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Legal compliance recommendations arising from the COVID19 outbreak in Mexico

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March, 2020

Legal compliance recommendations arising from the COVID19 outbreak in Mexico

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With the phase 2 of COVID-19  approaching, Mexico has turned on alerts to date with various confirmed cases, the World Health Organization (WHO) said that the coronavirus causing the COVID-19 can already be defined as a ” pandemic “, after the number of affected cases outside China has multiplied in two weeks and in that period the affected countries have tripled.

The companies are preparing contingency plans, examining their work protocols to do home office in order to adapt to these new contingencies.

Employees and employers must be prepared to make decisions in case of having any impact on the workplace and the supply chain may be affected.

E&M Business Lawyers offers some recommendations on labor, social security, corporate and commercial issues:

  • Employers must implement preventive measures to avoid the spread of COVID-19.
  • According to the Federal Labor Law (LFT for its acronym in Spanish), employees are obliged to observe the requirements, rules and measures regarding health, safety and work environment issued by employers for the safety and protection of all.
  • To the employers it is recommended to share with their employees the preventive health measures issued by the Mexican government.
  • To the employers it is recommended to review, analyze and, where appropriate, to adjust the home office protocols in order to be prepared.
  • Companies should review their supply contracts to be prepared in case the supply of materials is affected by force majeure situations.
  • Companies must verify their bylaws in order to comply with the General Law of Corporations (LGSM for its acronym in Spanish), which establishes that companies must be held at the company’s registered office.

Health and safety measures:

It is recommended that employers carry out the integration of a Safety and Hygiene Commission, which will have the following duties:

  • To be alert for the prevention of the spreading.
  • It is responsible for the communication with workers.
  • To disseminate the prevention and recommendations, as well as symptoms, in order to prevent the spread.
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Frequently asked questions in labor matters

Can the employer ask its employees to undergo medical examinations?

The employer may request its employees to undergo medical examinations during the employment relationship, employees are obliged to abide by the instructions issued by the employer to undergo such medical examinations.

The refusal may be causing the termination of the employment relationship, for which there must be evidence of the refusal by the employee.

It is recommended to verify that the employer has given each employee a PRIVACY NOTICE that describes the treatment that will be given to the confidential information that is provided to the employer. This notice is the employer’s obligation.

Also, the employer must request all employees to be informed of any closeness they have had with infected people or with suspicion. Additionally, to be informed of any trip that has been recently made to the risk area.

How the employer should act in the case that an employee becomes infected or has suspicions?

In the event that it is suspected that an employee has contracted COVID19, it will be necessary to approach to the Mexican Institute of Social Security (IMSS for its acronym in Spanish). In the event that the IMSS does not issue the certificate of disability, the employee must return to work, unless the employer assumes the labor costs resultant from not doing so.

If we are facing a contagion situation, the employee must have a disability issued by the Mexican Institute of Social Security (IMSS) and abide all the measures and instructions issued by the authority. This means that affected employees, will be entitled to the corresponding benefits as long as they meet the requirements requested.

Can I suspend the work of the company and payments to my employees if a health contingency is declared?

There are some alternatives for the suspension and termination of labor relations provided by the Federal Labor Law in the face of health contingency through the payment of compensation to employees. However, we recommend that such measures be taken with caution and previously advised in order to avoid occupational risks. It is recommended to privilege the intervention of the IMSS in the event that there is a proven contagion between the employees. Likewise, the suspension of work of the company may bring it other responsibilities of a commercial, corporate and fiscal nature.

Can the employer require the employee to provide services if it is in quarantined, but asymptomatic?

From the moment quarantine has been declared by the Mexican Social Security Institute, cannot be required to continue providing services to an employee from home despite being asymptomatic.

The employer is obliged to repatriate expatriates in risk areas?

The recommendation is to repatriate employees who are in risk areas, with preventive measures issued by the WHO. It is recommended that the employee have a restriction period of 14 days before returning to the workplace.

What to do in the case that an employee has recently traveled by Business and / or Private to risk areas?

It is recommended to issue information to the employee to give notice to the company in the case of being in this situation, before returning to the workplace if employee hasn’t returned. In the event that the employee is in this case and is already in the workplace, employee must inform the employer as soon as possible, in order to approach to the Mexican Social Security Institute (IMSS) so that an evaluation can be performed.

Is the employer obliged to suspend trips, conventions, meetings? What if the employee refuses to go? 

The government of Mexico has not issued or implemented health warnings or preventive measures; however, it may be suggested to the employee not to travel to risk areas, it is important to understand that cannot be forced not to travel if the employee decides.

