Mexico restricts employers’ use of outsourced labor 

April 30, 2021

A new decree published in the Official Gazette on 23 Apr 2021 restricts employers’ use of outsourced staff in Mexico, and requires them to extend profit-sharing arrangements to individuals previously employed on an outsourcing basis through a service entity or third party provider. Further information on the decree will be issued this year, including guidance from the Ministry of Employment and Social Welfare, the Mexican Institute for Social Security (IMSS), and the Workers’ National Housing Fund Institute (INFONAVIT).


Exemptions to the outsourcing ban

  • In certain situations, employers may use staff provided by outsourcing agencies, for example, to provide specialized services or specialist work unrelated to the organization’s core business. Employers that use and provide outsourced labor will be jointly responsible for any breaches of the applicable social security obligations.
  • Outsourcing agencies that provide outsourced staff must be included in a public registry of the Ministry of Employment and Social Welfare — and registrations must be renewed every three years. Outsourcing agencies must also report certain information quarterly to IMSS and INFONAVIT.
  • Employers within the same corporate group will be allowed to use staff across the group’s entities to provide complementary and shared services. 


  • Employers must extend their profit-sharing arrangements to include employees previously employed on an outsourced basis. The profit share amount — calculated on 10% of the company’s pretax profits — will be capped at the greater of three months’ salary, or the average profit share received during the previous three years. Some employees — such as unionized employees — will be entitled to receive an increased amount of profit-sharing under current federal labor law provisions. 

Transfer of outsourced staff to employer

  • For the first 90 days after the decree’s effective date, employers can implement a “special employer substitution” whereby they can directly hire employees from outsourcing agencies without the need to transfer assets. The new employer must respect employment rights and will become responsible for the employees’ the previous five years of employment.


  • Fines could be imposed on employers and subcontractors for breaches of the decree — from UMA 2,000 to UMA 50,000. The value of the UMA in 2021 is MXN 89.62.

Provision of independent services

  • Independent companies can provide services to other independent companies. Such arrangements are not within the scope of the decree, subject to meeting certain criteria.

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