Regardless of the location, the possibility of accidents or health concerns are heightened in the manufacturing industry. Manufacturing environments expose workers to a number of factors including:
- Handling and lifting of heavy loads.
- Operating potentially dangerous equipment.
- Exposure to hard chemicals.
- Proximity to high electric currents.
- Vulnerability to workplace stress.
While manufacturing environments all have the potential to be hazardous, the reality is unfortunate incidents occur at a fairly low level in Mexico due to the legal structure that is currently in place. It makes sense, too, because the country is heavily focused on drawing in more manufacturing business from the region, and workplace accidents can become quite costly for both the local governments and manufacturers that operate within Mexico's border.
An overview of Mexico's labor laws
Before manufacturing in Mexico and beginning to navigate the complexity of the country's robust set of regulations that promote industrial health and safety, it is helpful to understand Mexico's labor laws at their highest level. The country's workplace health and safety laws are rooted in a handful of federal legislations, which, according to the National Employment Law Council, include:
- Mexico's Constitution of 1917: Article 123 of Mexico's constitution recognizes employees' basic rights including job stability, social security and maternity rights. Additionally, the constitution requires each employer to issue its own health and safety regulations and impose rules for individual workplaces.
- The Social Security Law of 1997: The SSL pertains to all matters regarding employees' and employers' rights and obligations surrounding mandatory social security.
- The National Workers' Housing Fund Institute's Law of 1972: The INFONAVIT Law requires employers to contribute an amount equal to 5 percent of the employee's daily earnings to finance low-cost housing units.
- The Federal Labor Law: This law sets forth rules and regulations regarding labor relations, labor unions and labor courts.
Federal rules and regulations surrounding workplace health and safety are managed and enforced by the Secretariat of Labor and Social Welfare (STPS). However, it is the responsibility of individual states to implement these laws within their jurisdiction.
"The Federal Regulation of Occupational Health and Safety heightens the requirements regarding the training of employees and health and safety documentation."
Mexican industrial health and safety legislation keeps workers safe
Beneath the larger umbrella of federal labor law, there are a number of key pieces of safety legislation that set the tone for and expectations of manufacturers in Mexico:
- The Mexican Federal Labor Law: This piece of legislation allocates basic labor law, including requirements for worker compensation and workplace health and safety. Under this law, employers carry the burden of ensuring their employees are safe at work.
- The Mexican Federal Regulation for Occupational Safety and Sanitation and the Environment: This regulation simplifies the framework for occupational safety and health.
- The Social Security Law: This law outlines how workers will be compensated for injuries received on the job.
- Federal Measures and Standards Act: This regulation aims to promote increased participation by public, private, scientific and consumer representatives in standard setting compliance.
- The Federal Regulation of Occupational Health and Safety: This law took effect in February 2015. According to Mexican Laws, the regulation heightens the requirements regarding the training of employees and health and safety documentation. Overall, the new regulation addresses a rapidly growing industrial sector in the country, and raises the standards employers must meet to keep their workers healthy and safe. The regulation introduces new concepts including: assessments of workplace occupational health and safety, favorable organizational environment, ergonomic risk factors, psychosocial risk factors, workers with disabilities, labor violence and the definition of a workplace.
Health and safety agencies ensure implementation
Of course, none of Mexico's key laws and regulations could have a true impact without regulatory bodies to enforce them. There are three key health and safety agencies manufacturers in Mexico should be aware of:
- Secretariat of Labor and Social Welfare: This body created procedural safety and health standards, performs inspections, sets penalties, promotes the operation of joint committees, maintains risk statistics, endorses research and distributes important information.
- Mexican Social Security Institute: The IMSS is the main agency in charge of worker compensation in the country.
- The National Advisory Commission on Occupational Safety and Health: This agency conducts studies, proposes injury and illness prevention measures and reviews draft standards.
Joint committees keep employers compliant
Under the Federal Labor Law, there are three different levels of joint committees that must be present:
- Workplace: These committees should contain an equal number of worker and employer representatives.
- State: Each state must have an advisory commission for occupational safety and health with government representatives.
- Federal: On the federal level, the National Advisory Commission for Occupational Health and Safety plays the most important role.
Official Mexican Norms make the regulatory environment more complex
In addition to existing federal labor laws, safety-specific legislation, regulatory bodies and joint committees, Official Mexican Norms (NOMs) are the specific workplace rules issued by employers to ensure compliance with labor law and regulations. Federal governmental agencies have the authority to develop and issue NOMs without affecting far-reaching regulations, which means the country's regulatory environment as far as labor is concerned is quite agile and able to accommodate continued growth. NOMs must fall into three distinct categories:
- Safety standards.
- Health standards.
- Structural standards.
