What does it legally mean for a company to remain in an outsourcing model in 2024

In the dynamic business world, companies face a series of challenges and opportunities, and one of the most relevant issues in the legal field is the outsourcing model.

Outsourcing certain functions or services has been a strategy commonly employed by companies to improve operational efficiency and reduce costs. However, with the implementation of the Labor Reform in Mexico and other regulatory changes, the outsourcing landscape has undergone a significant transformation in legal terms.

Here we will tell you what it legally means for a company to remain in an outsourcing model in the middle of 2024. We will analyze current regulations, the legal responsibilities of companies and how to adapt to this new regulatory environment to ensure compliance and protect the interests of the company and its workers.

‍

What is outsourcing?

Outsourcing, or outsourcing, is a practice through which a company hires third parties to perform certain functions or services that were previously carried out internally. These services can range from human resources and accounting to IT and manufacturing services.

‍

The Labor Reform and its Impacts

In Mexico, outsourcing has been a topic of debate and concern in recent years. The implementation of the Labor Reform in 2023 brought significant changes in the regulation of outsourcing, with the objective of protecting the rights of workers and preventing abusive practices by companies.

‍

Legal implications for companies

In the current context, it is essential that companies understand the legal implications of following an outsourcing model in Mexico. Some important things to consider include:

‍

• Registration with the Secretariat of Labor and Social Security (STPS): companies that carry out outsourcing activities must register with the STPS and meet certain requirements, such as providing information about the outsourced services and the workers involved.

‍

• Joint responsibility: The Labor Reform establishes joint and several liability between the contracting company and the outsourcing service provider in the event of a breach of employment obligations. This means that both parties may be responsible for ensuring compliance with the labor rights of contract workers.

‍

• Limitations on outsourcing: the legislation imposes limitations on the outsourcing of personnel, prohibiting the outsourcing of personnel for core activities of the company. In addition, restrictions are established on the payment of utilities and profit sharing.

‍

• Compliance with tax obligations: companies that outsource services are required to comply with corresponding tax obligations, including paying taxes and issuing tax receipts. It is important to ensure that the service provider complies with all tax obligations to avoid penalties and legal problems.

‍

What penalties and legal problems can a company that uses the outsourcing model in Mexico have?

The use of the outsourcing model in Mexico can entail certain penalties and legal problems if the company does not comply with established labor and tax regulations. Some of the most common problems a company might face are:

‍

• Fines and economic sanctions. If the company fails to comply with labor, tax or social security obligations related to outsourcing, it may face financial fines from the competent authorities. These fines can be significant and negatively affect the company's finances.

‍

• Solidary responsibility. In the event of a breach of employment obligations by the outsourcing service provider, the contracting company may be held jointly and severally liable. This means that the company may be required to cover payments for salaries, benefits and other outstanding work obligations.

‍

• Legal Issues and Litigation. Failure to comply with labor and tax regulations related to outsourcing can result in legal problems and litigation. Affected workers can file lawsuits against the company for violations of their labor rights, which could result in costly legal proceedings and damage to the company's reputation.

‍

• Closing of operations. In serious cases of non-compliance or repeated violations of regulations, competent authorities could take more drastic measures, such as the temporary or definitive closure of the company's operations. This would have devastating consequences for it and its employees.

‍

How can companies adapt?

Faced with these legal changes, it's crucial that companies evaluate their outsourcing practices and take steps to ensure regulatory compliance. Some important actions include:

‍

• Review and update contracts with outsourcing service providers to ensure compliance with labor laws.
• Conduct internal audits to identify potential non-compliance risks and take corrective action.
• Train human resources and legal personnel on changes in labor legislation and the implications for the company.

‍

It is crucial for companies that use the outsourcing model in Mexico to comply with all applicable labor, tax and social security regulations. This will help avoid financial penalties, legal problems and damage to your reputation. Therefore, it is advisable to seek specialized legal advice to ensure regulatory compliance and protect the interests of the company and its workers.

‍

At GLZ Abogados, we're here to help you navigate these legal challenges and provide you with the expert advice you need. Contact us today for more information.

‍