Dear clients and friends,

Today April 20, 2021, the Senate of the Republic approved the Project of a Decree to amend, enact and repeal a number of provisions on outsourcing practices within the Federal Labor Law (LFT, in Spanish), Social Security Law (LSS, in Spanish), Law of the National Housing Institute Fund for Workers (LINFONATIV, in Spanish), Federal Tax Code (CFF, in Spanish), Income Tax Law (LISR, in Spanish), Value Added Tax Law (LIVA, in Spanish), among others. The aforementioned reform will enter into force the day after its publication in the Official Journal of the Federation (OJF).


Among the main amendments to LFT are the following:

1. It prohibits outsourcing, understood as the practice of an individual or entity of providing or making their own workers available in benefit of another.

It specifies that staffing agencies or intermediaries assisting in staff hiring processes may take part in recruitment, selection, training, and qualification, among others. But they will not be considered employers, as they do not benefit from the services.

2. It allows specialized services or works to be outsourced as long as they are not part of the corporate purpose, nor the main economic activity of the company. Contractors are to be registered in the public registry of the Secretariat of Labor and Social Welfare (STPS, in Spanish).

3. It allows complementary or shared services, and work provided among companies of the same business group to be outsourced, as long as they are not part of the corporate purpose, nor the main economic activity of the company receiving them.

4. It establishes that the outsourcing of specialized services or works, is to be formalized through a written contract detailing the purpose of the services to be provided or the works to be executed, and the approximate number of workers who will take part in the execution of such contract.

5. On the workers employed, it establishes a joint and several liability between the individual or entity who outsources the specialized services or specialized works and the contractor who fails to comply with the obligations resulting from the relationships with its workers.

6. It requires that individuals or entities providing outsourcing services be registered before STPS and that such registration will be renewed every three years. To be registered, individuals or entities must prove to have complied with all their tax and social security obligations.

7. It establishes that for an employer substitution to take effect, the assets of the company or establishment are to be transferred to the substitute employer.

8. It sets forth a maximum profit-sharing limit equal to three months of the worker’s salary or the average of the profit sharing amount received in the last three years. The amount to be applied will be that most favorable to the worker.

9. It prescribes economic sanctions for employers who do not permit inspections and reviews by labor authorities, those who outsource staff, provide outsourcing services without registration before STPS and those who benefit from outsourcing in violation of the provisions of the LFT on the matter. All of this, regardless of the other responsibilities applicable.



Among the main amendments to fiscal provisions are the following:

1. CFF prohibits the deduction of income tax and the crediting of VAT in payments or considerations for outsourcing staff who carry out activities related to the corporate purpose and the main economic activity of the contractor.

Such prohibition to deducting and crediting will also apply to services where staff are provided or made available to a contractor in any of the following cases:

  • Where the workers that the contractor provides or makes available to the company have originally been workers of the latter and have been transferred to the contractor through any legal form, and
  • When the workers provided or made available by the contractor perform the main activities of the company.

Deductions and credits may be effected over considerations for outsourced specialized services or specialized works that are not part of the corporate purpose or the main economic activity of the company, as long as the contractor has been registered as required by article 15 of LFT and it presents the documents listed in LISR and LIVA to the company.

The complementary or shared services and works provided among companies of the same business group will also be considered specialized services, as long as they are not part of the corporate purpose, nor the main economic activity of the company receiving them.

2. The entities or individuals who receive services or contract the works described in point 1 above will be jointly and severally liable for the contributions to which the workers rendering such services are entitled.

3. In case of a sanction, it will be considered an aggravating factor (which may increase the amount of the sanction in question), if a deduction or credit was made in violation of the provisions listed in point 1 above.

4. The crime of tax fraud and similar will be qualified, it is established, when they originate from simulated schemes to outsource specialized services or specialized works, or when staff is outsourced in the terms of the first two paragraphs of point 1 above. It should be mentioned that if the amount of the alleged fraud exceeds certain thresholds, it will be considered a crime that merits officious preventive custody as it is a serious crime in terms of the National Code of Criminal Procedures.

