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 overall 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.

Juan Jose Diaz Miron S.

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