Mexican Labour Law Compliance: Expert Insights for Nearshoring Success

Francisco Udave begins by emphasising the importance of understanding the unique legal framework of Mexico when starting operations. He notes that hiring employees in Mexico involves specific legal and practical steps to ensure compliance. Key considerations include the number of employees and the specific sector of business, as local practices may vary slightly even under the federal labour law. Furthermore, businesses must meet requirements related to collective relationships and union interactions.

The conversation then shifts to the essential documents needed for compliance. Ernesto de la Puente explains the necessity of an employer registry code from the Mexican Social Security Institute and various other registrations, such as those with the National Consumers Fund and the National Immigration Institute. These registrations are critical for formal employment and ensuring legal compliance.

Francisco highlights the importance of establishing a local legal presence, typically through a Mexican subsidiary. This presence is crucial for obtaining necessary registrations and ensuring compliance with local laws. He points out that assigning foreign personnel to manage or operate locally introduces complexities related to employment, immigration, and tax aspects.

Ernesto elaborates on the concept of employment stability in Mexico, where employers cannot unilaterally terminate employees without legal cause. He also discusses mandatory benefits such as profit sharing, Christmas bonuses, and holiday entitlements. Additionally, he touches on the significant issue of providing onsite services under subcontracting relationships and the active role of unions in certain regions.

Francisco discusses the cultural differences between home countries and nearshoring destinations, particularly regarding labour practices. He notes the 90/10 rule in Mexico, namely that at least 90% of employees must be Mexican nationals. This rule contrasts with practices in other countries where such ratios may not exist. He also highlights the differences between common law and civil law systems, stressing the importance of adapting global policies to comply with local regulations.

Ernesto underscores the essential role of local labour law experts in guiding companies through the complexities of Mexican labour laws. He believes that legal advice is crucial not only for understanding regulations but also for navigating day-to-day practicalities. Legal experts provide invaluable assistance in ensuring compliance and mitigating risks associated with nearshoring ventures.

Francisco outlines the importance of aligning global policies with local regulations to ensure compliance. He recommends conducting thorough analyses of these policies in light of local laws. Additionally, he emphasises the need to consider international treaties, such as the USMCA, which influence labour practices and obligations for companies operating in Mexico.

In discussing strategies for attracting and retaining foreign talent, Ernesto highlights the necessity of understanding local regulations to plan competitive compensation packages. He suggests offering travel and lodging allowances, legal and tax support, and ensuring cultural integration with the local workforce. These strategies help companies remain competitive and foster a supportive work environment for foreign employees.

The episode provides a comprehensive overview of labour law dynamics in Mexico, emphasising the importance of legal compliance and understanding local practices. Businesses engaging in nearshoring ventures can benefit significantly from the expertise of local labour law experts and the implementation of robust, compliant policies.