5. To deduct and credit payments or considerations for outsourced specialized services or specialized works, the contractor must present a copy to the company of the tax receipts for the payment of wages to the workers, the receipt of payments of tax withholdings made over said workers, the receipt of payments of the fees to IMSS (Social Security Institute) and the contributions to INFONAVIT, and the VAT return of the relevant period.

Contractors will receive an economic sanction for every omission to deliver information to the Company over the obligations hereof.

6. Finally, the 6% withholding obligation has been repealed as required in section IV, article 1-A of LIVA for people who receive services with staff performing functions in their facilities.



Regarding Social Security, the provisions of LSS and LINFONAVIT are matched with the changes made to LFT.

1. Joint and Several Liability of the Company. The company/individual who contracts services or specialized works will be jointly and severally liable with the contractor who fails to comply with its social security obligations over the workers employed for such services.

2. Obligation to Report Specialized Services. The company/individual providing specialized services or executing specialized works must report quarterly the information on the executed contracts no later than on the 17th day of January, May and September, in accordance with the following:

I. For IMSS.

  • Report on the parties in the contracts and information for identification.
  • Regarding each contract: Purpose; period of validity; list of workers or other staff providing the services
  • Copy of the registration issued by STPS for the provision of specialized services or the execution of specialized works.

II. For INFONAVIT, a similar report as above to identify the operations and their conditions.

3. Fines. Companies will be economically sanctioned in case of failure to report or for late reporting of the information to IMSS.

4. Repeal of risk classes for outsource companies under the Previous Law. Repeal of paragraph two, article 75 of LSS, making it impossible for employers who operated under the previous outsourcing scheme to be given an employer registration as required for each of the classes.

5. Restructuring outsourcing operations as regards LSS because of the Amendments. As regards LSS, during the 90 calendar days following the coming into force of the Amendments, the migration of workers from companies that operated under the outsourcing scheme will be considered an employer substitution, as long as the destination company of the workers recognize their labor rights, including seniority and risks of work. This will not require that the assets of the company or substitute employer be transferred.

6. Joint and several liability over INFONAVIT if the employer is substituted. The term for a joint and several liability has been reduced to three months in the case of a substitute employer over obligations generated before the date of substitution. Once three months have elapsed after the substitution of employer, all responsibilities will fall on the new employer.


Validity and terms.

The Decree in question considers, among others, the following terms:

a).- The Amendments to LFT, LSS and LINFONAVIT will enter into force the day following their publication in OJF.

b).- The amendments to CFF, LISR and LIVA will enter into force on August 1, 2021.

c).- STPS will have 30 calendar days following the entry into force of the Decree to issue the provisions on the procedures to register outsourcing services providers.

d).- Once the provisions therefor have been issued, individuals or entities providing outsourcing services will have 90 calendar days to be registered before STPS.

e).- For the substitution of employers, companies operating under an outsourcing regime will not be required to transfer assets within 90 calendar days starting from the date the Decree comes into force, as long as the contractor transfers the workers within said term to the beneficiary company. However, the labor rights from the labor relationship are to be recognized.

Once the aforementioned reform is published in the OJF, we will inform of its entry into force, where it will be necessary that the Companies review their corporate structure and the regime under which their employees are hired and make all relevant changes for them to comply with the new provisions on outsourcing. We remain at your service should you need to make changes.


Feel free to reach out if you have any questions or comments.


Labor, Tax & Social Security.


Elisa Cortés
Perla Arreola
Arturo Bañuelos
Felipe Mendoza
Javier Canseco
Ana María Becerra
Roberto Alvarez-Malo
Rogelio Sánchez
Isaac Corral
Edmundo Hernández
Fernando Holguín
Franco Herrera


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