Proposals to avoid a Labor Dispute by Covid 19

In light of the current situation with respect to COVID 19 (Coronavirus), and since the authorities issued the agreement by which they determined that it is a “Health Emergency by Force Majeure”, and NOT AS A HEALTH CONTINGENCY, the Federal Labor Law, provides that the procedure for the collective suspension of the employment relationship must be followed for a case of force majeure or fortuitous event not attributable to the employer. However, in order to carry out such a procedure and avoid a labor dispute, it is required the intervention of the Conciliation and Arbitration Board, of the workers and employers, which at this time CANNOT BE DONE DUE TO THE CLOSURE OF THE BOARD.

In the light of the above, the following proposals are made to address the current situation, the legal basis for them, and the considerations of each:

• Collective suspension of labour relations by health contingency (Art. 427, Part VII, and 429, Part IV, LFT )

In accordance with the Agreement declaring as a health emergency due to force majeure the epidemic of disease caused by the SARS-Cov2 virus (COVID 19) issued on 30 March 2020 by the General Health Council, we are in a situation caused by force majeure and not by a health contingency, so the assumption of a health contingency declared by the health authority is not considered, this being the essential requirement for proceeding in accordance with the provisions of Articles 427 (VII) and 429 (IV) of the LFT.

It is not advisable to carry out what has been established for a declared health contingency, since it’s not officially declared, and therefore the provisions for that case, in the form of the payment of one day’s current general minimum wage, are not applicable, for each day of suspension, not exceeding one month. Therefore, in the ABSENCE of the health contingency declared by the competent health authority, there is a risk of a labour dispute, with the applicable consequences and sanctions.

In other words, in the event of suspension of the employment relationship in accordance with section IV of article 429 of the LFT, WITHOUT THE OFFICIAL DECLARATION OF A HEALTH CONTINGENCY, there could be a labor dispute over the REDUCTION OF WORKERS’ WAGES.

If the employer determines that there is a HEALTH CONTINGENCY, without the competent authority declaring it, the workers may initiate a labour dispute and bring proceedings under the Federal Labour Act, as laid down in Article 48 of the LFT.

• Collective suspension of labour relations by force majeure or the fortuitous case not attributable to the employer (Art. 427 Part I and 429 Part I, LFT)

Under the Agreement declaring as a health emergency by force majeure the epidemic of disease caused by the SARS-Cov2 virus (COVID-19), issued on 30 March 2020 by the General Health Council, The special procedure before the Conciliation and Arbitration Board should be followed by giving notice and requesting approval of the suspension, subject to the established procedure. This is not possible at the moment due to the closure of the Conciliation and Arbitration Board by Agreement that determines the suspension of work by the contingency COVID-19 published on March 20, 2020 in the Labor Bulletin.

Should the employment relationship be suspended without the established procedure and without the authorization of the Conciliation and Arbitration Board, there could be a labor dispute over the UNILATERAL determination of the collective suspension of labor relations. Workers could bring proceedings under article 48 of the Federal Labour Act.

• Unemployment (Art. 123 fractions XVII and XIX of the CPEUM)

According to both factions it is established that the stoppages are a right of the workers and the bosses, and that for them to be lawful they will be so only when the excess of production makes it necessary to suspend the work in order to maintain the prices at an affordable limit, and for which the conduct of the procedure and obtaining the approval of the Conciliation and Arbitration Board is required and the applicant shall provide evidence of the excess production, This will be done by making the workers affected by unemployment aware of it. Reiterating what was said in the previous point, concerning the closure of the Board by Agreement that determines the suspension of work by the contingency COVID-19 published on 20 March 2020 in the Labor Gazette.

If the employer does not comply with the procedure or is not approved by the Conciliation and Arbitration Board, the workers may bring the actions referred to in article 48 of the Federal Labour Act.

• Holidays (Articles 76, 77, 78, 79, 80 and 81 of the LFT)

The employer may advance the holidays so that the workers remain at home during the period of infection of COVID 19, it is feasible taking into account the following, but it must be in common agreement with the worker and leaving the necessary records. It is the employer’s obligation to keep these records and to present them to the labour authorities when required. This measure does not cover the total of the period determined by the authorities established in the Agreement declaring as a health emergency due to force majeure the epidemic of disease generated by the SARS-Cov2 virus (COVID-19) in which it was introduced until 30 April 2020. whereas leave is paid and the worker must be paid a premium of not less than 25% of his wages during the holiday period; that is, he shall not be obliged to work by electronic means, enjoy the holiday period and the holiday bonus.

