special procedural conflict and obtaining the approval of the suspension and determine the compensation (which may not exceed one month's salary) from the Conciliation and Arbitration Board. In this scenario, the mere declaration of the emergency (which is no longer a contingency, since it is a safe and superior risk), allows the employer to suspend activities, stop paying salaries and offer the daily minimum wage as compensation for up to the term of 30 days.

In evident detriment of the above, we must highlight the way in which the Federal Government has attacked the suspension announced in today’s afternoon press conference, warning employers that they would have to pay the salary and suspend non-essential activities, under penalty of facing administrative and even criminal procedures.

At MGGL we consider that the de facto application of the suspension of relations under fraction VII represents contingencies in the medium term. To date, we believe that the scope of the suspension should be specified in the Federal Official Gazette, with the dates and descriptions of which are the non-essential activities that should be suspended and which activities are necessary to deal with the health contingency. The means that the authorities have used to communicate their decisions in relation to the health emergency do not comply with the necessary formalities for these to be legally binding.

Once these elements have been defined, we can evaluate and suggest mechanisms to respond to the contingency, including total or partial suspension of activities, leaves of absence, rotation and reduction of working hours, programmed technical stoppages, remote working arrangements, trying to achieve a consensus on how to protect the health of employees, the source of employment and the reactivation of activities.

IMPACT OF THE CORONAVIRUS PANDEMIC (COVID-19) ON THE WORK ENVIRONMENT

On March 24, 2020, the AGREEMENT establishing the preventive measures to be implemented for the mitigation and control of the health risks implied by the SARS-CoV2 virus (COVID-19) was published in the Federal Official Gazette and entered into force, as well as the DECREE by which it is sanctioned.

The Agreement is neither clear nor precise and the Executive has omitted to make an express and extraordinary declaration regarding the health contingency, seeking continuity to the country's economic activity. However, the Agreement established the preventive measures that the public, private and social sectors must put into practice, mainly in accordance with the following:

i. Avoiding attendance at workplaces, public spaces and other crowded places by adults over 65 years of age and groups of people at risk of developing serious illness and/or dying from it who, where appropriate, shall be granted paid leave with benefits. This risk group includes pregnant or nursing women, children under 5 years of age, people with disabilities, people with chronic non-communicable diseases (people with high blood pressure, lung disease, kidney failure, lupus, cancer, diabetes mellitus, obesity, liver or metabolic failure, heart disease).

ii. School activities at all levels are suspended until April 17, 2020.

iii. The suspension of activities is determined for the period from March 24 to April 19, 2020 in sectors with particular characteristics, but it is not precise or specific to which it refers, since it determines that the suspension will be applicable in those activities that involve the physical concentration, transit or movement of people, determining the following particularities:

Federal Public Administration agencies and entities and social and private sector organizations must implement plans that guarantee the continuity of operations for the fulfillment of their essential functions related to the mitigation and control of the health risks implied by the COVID-19.

In the private sector, the companies, businesses, commercial establishments and all those that are necessary to face the contingency will continue working, including hospitals, clinics, pharmacies, laboratories, medical services, financial services, telecommunications, the media, hotel and restaurant services, gas stations, markets, supermarkets, miscellaneous, transportation services and gas distribution, as long as they do not correspond to closed spaces with agglomerations.

In view of the foregoing, for those companies that continue operating, or modify their activities, either by reducing the work to essential services or by working at home, during the referred period, the labor relations will be maintained and applied in accordance with the individual, collective, legal contracts or General Labor Conditions that correspond and with the Federal Labor Law.

For those companies that are in suspension, or that are expressly ordered to suspend their activities as stated in the official state newspapers or gazettes, in terms of Article 4 of the General Health Law¹, this agreement must be considered to have been issued by a competent health authority for purposes of Article 427 section VII of the Federal Labor Law, and therefore constitutes a suspension of work without the need for approval or authorization by the Board of Conciliation and Arbitration, suspending the obligations to provide services and pay wages, solely and exclusively for what it does to companies that fall within the suspension cases.

iv. The Agreement also provides for the suspension until further notice from the health authority, mass events and meetings and congregations of more than 100 people, and reiterates the basic measures of hygiene and healthy distance.

During this suspension, workers must continue to be registered with the Mexican Social Security Institute and continue to enjoy social security benefits.

