Amendment to the Social Security Law on Matters Related to Outsourcing Companies

On July 9, 2009, various amendments to the Social Security Law were published in the OfficialJournal of the Federation. One amendment, in particular, provides that companies hiringpersonnel services from an employee outsourcing company will assume, by operation of law, allemployer obligations set forth in the Social Security Law with regard to the employees from theoutsourcing company that are subordinate to such company contracting the outsourcing ofpersonnel. The foregoing applies if the outsourcing company defaults on its obligations undersuch law and when the Mexican Social Security Institute provides notice to such outsourcingcompany requiring compliance with such law and the outsourcing company fails to comply withthe required actions contained in such notice. Companies that hire employee outsourcingcompanies will have to provide, on a quarterly basis, a list of all executed contracts of suchnature from the previous quarter within the first 15 days of the months of January, April, Julyand October. This amendment also provides for fines ranging from 20 to 350 times the minimumsalary in effect in the Federal District in the event that companies hiring employee outsourcingcompanies fail to submit the reports requested in such amended law. Moreover, the amendmentprovides that the employee outsourcing companies will have an employer registration for each ofthe five risk categories provided by said law, when necessary, in terms of risk categories underwhich the companies benefiting from such services are registered. Employee outsourcingcompanies shall review on an annual basis the incidence of casualty on each one of the employerregistrations assigned to such company. The measures described above intend to preventemployee outsourcing companies from defaulting on their obligations mandated by law and toprotect the rights of employees hired under this system.