Trade agreements set a higher standard in Mexico
While the majority of Mexico's regulatory framework surrounding industrial health and safety is dictated by its own national laws and committees, the country's participation in international trade agreements means the government has a keen interest in creating a safe, stable workplace that shield employees, companies and investors from risk.
For one, the North American Free Trade Agreement specifically covers workplace safety. According to Wake Forest Law Review, under the North American Agreement on Labor Cooperation, participating parties in NAFTA must ensure its labor laws and regulations provide for high labor standards. Moreover, NAALC covers the enforcement of labor law, including with respect to occupational safety and health.
Another important international agreement that has more recently reached the scene is the Trans-Pacific Partnership. As noted by the Ways and Means Committee Democrats, the TPP creates an opportunity to improve worker rights in participating countries, as involved parties must adhere to the laws and practices of the International Labor Organization's Declaration on Fundamental Principles and Rights at work, which provides for:
- Freedom of association.
- Effective recognition of the right to collective bargaining.
- Elimination of all forms of forced compulsory labor.
- Effective abolition of child labor and prohibition of the worst forms of child labor.
- Elimination of discrimination in respect to employment and occupation.
Above all, the TPP creates an opportunity to renegotiate the labor standards set forth in NAFTA, and find new ways to enforce those expectations.
Employee and employer occupational health and safety obligations
Before launching a manufacturing operation in Mexico and hiring a workforce, it is also important to be able to distinguish between employee and employer obligations to ensure safe work environments:
- Employers: In Mexico, employers must abide by safety standards, NOMs and regulations, maintain safety and health programs, abide by compliance-verification systems, ensure accurate equipment and perilous substance controls, facilitate the creation of joint committees, provide adequate worker training and information about risks, allow labor inspections, provide information and reports to authorities, and protect pregnant and lactating women.
- Employees: In Mexico, workers must play an active role in ensuring their own safety by obeying set standards, aiding coworkers, cooperating with joint committees, participating in training, using required protective equipment, undergoing medical examinations, notifying employers of any kind of contagious illness they may have contracted and reporting safety breaches.
Understanding the inspection and penalization process
With such a robust legal framework in place to keep workers safe from harm, it only makes sense there would also be a complex inspection and penalization process. While partnering with an experienced offshoring solutions provider can ease this process tremendously, it is still vital to understand how industrial health and safety inspections work in Mexico.
According to the Association of Corporate Counsel, labor inspections in Mexico are practiced to ensure workplaces are complying with their obligations surrounding general conditions, health and security, training of employees and any other provisions established by federal laws, regulations and NOMs. There are new main types of inspections the STPS may conduct:
- Ordinary inspections: These are inspections that take place on a routine basis or when a workplace is opened, extended or changed. Additionally, ordinary inspections can occur on a yearly basis or for verification to ensure a company is complying with a new or existing regulation.
- Extraordinary inspections: The STPS can order these inspections at any time, especially if it is concerned employees are in danger or risk.
While many inspections go smoothly, there is always the chance of penalty. As the ACC pointed out, should authorities determine an employer does not comply with applicable provisions, the economic penalty is determined at the discretion of the labor authorities. More specifically, the Federal Labor Law mandates the imposition of an economic penalty is calculated from a minimum fine equivalent to 50 times the minimum wage, to a maximum fine of 5,000 times the minimum wage. For this reason, it can be extremely valuable to partner with an offshoring solutions provider that helps companies navigate compliance issues and avoid penalties spanning from fines to actual workplace closures.
Mexico's worker's compensation framework
Finally, manufacturers in Mexico must understand how worker's compensation functions in the country. While the proper training and procedures can prevent unnecessary injuries or health concerns, the reality is accidents can happen any time.
In Mexico, the IMSS administers the worker's compensation system. To maintain this framework, employers must pay yearly worker's compensation premiums based on bereavement incidents lost from work days, disabilities and fatalities over the preceding 12 months, all of which are subject to an annual modifier. The IMSS also issues benefits to workers.
Covered employers must register workers with and pay premiums to the IMSS, which is responsible for delivering those funds to injured or ill workers. Additionally, premium rates are adjusted to reward good safety and health performance, or to penalize poor compliance or standards.
Worker's compensation benefits in Mexico cover both medical expenses and income reimbursement for disability. However, employees can be excluded from eligibility if they were intoxicated during the time of an incident. Suicide attempts and physical confrontations are also subject to exclusion.
Launching a manufacturing operation anywhere, including the U.S., require an in-depth understanding of a vast number of rules and regulations. Manufacturing in Mexico is a wise strategic decision for most businesses. However, to capitalize the most on the many offshoring advantages the country provides, companies must be prepared to adhere to occupational health and safety regulations.