Of course, we cannot fail to observe the lack of clarity when defining the sectors that must suspend work as preventive measures for the mitigation and control of risks, so employers who determine the suspension of their work must sign agreements with workers and/or unions in which they recognize the nature of the cause of the suspension and the wage modality under which the activities are interrupted, regardless of the implementation of any support for the benefit of their workers.

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_¹ Artículo 4o.- Son autoridades sanitarias:

1. El Presidente de la República;
2. El Consejo de Salubridad General;
3. La Secretaría de Salud, y
4. Los gobiernos de las entidades federativas, incluyendo el Gobierno del Distrito Federal.

On March 23, 2020, the Agreement dated March 19, 2020 was published in the Official Journal of the Federation.

The General Health Council recognized the SARS-CoV2 virus (COVID-19) disease epidemic in Mexico as a serious disease of priority attention, and "sanctions the preparation measures, prevention and control of the SARS-CoV2 virus disease epidemic, COVID-19, designed, coordinated, and supervised by the Ministry of Health and implemented by the Federal Public Administration agencies and entities, the Legislative and Judicial Powers, the National Health System institutions, the governments of the Federal Entities...”

The General Health Council also expressly recognized the SARS-CoV2 virus disease epidemic, COVID-19 in Mexico, as a serious disease of priority attention.

This agreement of the General Health Council determines that the Ministry of Health will establish the necessary measures to prevent and control the epidemic, and expressly recognizes the governments of the states as health authorities for the corresponding legal purposes. In fact, according to Article 7 of the Health Law in force in Mexico City, the head of the government in this city must be considered as a health authority.

Likewise, on March 23, the Agreement dated March 20, 2020 was published in the Official Gazette of Mexico City, by virtue of which the Head of Government of Mexico City, resolved that: la Jefa de Gobierno de la Ciudad de México, resolvió que:

“FIRST. In light of the health emergency and in order to reduce to the maximum the COVID-19 infection curve among the population of Mexico City, it is decided to temporary suspend activities of the following public and private establishments:any establishments considered to have a direct impact on the neighborhood and vicinity (party halls, movie theaters, theaters, bars, private clubs, casinos, nightclubs, discos, clubs and their variables); low-impact commercial establishments such as public and steam baths, gyms, sports centers, museums, zoos, electronic and/or video game entertainment centers, mechanical and electromechanical, bowling alleys and billiards; as well as the so-called innovation, freedom, art, education and knowledge institutes (PILLARS), child development centers (CENDIS), DIF centers in Mexico City, DIF day centers in Mexico City, centers for attention, care and development of children (CACDIs) and educational centers at all levels in Mexico City. ”

The Agreement provides that the suspension entered into force upon its publication on March 23, and will remain in force until 19 April 2020.

This agreement by the Head of Government, in her capacity as health authority of Mexico City, must be interpreted for the purposes of Articles 42 Bis, 427 section VII and 429 section IV of the Federal Labor Law, as a declaration of health contingency, which suspends labor relations. It is important to note that the suspension applies only to the establishments expressly mentioned and only within Mexico City.

This declaration of sanitary contingency takes effect by itself, and therefore, there is no need for approval or authorization by the Board of Conciliation and Arbitration to suspend the obligations to provide services and pay the corresponding salaries.

From our perspective, the suspension is based on the severity of the pandemic and the danger it poses to the health of our country. As a consequence, the employer's obligation to pay its workers an indemnity equivalent to one day of the general minimum wage in force in Mexico City is triggered, which to date amounts to $123.22 pesos, for each day that the suspension lasts, that is, from March 23 to April 19, 2020.

During this suspension, workers must remain registered with the Mexican Social Security Institute and continue to enjoy social security benefits. Even though the suspension takes effect as of the entry into force of the Agreement, we suggest that the corresponding agreements be entered into with the respective employees and/or unions recognizing the nature of the suspension and its effects.

The employers affected by the suspension of work, taking into account the specific circumstances of their company and its workers, may establish during the suspension any form of support for the benefit of their workers.

For the purposes of the other states of the Mexican Republic, a health declaration such as that of the Mexico City government must be reviewed. In the event that there is no formal suspension due to the pandemic and it cannot be considered as a health contingency declaration, the effects on labor relations will be different.

THE CORONAVIRUS IN MEXICO - PHASE 2

Yesterday, the World Health Organization (WHO) published a report in which it placed Mexico in Phase 2 of the Coronavirus Contingency (COVID-19). This means that it can now also be transmitted by local infection and not only by contagion from abroad. A restriction on mobility has not been decreed yet.