It is important to remember that holidays must be in line with the LFT, which states:

“Workers with more than one year of service shall enjoy an annual period of paid leave, which in no case may be less than six working days, and shall be increased by two working days, up to twelve, for each subsequent year of service.

After the fourth year, the leave period shall be increased by two days for every five days of service.”

A one-year service requirement is required to qualify for the holiday period, which is a minimum of six days for the first year. Therefore, this measure does not cover the period established by the authorities and represents the payment of the holiday premium, in addition to the days paid for the holiday period, so that after the end of this period, one would have to return to the usual tasks.

• Permits and Licenses (In Internal Labor Regulations deposited with the Conciliation and Arbitration Board)

The LFT only provides for the following permits and leave: permission for a foreigner to work, on grounds of paternity, by special declaration of absence, to vote in elections, for an accidental or permanent commission by your trade union or the State and leave for insured working mothers or fathers, whose children up to the age of 16 have been diagnosed by the IMSS with cancer of any kind and are licensed as a document necessary for the performance of a specific activity; for this reason it is inapplicable and, in the absence of one of the grounds indicated in the LFT, the permits and licenses in question do not apply. It is important to note that these permits are individual rather than collective, and therefore could not apply to all workers at the Centre.

Permits and licenses with or without pay may be covered by the Internal Labour Regulations of each workplace, which must be deposited with the Conciliation and Arbitration Board, in order to be effective. For this purpose, the RIT must have a Joint Commission for its formulation and must not be contrary to the LFT. The RIT is for the workplace only.

• Private Agreement (Jurisprudence)

For the elaboration of an agreement between the employer and all workers in the workplace, represented by the Union or through the majority of workers. This agreement must establish the conditions under which working relations will be suspended or how it will develop during the period of the “health emergency caused by force majeure”, to the epidemic of disease generated by the virus SARS-Cov2 (COVID-19).

Noting that this Convention cannot be contrary to the LFT or contain a waiver of workers’ rights, said Agreement being an agreement between both parties (WORKERS AND EMPLOYERS), ratification by the Conciliation and Arbitration Board is not required for validity. Reiterating that the Convention must not contain a waiver of workers’ rights and must be concluded with the Union or with the majority of workers in the company.

Serving as the applicable basis the following jurisprudence criteria: CONVENTION IN LABOR MATTERS. WHEN IT CONTAINS WAIVER OF RIGHTS. THE, TERMINATION AGREEMENTS OF THE EMPLOYMENT RELATIONSHIP ARE VOID. FOR THE PURPOSES OF THEIR VALIDITY, THE PARTIES ARE UNDER NO OBLIGATION TO APPLY TO THE CONCILIATION AND ARBITRATION BOARD COMPETENT TO RATIFY THEM, AN AGREEMENT TERMINATING THE EMPLOYMENT RELATIONSHIP. WHAT IS EXPRESSED IN IT HAS DEMONSTRATIVE EFFICACY AS A CONFESSION OF THE WORKER, WHEN THE LATTER OFFERED IT OR ENDORSED IT IN THE TRIAL AND THE ISOLATED THESIS OF OUTSIDERS TO THE CONCLUSION OF AN AGREEMENT.

Therefore, in view of the specific circumstances of the case we consider that THE BEST OPTION TO AVOID A LABOR DISPUTE, is to conclude agreements with the workers.

This means that the Convention represents a certainty for both parties (workers and company), and it must be specific to the needs of each Workplace and its economic activity.

Lastly, the Federal Labour Office (PROFEDET) and the Ministry of Labour and Social Security (STPS) have expressed their views on the Agreement declaring a health emergency as a result of force majeure, to the disease epidemic caused by the SARS-Cov2 virus (COVID-19), therefore, they indicated that the Special Procedure should be followed for collective suspension of the employment relationship by force majeure or the fortuitous case not attributable to the employer and not the suspension by health contingency.

Without further ado, and mentioning that Bandala | Díaz | García has years of experience in the fields of Tax, Accounting, Labor and Administration; we make available our services for the implementation of the above mentioned measures, and we are at your complete disposal for any doubts and clarifications, if deemed necessary.

We can help you with the option that needs to be implemented.