Mexico´s Best News of 2017, The Labor Reform.

As with every transformation, the labor reform of 2017 will come with
its fair share of naysayers, but there is no way around it:  this radical conversion of the labor justice
system is the best thing to happen to Mexico, commerce and business over all.

For reader’s sake a little bit of history must be shared in order to
understand why labor disputes in Mexico are not a part of the traditional
justice system. Much like in the U.S, per the separation of powers the authority
to decide cases and controversies is vested in the Judicial branch headed by the
Supreme Court and inferior courts established by the Constitution on both
Federal and State levels. For one hundred years all matters including
financial, governmental, regulatory or any other associated to the administration
of justice has been controlled by this Judicial power, except for one
particular area: Labor disputes.

Due to concrete conditions in Mexico back in 1917, derived from years of
civil and revolutionary war, the over all distrust of the justice system that
was seen as part of the status quo that favored the wealthy elites, and
doubtless, many injustices suffered by the en-masse
population, there was a necessity to create an alternate three-way system to
guarantee justice in regards with labor and employment matters. The concept of
this model meant that controversies where to be voiced not before a judge, but through
an arbitration board composed of three agents representing a) the employer b)
the employee and c) the government (president of the board), which in the end
would resolve all disputes over a majority vote through an informal arbitration
procedure. Through this innovative system, all prosecutions where not resolved
by one judge but by three agents to maintain fairness and objectivity in
regards with the working class. The end result was Labor boards that materially
administered justice, but were formally placed under the Executive power both
at Federal and State levels.  

In today’s circumstances labor boards across the country suffer from
insufficient funding from governments to be able to guarantee a correct
administration of justice and therefore have become fertile grounds for rampant
corruption. Low salaries for employees, not enough personnel, enormous amounts
of files in progress and miniature budgets to upkeep buildings have the boards
in a state of near abandonment. As far as personnel, there is virtually no training
and thereafter plenty of uncertainty for employers and employees with
substantial or potentially expensive matters tried before the boards. In some
critical states like Quintana Roo local governments have used the labor boards
to illegitimately organize and implement corrupt schemes to charge employers with
ridiculous amounts of money or even in some cases illicitly strip them of
property. Over all, the lack of regulation and accountability for board
officials and an outdated system with low wages has made firms and counselors
innovate in terms of legal prevention as to avoid litigating at all costs to escape
pricey legal exposures.

One of the main targets of this reform is to address this concern conclusively
by completely removing the three-way representation arbitration system and transforming
it into Labor Courts within the Judiciary branch. This includes ofcourse more
funding, ( by definition the Executive power had no funding for administering
justice) and the same amount of restrictions, liabilities and support than any
other court in the Justice system. For many pessimists, this may not be the
answer to end with all corruption, (as there are corruption scandals within the
judicial system as well) but anyone seeking to legitimately end corruption must
be aware that even though this might not be the final step, it is indeed a much
needed first step that must be taken in this endeavor.

In regards with the administrators of justice and people working within
the justice system, this will necessarily mean more training, increased
liability, better facilities and hopefully an increased sense of pride in the
Job. For Labor Judges this will mean social, legal and economic recognition
that will also entail increased liability and restrictions when dispensing with
impartiality. In elevating the living standard and public standing of employees
that will from now on work in labor courts we hope for better human resources,
increased competition and legitimacy in all processes. 

For the private sector, both employees and employers should benefit from
a heightened sense of justice in the system. Employers should consider
implementation of due diligences to catch and correct practices or policies
that are not in compliance with legal statutes or international compliance
whllst an increased set of restrictions should bring about a much-needed amount
of scrutiny, but also security and stability when litigating without the usual
grind of trying to avoid fraud.

As labor and employment consultants we urge all employers to keep
fighting labor injustice “inhouse”, and to envision the management of human
resources as a means to avoid controversies and costly litigation. One thing
that our current system has taught employers is the value of  “prevention”. This crucial part of doing
business in Mexico should not be forgotten or overlooked even after this legal reform.

As I said before, there will be a lot of comments surrounding this labor
reform but all businesses, foreign investors, and any and all interested
parties should not lose sight of one thing: with all the news and political
hype surrounding 2017, this is the best thing to happen yet this year.

For more information:

Bufete Diaz Miron y Asociados

Juan José Díaz Mirón

jjdiazmiron@diazmiron.com