ACTIONS OF THE AUTHORITIES

Given the ease of infection, several countries, including Mexico, have taken a series of actions to contain the spread of this virus. As part of these actions, various authorities have determined to suspend their work.

The Supreme Court of Justice of the Nation and the Federal Judiciary have announced that no sessions, hearings or procedural deadlines will be held during the period from March 18 to April 19, 2020.

Two days later, on March 19, 2019, the Federal Conciliation and Arbitration Board published a statement in its bulletin suspending hearings and proceedings from March 23 to April 19, 2020.

t the local level, the authorities throughout the Republic did not have a uniform response, so they are gradually suspending work, communicating with the general public and making announcements through their local bulletins. Most of the Boards have decided to suspend work for the period from March 23 to April 19, 2020 and these days have been declared public holidays, so new dates will be set for the holding of hearings that are scheduled in this period.

ACTION GUIDE FOR WORKPLACES AGAINST COVID-19

Last Friday, on March 20th, the Ministry of Labor and Social Welfare published an Action Guide for Work Centers against COVID-19, with the purpose of adopting measures that contribute to prevention and the fight against the Coronavirus.

The objective of the guide is to prepare the workplaces before a potential sanitary contingency situation. It recommends actions such as the planning or training of employees, temporary measures as staggered schedules, as well as mechanisms that the workplaces will be able to implement to prevent the contagion and reduce the impact that the epidemic could cause them, by means of exceptional practices of health and hygiene and the identification of co-workers with symptoms of disease.

As part of the planning actions, the guide establishes the need to identify the tasks or functions that can be made more flexible or carried out from home, as opposed to those activities that are essential for maintaining the activity of the workplace.

Likewise, the Ministry has assumed the temporary policy of suspending non-essential activities, in accordance with the “National Social Distancing” program, which will run from March 23 to April 19, 2020. It is important to note that this suspension is not the result of a health contingency declaration, and therefore the obligations to pay the salary are subject to the negotiations that can be achieved with the employees/unions.

In the event that a general health contingency situation is declared, the employer is obliged to suspend work in general, exempting the workers from going to work and the employer from paying wages, with the latter having the obligation to cover its workers with compensation consisting of one (1) day's minimum wage for each day the contingency passes for a maximum period of one month. After this period, there will be no obligation to render services by the worker or to pay salaries by the employer until the contingency decreed subsists.

The scenarios set forth that will continue to be in force can be read in our previous bulletin.

At MGGL we are working to keep our clients and strategic partners updated on any official communication or disposition published by the competent authorities while this condition subsists.

Likewise, we have adopted the required sanitary measures to avoid the transmission of COVID-19 among our personnel, activating the necessary protocols to guarantee our clients the continuity of our services.

Derived from the current Coronavirus pandemic (COVID-19) in different parts of the world, various measures have been taken to prevent its spread. In this context, an environment of uncertainty arises in the application of preventive measures that can be taken, and on what to do in the event of a possible declaration of health contingency by the Ministry of Health.

Article 42 Bis of the Federal Labor Law, contemplates the declaration of health contingency issued by the competent authorities as a cause for collective suspension of labor relations, mentioning the following:

“Article 42 Bis "In cases where the competent authorities issue a declaration of health contingency, in accordance with the applicable provisions, which involves the suspension of work, the provisions of Article 429, Section IV of this Law shall apply”.

Article 427, in conjunction with Article 429, Section IV, provides that in the event that the competent authority declares a health contingency, the employer is obliged to suspend work in the workplace, exempting the workers from going to work and the employer from paying wages. In such event, the Employer has obligation to provide its workers with an indemnity consisting of one day's general minimum wage applicable to each day that the contingency occurs and this for a maximum period of one month.

“Article 427 These are causes for the temporary suspension of employment relations in a company or establishment:

(…)

VII. The suspension of work or jobs, declared by the competent health authority, in cases of health contingency".

Article 429 .- In the cases referred to in Article 427, the following rules shall be observed

(…)

IV. In the case of fraction VII, the employer shall not require the approval or authorization of the Court and shall be obliged to pay his workers compensation equivalent to one day's general minimum wage in force for each day of suspension, which may not exceed one month.

