The Federal Law to Prevent and Eliminate Discrimination (La Ley Federal para Prevenir y Eliminar la Discriminación or LFPED) was publishedin the Official Journal of the Federation on June 11, 2003. Even though such law has been in effect since then, there has not been an agencyresponsible for its application until recently, when the National Council for the Prevention of Discrimination was created (Consejo Nacional ParaPrevenir La Discriminación). This law protects employees from discrimination based on ethnic origin, nationality, sex, age, disability,socioeconomic status, health condition, pregnancy, language, religion, opinion, sexual preferences, marital status or any other status that couldimpede or nullify the recognition or exercise of an employee’s rights and equal opportunities for those individuals within Mexican territory.Among other discriminatory practices, the LFPED establishes the following: (a) prohibition against free election of employment for restrictingopportunities to gain tenure/seniority or promotion within an organization; (b) establishes differences in salary, benefits and workplace conditionsare handled fairly. (The LFT distinguishes classes by aptitude, which is often difficult to demonstrate in practice); (c) limiting access to trainingand professional development programs; (d) applying any type of use or custom against human dignity or integrity; (e) impeding one’s right tochoose a spouse or partner; (f) exploiting or treating employees abusively or in a degrading manner; (g) inciting hatred, violence, rejection,mockery, defamation, injury, persecution or exclusion; (h) engaging in or promoting physical or psychological abuse based on physical appearance,form of dress, speech, mannerisms, or for publicly assuming a sexual preference. Those employees and workers in Mexico who sufferdiscriminatory practices may present a petition before competent labor authorities and at the same time present a complaint before the NationalCouncil for the Prevention of Discrimination (Consejo Nacional Para Prevenir La Discriminación or CONAPRED) and hold their employerresponsible before the CONAPRED process for damages and losses suffered, and may also request economic compensation through a civil lawsuit.Until now, very few cases of employees and workers have been filed, but the LFPED has been relatively unknown. However, it could becomewidely used in the labor field, and it is recommended that human resources employees in companies such as managers, supervisors and foremen beaware of its existence in order to avoid subjecting employees and workers to this type of treatment or practice.

Article 87 of the Federal Labor Law (Ley Federal del Trabajo or LFT) establishes that employees have a right to an annual holiday bonus, whichmust be paid on or before December 20th of each year, and is at least equivalent to 15 days of salary. For employees who have not completed a fullyear of service, or those who leave the company prior to the holiday bonus year end period, they also have a right to receive a proportional part ofthe holiday bonus in conformity with the time they worked, however short such time may be. With this in mind, one may interpret that the spirit ofthe LFT regarding holiday bonus payments is to grant employees an additional payment in order to allow them to enjoy the year end holidays andpay corresponding expenses. Holiday bonus pay can be considered as a “blind” benefit, in that it is paid based on the time an employee has workedat the company during the year, not based on an employee’s qualifications or position, with the employer being obligated to make the payment toall employees under identical conditions according to the number of days they worked during the year. One important aspect of the holiday bonusis the fact that from the time an employee leaves his or her employment with the company, regardless of the time of year, the employee has the rightto receive a proportion of holiday bonus pay based on the time worked for the employer during the year. It is also worth noting that someemployers pay holiday bonus in greater amounts than the legal minimum, in some cases 30 or up to 60 days or more, in which case the employeeautomatically enjoys an acquired labor right that may not be reduced in any way in the future. (Note: Under Mexican law, once a benefit has beengranted, it may not be reduced or taken away.) The holiday bonus concept plays an important role in Mexican collective bargaining agreements andtheir periodic renewals given that many labor unions attempt to renegotiate such contracts every two years, requesting an increase in the number ofdays of holiday pay employees are entitled to receive. Given that the holiday bonus is a direct cost borne by employers, it is necessary to negotiate the holiday bonus pay carefully and evaluate payroll costs for making the holiday bonus payment. Finally, it is especially important to note thatholiday bonus pay, in addition to being paid in the established term and customary form, must also be considered for purposes of paying employeeseverance indemnification, which includes three months’ wages and 20 days’ salary per year worked and that, in conformity with Article 84 of theLFT, holiday bonus pay forms a part, together with all of the other payments received by the employee, of the total daily salary used to computeseverance payments.

The Internal Revenue Service (IRS) has finally issued its preliminary position with respect to the Single Rate Business Tax (Impuesto Empresarialde Tasa Única or IETU) for purposes of crediting such tax, which is paid in Mexico, in the United States. In release 2008-3, the IRS stated that itwill continue to analyze the details of the IETU in order to conclusively define if it is truly an income tax, for purposes of determining the proprietyof recognizing IETU tax payments as international credits against federal income tax due by tax residents of the United States. Such releaseprovided that until further notice, taxpayers may take the position that the IETU is an income tax that may be credited for U.S. tax purposes, thuspreventing the IRS from challenging U.S. taxpayers who take the IETU as an international tax credit. The IRS’ release concludes by stating that ifit decides to change its policy regarding IETU tax credits, such change will not be made retroactively. In Mexico, the Department of Finance andPublic Credit (Secretaria de Hacienda y Crédito Publico) in a more positive communication, indicated that it will work with the IRS so that a finalconclusion confirming the availability of international tax credits for IETU tax payments, both with respect to the current legislation creating theIETU and any future amendments. Even though the IRS’ position is not final, this news should be viewed quite favorably by U.S. taxpayers andmultinational enterprises doing business in Mexico. Mexico also stated that a large number of countries had already expressly accepted the incometax nature of the IETU and granted international tax credit status for IETU paid in Mexico, beginning January 1, 2008.