Some Mexican Labor Laws Suspended in Earthquake's Wake

During times of natural disaster, labor law may indemnify employers against legal action

By Oscar De La Vega and Eduardo Arrocha September 14, 2017
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Some Mexican Labor Laws Suspended in Earthquakes Wake

​On Sept. 7, an earthquake measuring an 8.5 on the Richter scale hit the central and southern states of Mexico. Felt as far as Mexico City, roughly 500 miles away, it caused severe damage in the states of Chiapas, Oaxaca and Veracruz. Many people lost their lives and their homes.

This event of nature has labor consequences as well. Some companies have suspended or terminated their normal activities because of the damage caused by the quake, but laws may indemnify them against legal action.

Here are a few things HR should know about Mexican labor law in times like these:

Collective Suspension

Article 427 of the Mexican Labor Code establishes several reasons why employers aren't liable if they must suspend payment of salaries and benefits—and why employees aren't obligated to work—during unforeseeable circumstances, such as an earthquake.

If employers experience such an event, the law states that they must file with Mexico's Board of Arbitration for a summary ruling for the approval of the suspension of salaries and benefits—and determine the amount of any indemnification to be paid. That amount can't exceed one month's salary for each worker.

 

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If the suspension falls within the law, the only obligation for the employer is to pay an indemnification, which will be determined by the Board of Arbitration. The board will weigh the specific circumstances and determine a reasonable amount of time that the company will need to resume normal activities.

If the suspension of work lasts more than six months, workers can ask the board to verify the need for the suspension. If the board determines that work can be resumed, employers have 30 days to notify workers that they must show up for work. If they fail to show up, the employer is free to terminate their labor contract—without liability. If the employer fails to reopen the establishment, it would then be liable for wrongful dismissal and must pay employees three months of salary, plus 20 days of wages for each year of employee seniority.

Collective Termination

As in the case of collective suspension of work, Mexican labor law also establishes reasons for collective termination without legal liability for the employer.

The code establishes the same conditions for collective termination—an unforeseeable circumstance outside of the employer's control. The difference is that the event would make the continuation of the company or establishment activities impossible.

Just as in the case of collective suspension, in accordance with labor laws, organizations must file for a summary ruling by the Board of Arbitration. Once the board justifies the collective termination, it will order an indemnification of three months of salary and the payment of a seniority bonus (12 days of wages per year of seniority). This will be the total amount the employer needs to pay each employee.

 

Note: This article references reasons related to an earthquake. This doesn't mean that there are no other circumstances under which the collective suspension or termination of labor relations is considered in Mexican labor law. It is also important to note the more benign treatment of the indemnifications and legal responsibilities provided for in the law in these cases.

 

Oscar De La Vega and Eduardo Arrocha are employment and labor attorneys with De La Vega & Martinez Rojas SC in Mexico City.

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