La Ley Federal del Trabajo, contempla a la declaratoria de contingencia sanitaria emitida por las autoridades competentes como una causa de suspensión colectiva de las relaciones de trabajo

Knowing this, we must take into account the following possible scenarios:

1. Until a general health contingency declaration is issued, the employer cannot unilaterally suspend the effects of the labor relations; therefore, he is obliged to pay his workers their full salary. This does not mean that there is a prohibition for the employer to allow his workers to stop going to work, that is, the employer may allow his workers to stop going to work, but he may not affect their wages, benefits or rights.

2. In accordance with the above, the practice known as "Home Office" could be taken as an alternative, by means of which, the jobs that allow it by their nature, could be provided remotely from the place that the worker wishes, by means of a temporary agreement with the employees, establishing the scope of the work provided, but without the employer being able to reduce or affect the salary, benefits or rights of his workers.

3. In the event that the competent authority issues a general health contingency declaration, such declaration shall describe the scope and type of services that shall be suspended, and the employer would be obligated to suspend work generally, exempting the workers from going to work and the employer from paying wages, with the latter having the obligation to cover its workers with compensation consisting of one day's general minimum wage for each day the contingency passes, for a maximum period of one month. The general minimum enforceable daily wage is currently set at $123.22 Pesos, and $185.56 Pesos for the north border of the country. After this period, there will be no obligation to render services by the worker or to pay any salary by the employer until the contingency decreed subsists. Of course, the employer may implement any alternative to support and benefit the employees, even during the formal suspension of the services.

4. If the competent authority issues a general health contingency declaration and if the nature of the work so permits, the alternative practice called "Home Office" may be established by mutual agreement between the employer and the worker, whereby, in the absence of an express prohibition for either the employer or the worker, it could be agreed to continue the provision of services by the worker remotely, that is, without the worker being obliged to go to workplace to provide services, in which case the worker's wages and benefits would be covered in full, without the need to cover the compensation referred to in article 429, section IV, of the aforementioned legal provisions.

It should be mentioned that the health contingency declaration should determine the scope and types of work to be suspended. There is the possibility of suspending only the work of women and minors under 18 years of age in workplaces; this is only if the declaration itself so determines, as provided for in our labour law in articles 168 and 175. In this case, the employer would be prohibited from using the work of women and minors under 18 years of age, but the salary, benefits or rights of such workers may not be prejudiced.

In case the contingency subsists for a period longer than one month as established in article 429, section IV of the Federal Labor Law, the provisions of articles 431 and 432 of the same legal system shall apply, which mention the following:

Article 431.- The union and the workers may request every six months the Conciliation and Arbitration Board to verify whether the causes that led to the suspension still exist. If the board decides that they do not subsist, it shall set a term of no more than thirty days for the resumption of the work. If the employer does not resume work, the employees shall be entitled to the indemnification set forth in article 50.

Article 432.- The employer shall announce the date for the resumption of the work at all times. He shall give notice to the union, and shall call by such means as may be appropriate, in the opinion of the Conciliation and Arbitration Board, the workers who were employed in the company when the suspension was decreed, and shall be required to reinstate them in the positions they previously occupied, provided that they appear within the period set by the same employer, which may not be less than thirty days from the date of the last call.

If the employer does not comply with the obligations set forth in the preceding paragraph, the workers may exercise the actions referred to in Article 48.

The provisions of this article shall not be applicable in the case referred to in section VII of article 427. In this case, the workers will be obliged to resume their work as soon as the contingency is over.

According to the legal provisions transcribed, in the event that the contingency exceeds the period of one month and the work relationship remain suspended, including the obligation of the worker to provide services for the company and the obligation of the employer to pay wages, the latter would have no additional payment obligation until work is resumed, as soon as the health contingency declaration is lifted.

In the event that, in any work center, it is considered that there are risks to the health of the workers and if a general declaration of contingency has not yet been issued, the employer could submit to the consideration of the Conciliation Board the suspension of work in the work center and the Board would have to determine whether it is appropriate for the employer to temporarily suspend work.

Notwithstanding the above, independent temporary agreements may be negotiated with the employees and/or unions to suspend the services under the terms and conditions of operations and compensations applicable in each particular case.

On October 23, an initiative was presented in Mexico’s Senate to reform the business practice of outsourcing, with some very particular and noteworthy conditions. The initiative reflects the new course of public labor policies and Is fully aligned with the social focus of the current government. The initiative makes no distinction between the tax-evasive practices that have developed around this practice, and the practice of certain companies that make use of it for strategic business reasons and to maintain their competitiveness, with total adherence to the law.