For both employers and employees, it is recommended that they review the possibility of postponing the trip and follow the recommendations issued by the World Health Organization (https://www.who.int/es/emergencies/diseases/novel-coronavirus -2019 / advice-for-public).

For this reason, it is important to implement a contingency plan, which is constantly adapted to the messages of the WHO and the health authorities of the Mexican government.

Can the employer force to work home office for a while?

Yes, as long as the measure is under a scheme in which there are substantiated doubts or suspicions of contagion, that is, employees who have been in contact with areas declared at risk in the established period. Employees must have a temporary restriction for the incubation period of 14 days. The employee will have a justified absence and the right to receive their salary and benefits package agreed in the employment contract.

The employer must be careful not to carry out any discriminatory practice, since no individual in Mexico can be discriminated against for being diagnosed with COVID-19, if so, the responsibility of the employer could be the payment of legal compensation as a result of the termination of the employment relationship for reasons attributable to the employer.

Can an employee not attend the workplace for fear of contagion?

The employee is not authorized to not go to work for fear of contagion, unless the corresponding authority has determined preventive isolation (IMSS, SSA), it is the employer who is responsible for establishing preventive measures.

If the employer has not given this indication, the absences will be unjustified. However, the Mexican government could at any moment order the closure of companies due to the health contingency, and the employer would be obliged to abide by said determination.

Will the employee be able to decide to do home office?

No, home office should require the prior consent and agreement of the employer.

Is it necessary to have a pandemic policy?

Today, a policy of this nature is not required by the LFT, however, we believe that the employer must have an established policy that include protocols to report relevant symptoms, trips made or to be made to countries with restrictions.

CORPORATE MEASURES:

The General Law of Corporations (LGSM) establishes that the society assemblies that are governed by said law, must be held at the registered office of the company. Due to the COVID19 outbreak, some companies could be affected by not being able to gather their partners at the registered office to carry out decision making, so it is important to verify if the company’s bylaws foresee the possibility of take unanimous resolutions of partners / shareholders outside the assembly, in order that the company can continue with its daily operations, as well as that the assemblies can be carried out in a virtually manner.

COMMERCIAL MEASURES:

It is recommended that the identification of those contracts in which operations may be affected as a result of interruption of activities or delay due to the pandemic.

  • If there is a case of force majeure, in which case would it justify not supplying customers for not receiving raw materials or products from the affected countries (China, Italy, etc.)?

Each of the cases must be analyzed, the specific supply contract and how the case of force majeure has been regulated. The applicable law should be examined, since the consequences of force majeure may vary in each country. In the absence of a signed contract, UNIDROIT principles of international commercial law may apply.

It is important to inform the client about the situation that makes it impossible to fulfill orders, the estimated time and the cause. The industries must bound the risks and damages that may be claimed, through an analysis that determines the degree of inability to supply or the intensity of the force majeure in this case of being in this scenery.

It is also important to consider that the Civil Codes of the various States of Mexico, allow exceptions established to the requirements that regulate the fortuitous event or force majeure, so that the parties that have agreed to this at the time, may not invoked as excluding liability.

  • In the case of clients of Chinese companies or affected countries, issue a document in which the breach by force majeure is proven, will this be final?

It must be reviewed in each case as ruled by the competent court. Since these governments are not an impartial instance, nor is it recognized as a global authority. It is advisable to take into consideration the situation that is being experienced in China and affected countries, in order to deal sensitively relationship with suppliers.

  • In the case of having an insurance policy to repair damages and losses caused to clients or third parties due to non-compliance, is it covered in case of force majeure?

Insurance policies usually exclude force majeure events, however, it is recommended to review insurance policies as it may not be covered in cases of force majeure, but might cover the delays in supply, as long as it is invoked BEFORE the official declaration of force majeure. Therefore, we recommend to verify the compliance of policies in each case.

At EM Law our specialists in labor, social security, corporate and commercial matters are at your service to answer any questions in any of our two offices in Mexico City and the Bajio region.

Contact Us

Ciudad de México

Edgar L. Espejel M.

edgar.espejel@emlaw.com.mx

+52 (55) 1209 1200

+52 (55) 6845 0349

Av. Insurgentes Sur 601, Piso 11

Col. Nápoles, 03810,  Ciudad de México

Zona Bajío

Liliana Arredondo

liliana.arredondo@emlaw.com.mx

+52 (461) 178 9886

+52 (461) 615 2020

Sierra Nevada #305

Col. Las Arboledas, 03810,  Celaya, Guanajuato.