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Mexico updates its Federal Labor Law to regulate digital platforms, ensuring standardized labor conditions and rights for gig economy workers.
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The amendments introduce new definitions and rules, including flexible work schedules, digital contracts, and algorithmic management transparency.
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Employers must provide social security, profit sharing, and training, while workers gain union rights and protection against discrimination.
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Non-compliance with the new regulations may result in fines, with a phased implementation.
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On Dec. 24, 2024, Mexico published amendments to its Federal Labor Law regarding digital platforms. These changes take effect 180 days after publication.
This GT Alert highlights significant modifications to the law and details the new definitions, penalties, and implementation timelines.
I. Purpose
The amendments seek to establish a regulatory framework for digital platforms in Mexico that standardizes labor conditions for the employees working through these platforms. This includes compensation, effective access to social security, provision of benefits, implementation of security measures, and profit sharing. The regulation seeks to ensure that digital platform employees' labor rights are protected under a legal framework.
The initiative focuses on regulating the "gig economy" platforms, meaning income generation outside a traditional work scheme. Nonetheless, these regulations have implications for other similar business models operating under unconventional work schemes. The regulation seeks not only to standardize working conditions for employees working for these types of platforms, but also to potentially apply to any company with a similar business model, ensuring wider labor protection within the digital industry.
II. New Definitions
Chapter IX B is incorporated into the Federal Labor Law, which addresses the topic of work on digital platforms, along with the following definitions related to this modality:
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Digital platform: Computer systems that assign tasks or services to workers for third parties using information technologies as defined in article 330-A of the Federal Labor Law.
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Work on digital platforms: A subordinate employment relationship where workers provide physical services managed by a person or company through a digital platform.
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Employee: An individual who works on digital platforms, earning at least one monthly minimum wage in Mexico City.
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Effective working time: The period from when a worker accepts a task until they complete it. Employees who do not generate a monthly net income exceeding the amount specified in the preceding paragraph will be considered independent contractors.
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Algorithm: Automated decision-making systems that control and supervise digital platform workers.
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III. Changes
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Employment Contract: Employers must use approved contract templates and can sign them digitally. Employers must submit the contract template to the Federal Center for Conciliation and Labor Registration for approval.
The contract should establish the equipment and work supplies provided, the percentage and amount the employer will pay the employee for each task service, work, or job, any bonuses that may be applicable, and health and safety obligations, among others.
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Work Schedule: Schedules are flexible and discontinuous, with employment existing only during effective working time.
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Salary: Pay is set per task and includes proportional amounts for rest days, vacations, and bonuses.
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Social Security: Tips that individuals generate on digital platforms will not be considered part of the base salary for social security purposes. Employers must cover occupational risks during effective working time.
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Profit Sharing: Workers with over 288 annual hours can participate in profit sharing.
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Union Freedom: Workers can form or join unions.
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Algorithmic Management: Employers must inform workers about how algorithms affect their employment.
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Employer Obligations: Special obligations are included for digital platform employees, as well as for employers and individuals who manage or operate services through digital platforms.
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Review Mechanisms: Digital platforms must provide employees with mechanisms to review decisions affecting their access to or connection with the platform. Autonomous personnel, not algorithms, must manage these mechanisms.
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Special Causes of Termination: New reasons for justified termination include:
- submitting false data and;
- compromising user security;
- engaging in acts of dishonesty or misconduct, acts of violence, threats, insults, harassment, and/or sexual harassment, mistreatment, discriminatory acts, or other similar acts during and due to work; and
- repeatedly failing to comply with the accepted tasks, services, works, jobs, or work-related instructions without justified cause.
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Training: Employers must provide necessary training and tools.
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Gender Perspective: Companies must protect workers from gender-based discrimination and violence.
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IV. Fines
Violations will be subject to additional fines calculated based on the Unidad de Medida y Actualizacion (Unit of Measurement and Update UMA), which is the economic reference in pesos used to determine the amount of payments for obligations and scenarios outlined in federal laws, state laws, and any legal provisions arising from them. For 2025, the UMA is valued at $113.14 Mexican pesos.
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2,000-25,000 UMAs for failing to register contracts before the Federal Center for Conciliation and Labor Registration.
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1,000-25,000 UMAs for failing to issue or report modifications in the algorithmic management policy document.
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250-5,000 UMAs for violating the provisions of Article 291-K concerning administrating and managing services through digital platforms.
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500-25,000 UMAs for failing to implement the mechanisms outlined in Article 291-P regarding actions related to autonomous personnel rather than algorithms.
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V. Implementation Deadlines
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This regulation will be implemented gradually.
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The law becomes enforceable 180 days after its publication in the OGF.
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Before being enforceable, the Mexican Social Security Institute and the National Housing Fund Institute for Employees will issue guidelines through a mandatory pilot test to be conducted five days after the law takes effect. The guidelines will establish general rules on employers' contributions for employees hired through digital platforms.
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The Mexican Social Security Institute will have 180 days from the rules' publication date, to consider the results of the pilot test prepare additional compliance initiatives, which will be presented to the Legislative Branch for discussion.
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The Ministry of Labor must, within five days of the rules' effective date, establish the general provisions governing the net income calculation for employees, which is currently determined by tasks, services, or work performed.