MGGL presents a summary of the initiative below, anticipating that the approval of a scheme such as the one proposed will further jeopardize private investment, the signing of the new United States-Mexico-Canada Agreement (USMCA), and in general, our country's competitiveness vis-à-vis other nations.

The proposed reform is justified around the main argument that the transfer of workers to an outsourcing company generates (i) the omission in the payment of “PTU” (mandatory profit sharing payments to employees); (ii) that the core activities of the businesses are simulatively carried out by third parties; (iii) the non-compliance of fiscal, labor and social security obligations with respect to outsourced employees; (iv) the simulation of operations, through the issuance of invoices with virtual operations, affecting revenue collection of the Treasury, and (v) the impact on the right to freedom of association and the right to collective bargaining.

The objective of the proposal is to eliminate general subcontracting of workers, either with third parties (outsourcing) or through companies related to the contractor (insourcing), and to limit the model of personnel subcontracting, generating a new, much more limited operational framework.

The new framework involves (i) the certification of contracting companies by the Secretariat of Labor and Social Welfare (STPS) in the National Registry of Outsourcing Companies; (ii) the detailed description of the scope of services in the contract; (iii) verification of compliance with employer regulations; and (iv) a temporary program of criminal immunity for those who have engaged in criminal conduct around outsourcing and subcontracting, granting 180 calendar days for spontaneous and full regularization.

The proposed definition of outsourcing establishes that"outsourced work is work performed by workers contracted by an employer,called a contracting companyto execute works or render services under its direct dependence on behalf of another person, natural or legal, called a contractor or beneficiary, which establishes the tasks of the contracting company's workers and supervises them in the development of the services or the execution of the works provided in the respective contracts..”

This definition would follow the original structure of Article 15A of the Federal Labor Law (FLL), by providing for the assignment of workers from one employer to perform services for another, who establishes and supervises the works, i.e., the assigned workers would be supervised by legal and contractual definition to the beneficiary of the service.

However, the initiative limits the viability of outsourcing or subcontracting practices to those cases where theactivities provided by the contracting company require a degree of specialization that is different or ancillary to the principal activity or vocation of that performed by the contractor or beneficiary…”

Beyond the limitation of outsourcing activities needing to be different from the contracting company’s core activities, the initiative prohibits and qualifies the following scenarios as simulation:

1. When it is to carry out the core or essential activities, according to the line of business;
2. When workers of the contractor or beneficiary have been transferred by means of employer substitution or any other equivalent act to the contractor so that he assumes them as his own.
3. When its purpose is to cover the totality of the labor activities of the work center of the beneficiary contracting party;
4. When the contracting company has a direct professional, labor or economic relationship with the contractor, or is part of the same company, entity or economic group and any of the foreseen behaviors is carried out.

The only specific exceptions to the concept of simulation as identified by the initiative refers to the situation where the services covered by the outsourcing contract cannot not be carried out by the workers of the contracting company, that the assignment is project-based and limited in time, and that the time of services rendered by the specialized outsourced personnel does not exceed the time necessary for the completion of the project. The initiative stipulates that contractors may provide services provided that they are registered in the National Registry of Outsourcing Companies of the STPS.

Workers employed in the execution of projects or services under the outsourcing regime will be entitled to (i) be informed in advance of the conditions of their employment, and receive a copy of the outsourcing contract, (ii) enjoy equal working conditions, and enjoy all the prerogatives that the law grants to workers hired directly, and (iii) that all the salaries and benefits covered are consistent with their individual work contract and the tax statements that are issued.

In the event that any of the simulation hypotheses has occurred, the beneficiary is obliged to cover the corresponding PTU for the entire period in which they were under an irregular and/or simulated regime. In addition, the initiative grants broad powers of inspection and verification to the labor and social security authorities to verify full compliance with the regime, ratifies the imposition of fines for non-compliance and opens the possibility that the simulation may be criminal to the detriment of workers, the Federal Treasury and/or the IMSS.

This initiative marks an ideological shift and the new political course, and although it will be subject to analysis and we believe there will be ample discussion still before its approval and enactment, it does make it very clear that current models and schemes used will no longer be allowed.Concepts such as economic unit, intermediation and business group will gain in significance, regardless of the final characteristics of this initiative. At MGGL we are working with our clients to anticipate possible adjustments required under such new law and new criteria that may derive from them, trying to guarantee the soundness and independence of operation necessary to maintain competitiveness in a global environment.