Reed Smith Client Alerts

On March 24, 2020, the Ministry of Health (Secretaría de Salud) published in the Official Gazette (Diario Oficial de la Federacion) a resolution (the "COVID-19 Resolution") that establishes precautionary measures to be adopted by the private, public, and social sectors in Mexico to mitigate and control risks resulting from the COVID-19 virus. On that same date, the President of Mexico ratified the COVID-19 Resolution, requiring the country to comply.

This Alert provides a quick overview of certain key contractual, labor, and financial issues in Mexico resulting from the current COVID 19 pandemic crisis declared by the World Health Organization on March 11, 2020.

Authors: Francisco Rivero Daniel Avila Alejandro Agredano Zermeño

upward view of tree

I. Labor

The COVID-19 Resolution establishes that the private, public, and social sectors shall comply with the following measures:

  1. Individuals older than 65 or at risk of developing a serious illness and/or dying as a result of COVID-19, that are pregnant or nursing mothers, mothers of minors under 5 years of age, individuals who are disabled, suffer from a chronic non-contagious disease or have a suppressed immune system (represent Covered Employees) will enjoy full salary and benefits and shall not attend the work place, or public or crowded places.
  2. A temporary suspension of school activities until April 17, 2020.
  3. A temporary suspension of activities that involve the physical attendance, transit, or movement of people.
  4. An order that essential activities related to mitigation and risk control of COVID-19 including medical, financial, news, and telecommunication services, hotels, news services, gas stations, supermarkets and groceries, transportation services and utilities unless they entail confined and crowded spaces will continue.
  5. A temporary prohibition of events involving more than 100 people.
  6. An order to comply with basic hygiene measures. 
  7. Other applicable measures that the Ministry of Health shall issue.

Although the Mexican Federal Labor Law (FLL) allows employees to "work from home" or remotely in any place freely chosen by the employee by registering the arrangement in the corresponding "Registry of Employees Working from Home" it is unlikely to apply to the current COVID-19 crisis given that this Registry is only for employees that work remotely year round.

The FLL does not describe the measures for temporary remote work (not even in the case of a disease such as COVID-19), and as long as the Mexican authorities do not issue a health contingency declaration that suspends the labor relationship, which has not yet occurred, for all non-Covered Employees the following scenarios may apply:

A. If work can be performed from home, the employer should agree in writing the guidelines with employees. As a practical matter, this could be achieved by incorporating such guidelines into the employer’s electronic internal policies requesting the electronic consent of employees; 

B. Salaries may be reduced if working hours are also reduced, both parties are in agreement and there are no waivers of rights affecting employees; 

C. If the work can not be performed from home, and the employer decides to close the workplace as a contingency measure, the employer shall continue paying full salary and benefits, unless an agreement to the contrary is reached with employees. 

D. If certain employees are not able to perform work from home, they would need to go to the corresponding workplace. 

If an employee is diagnosed with COVID-19 the employer shall suspend the existing labor relationship, and the Social Security Institute shall pay 60 percent of the employee’s salary for up to 78 weeks.

If the competent Mexican authorities issue a health contingency declaration that suspends the labor relationship, the employer must pay an indemnity equal to the minimum wage in force in the region where the work center is located for up to one month. The employer is not required to continue paying salary and benefits.