Problems relating to Trade and Investment on Mexico
16. Employment |
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Issue |
Issue details |
Requests |
Reference |
| (1) Vexatiously Complex Procedures for Work Visa Acquisition / Renewal | - It was only in September 2012 that GOM authorised Resident Certificate for 4-years maximum. However, by the 2013 Amendment, the Annual Renewal had become necessary, requiring trip to Mexico City each time. The cost of filing renewal application kicks up the operational expenses, (including attorney's fees) of the Member Firm's Subsidiary (MFS) in Mexico. - The time required for completing renewal of work visa filed in 2014 was cut down by large margin (to 5-days). However, at each legislative or administrative change, replacement of administration's staff takes place in vast numbers, making it difficult for applicants to timely prepare or take responsive actions on the work visa related issues. There have been tendencies of problems/confusions to arise periodically each time, on such occasions, over the work visa related issues. |
- It is requested that GOM: -- exercises self-control in annually amending laws and regulations. -- accepts renewal application also at the nearest location of the applicant. - It is requested that the administration ensures to provide prior instruction and training of its staff in depth and breadth to annihilate any chance of inconvenience or difficulty to arise over work visa issues after each legislative or administrative change. |
- Ley General de Poblacion, articulo 60 y Reglamento de la Ley General de Poblacion, articulo 140 - Immigration Law |
| (Action) - Simple Entry Visa (good for 180-days, at $262-MXN) is required for entry into Mexico on business purposes, while entry into the U.S. with less than 75 miles is authorised under Simple Entry Visa. A formal visa is required for more than 75-miles. |
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| (Improvement) - On 28 September 2012, Implementing Regulation of Immigration Law was promulgated. Article 156 of the Regulation provides: "Stay Permit is issued with validity of plural years, maximum 4-years, excepting infants with 3-years of age on less." However, it seems that Stay Permit Card itself requires annual renewal. (JETRO business news of 26 October 2012) |
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| (2) Delayed Visa Issuance for Expatriates due to Frequently Amendments of Immigration Act | - Immigration Law changes frequently so that neither Mexican Consular Office in Tokyo nor GOM are able to provide prompt or sufficient service, delaying visa issuance, and in the end disrupting expatriates' work and the stay in Mexico of their accompanying family members. | - Visa issuance is streamlined and promptly processed by and among the Alinza del Pacifico Member States (Mexico, Chile, Peru and Columbia). It is requested that GOM streamlines and expedites visa issuance to Japanese expatriates to Mexico and their accompanying family members, in as much as Japan because both countries had concluded Japan-Mexico EPA. | - Ley de Migracion - Reglamento de Migracion |
| (3) Overly Labour Protective Labour Legislation | - While the enforcement in December 2012 of new Labour Act had drastically revised the Act since 1970, it retains overly labour protective colour more than in past years. It includes a provision that compels employers to pay compensation for dismissals inclusive of those who caused material damage to employers. This goes beyond the comprehension based on a general common sense. |
- For Mexico to become developed countries, it is essential for GOM to take steps to streamline and amend the labour legislation in line with the higher international standard level, including the Labour Contract Law. | - Labour Act |
| (Action) - In principle, the Labor Act provides that any employment must be for an indefinite term, and does not permit any trial period of employment. Employers must pay three-month compensation at the time of discharge of employees on employers' own accord. Moreover, if the discharged employee is a nonunion member, employers can be excused from rehiring the employee by payment of compensation equal to 20 days per year of the service years of the employee so discharged. - On 28 September 2012, Chamber of Deputies (Camara de Diputados) passed the bill to amend the Federal Labour Act focused on relaxing the Labour Contract and Employment Obligations. The bill amends the Federal Labour Act promulgated in 1971 after the absence of 42-years, including among others provision of certain Probational Period for Trial/Training of New Workers, allowing Adoption after Test and Dismissal, and allowing Hourly Wages based on Hours Worked. - On 30 November 2012, Amended Labour Law was promulgated. |
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| (4) Difficulty in Punitive Discharge | - Even in the event of legal punitive discharge on employee's violation of rules of employment, not on account of employer's convenience, the employer must pay legal dismissal allowance/severance indemnity allowance to the employee. | - It is requested that GOM refrains from compelling employers from payment of severence allowance other than the discharge by employer's or employee's own accord. | - Labour Act, Mexico |
| (5) Pre-Modernistic Employees Profit Sharing System (PTU) | - Under the Mexican law, all workers (except executive officers) are entitled to be distributed 10% of the corporate profit evenly commensurate with the number of days worked and the wage scale, regardless of the individual performance results or ability. Employees are entitled to receive such payments in so far as they are on the payroll of the enterprise in concern. - Under Labour Act, employer must pay 10% of pre-tax profit to all employees, as long as who belong to the company before the end of May. - Under Labour Act, apart from the regular wages and bonuses, it amounts to considerations payable to employees, giving extremely negative impact upon enterprises operation as compared to personal expenses in other countries. - Existence of PTU, which dictates distribution of profits, inclusive of gains even foreign exchange, is in total absence of rationality to the extreme. |
- It is requested that GOM : -- repeals the scheme to share profits with employees, and if that is not possible, -- amend the scheme based on the principle of competition. - It is requested that GOM repeals PTU. - In international perspective, it is considered that this Scheme is better dispensed with. - It is requested that GOM repeals PTU. |
- PTU - Labour Act - Labour Act, Article 15 - Constitution Chapter IX (Substantive Details in Labour Act, Articles 117-131) |
| (6) Irrational Labour Profit Sharing Scheme | - Mexican Employees are entitled to receive 10% of an enterprise's profit after adjustment of the taxable income, as employees' pooling of profit under the Participacion de los Trabajadores en las Utilidades de la Empresa (PTU Scheme). The PTU Scheme fails to come to grip with neither the Economic nor Market Principle. Should this abnormal scheme grow irrationally into the future, foreign investors will have to reconsider before making investment into Mexico. From the perspective of foreign investors, it is preferable for Mexico to revert its labour policy back to normal where enterprises pay wages to their employees based on their performance and ability, reflective the prevailing market conditions and terminate the abnormal PTU Scheme. | - It is requested that GOM prohibits the abnormal profit sharing system. | - Federal Labour Act amendment (in Article 15), clarifying the definition of HRDA and providing certain restrictive measures. - Ley Federal del Trabajo; Articles 117 to 131 - Ley del Impuesto sobre la Renta; Article 16) - Ley Federal del Trabajo (LFT, Federal Labour Law in English) |
| (7) PTU Review | - While PTU (under Profit Sharing Scheme) gets distributed to all employees evenly without reflecting the job performance or individual ability, it does not motivate individual workforce. - Where an expatriate is not on the BOD or remunerated in like manner, employers must apply PTU to that expatriate in contravention of the agreement between Member Firm and MFS. |
- PTU is a scheme rooted in socialistic doctrine, requiring amendment to certain extent based on the doctrine of competition. - It is requested that GOM takes step to provide exceptional provision applicable to expatriates from overseas. |
- Federal Labour Act amendment (in Article 15), clarifying the definition of HRDA and providing certain restrictive measures. |
| (8) Compulsory Conversion of Despatched Workers to Regular Workers | - Amendment of Federal Labour Act in November 2012 raises labour cost as it requires conversion of despatched workers into workers. (no improvement on it, as usual) | - It is requested that GOM deregulates restrictions on HRDA. | - Federal Labour Act amendment (in Article 15), clarifying the definition of HRDA and providing certain restrictive measures. |
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