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Mexico: opening up the state

Mexico has been a member of the North Atlantic Free Trade Association for over 20 years now and was seen by the then President Salinas de Gartari as an opportunity to establish Mexico as a leading free market economy.

Things have not always gone as smoothly as planned but suffice to state that Mexico is again attracting interest as an emerging economy with opportunities for foreign investors.

In late 2013 two autonomous agencies were set up to tackle anti-trust provisions in the telecommunications industry (the Federal Institute of Telecommunications) and for other industries namely the Federal Economic Competition Commission.

New powers have also been given to the Mexican Federal Constitutional Court to deal with competition regulation and this has led to a proposal that in the television sector alone, some 246 channels are now up for tender.

The labour market regime remains slightly rigid and quite archaic in places. Two main documents govern the employment relationship namely the 1917 Constitution and the Mexican Federal Labour Law Act.

There is a presumption of permanent employment with an employer and tight requirements regarding hours and days of work that favour employees. Severance payment conditions can be generous to employees, namely 3 months pay plus 20 days pay for each year served.

Employment law in Mexico does not recognise at will termination but there are provisions for discharge for cause namely certain acts have been committed by the employee namely fraud, failure to report impropriety, disobedience, drugs and alcohol at work.

The Mexican labour market model will probably have to go through further profound changes to introduce flexibility to promote growth and to ensure that the monopoly scenario in place at the current time, does not lead to a lack of competitive practices.

Taking these steps will prove to be the major challenge for the Mexican government-but if Mexico is still to be part of the economic hot-spots comprising the MINTS (Mexico,Indonesia, Nigeria and Turkey) they are ones which will need to be implemented.

Matthew Yates Partner

Co-Lead Global Labour Law Unit

matthew.yates@dwf.co.uk

David Gibson Partner

Co-Lead Global Labour Law Unit

david.gibson@dwf.co.uk

 

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Legal news, views, trends and tools for HR Professionals. Stay ahead. Go further