Mexico City, october 22 2024.
On October 16, 2024, President Claudia Sheinbaum announced an initiative to reform Mexico’s Federal Labor Law. This reform which will be submitted to the Congress aims to guarantee employment and social security rights for those deemed employees of digital platforms.
In recent years, the lack of protection in labor rights, social security and housing benefits for those who provide services on digital platforms, such as delivery, drivers and other people who perform tasks through apps, has become a relevant concern. While the digital economy offers flexible hours and the possibility of providing services from anywhere, it has also created significant gaps in the protection of those who provide their services on these platforms.
The reform seeks that the operators of digital platforms, defined in the initiative as “employees”, are granted with labor and social security rights, trying to maintain this business model viable. Key aspects of the initiative include the following:
- Only the time actually worked will be considered, from task acceptance to completion. However, unions representing employees in digital platforms, are pushing for waiting time between tasks to be counted as work hours as well.
- Payments will be set per task or service, including prorated benefits such as rest days, vacations, vacation bonus, and Christmas bonus, which could create a significant administrative burden on employers.
- Companies will need to enter into individual or collective employment contracts with employees, which must be registered with and authorized by the Federal Center for Conciliation and Labor Registry. These contracts may be signed digitally, and must detail salary, equipment, safety conditions, and supervision requirements.
- The right of employees to participate in the profit sharing of the companies that own the platforms, which could pose challenges for employers, especially when calculating the number of days worked for the payment of such concept.
- The requirement of transparency, in how the algorithms that assign tasks operate, which must be integrated into employment contracts, which could also imply the revealing of certain industrial secrets.
The reform also introduces new obligations for digital platform companies, including:
- Payments to employees must be made within no more than one week.
- Implement mechanisms to record hours worked and issue receipts.
- Register employees in the social security system.
- Guarantee training and implement job security mechanisms.
- Transparency of remuneration for each task or service.
- Establish mechanisms to prevent discrimination, violence and harassment in the workplace.
In turn, the Mexican Social Security Institute (IMSS) will launch a mandatory pilot program for companies to register digital platform employees. To this end, it will issue national employer registrations for the platforms and will allow flexibility in payments, with retroactive adjustments to ensure the registration of employees.
Platforms will be required to register under the Mandatory Social Security Regime, which covers occupational risk, illness, maternity; disability retirement daycare and social benefits, in addition to housing benefits provided by the National Workers’ Housing Fund Institute (INFONAVIT), for operators that generate a monthly income equivalent to one minimum wage or higher. Operators with incomes below the minimum wage may choose to register as self-employed employees.
Regardless of their monthly income, all operators will be covered by the Occupational Risk Insurance for the time actually worked.
It is worth noting that the results obtained during this pilot program will be used for drafting subsequent reforms to the Social Security Law on this subject.
Employees will be obliged to comply with safety standards, take care of the assigned equipment and perform the tasks at the designated times and places.
The initiative does not address essential topics related to weekly rest days and mandatory rest days or vacation days, periods when employees of these platforms typically experience a higher volume of tasks. It also fails to mention the obligation of employers to ensure that employees do not exceed their normal working hours.
Countries such as Chile and Spain have advanced in the regulation of the work in digital platforms, while in Brazil a similar proposal is currently under discussion in the Brazilian Congress. This places Mexico within a global trend of labor regulation in the digital economy, a topic that has been on the agenda for several years.
The initiative seeks to balance the flexibility that characterizes the business model of digital platforms with the need to provide social security and labor protection to operators working within them.
The project sets forth that the decree will enter into force the day after its publication in the Official Gazette of the Federation, although a transition period is expected to allow companies to adapt to such a significant reform.
This note was prepared with the support of Gabriela Guadarrama García and Daniela Hidalgo Martínez.
The labor and employment lawyers of Basham, Ringe y Correa, S.C., remain for any further comments or questions.
Sincerely,
Jorge G. de Presno Arizpe
David Puente Tostado
Luis Álvarez Cervantes
lalvarez@basham.com.mx
Gil Alonso Zenteno García
Santiago Villanueva Durán
