Discussion Forums to Address Overtime Pay and Hourly Contracts
As discussion forums commence on June 2 to debate reducing the workweek from 48 to 40 hours, experts emphasize the need to address overtime pay and hourly contracts. Although permitted by the Federal Labor Law, these aspects lack flexibility, according to specialists.
Óscar de la Vega’s Perspective
Interviewed separately, Óscar de la Vega, partner at D&M Abogados, highlighted that while global trends lean towards reducing work hours, Mexico must consider specific factors to minimize the impact on employers.
- Extensive Overtime Costs: Companies working 48-hour weeks, particularly in the automotive, maquiladora, and mining sectors, will face high overtime costs. The first nine hours are double-pay, and after the ninth hour, it becomes triple pay. Alternatively, businesses could hire more personnel, which is also expensive.
- Flexibility in Hourly Contracts: De la Vega pointed out that the Federal Labor Law (LFT) allows hourly contracts, but Article 183 does not offer much flexibility regarding salary setting. It mandates full-day payment for partial hours worked.
- Gradual Jornada Reduction: He stressed that reviewing and analyzing the possibility of more flexible hourly contracts would facilitate a gradual reduction in working hours.
Jorge Sales Boyoli’s Perspective
Jorge Sales Boyoli, partner at Sales Boyoli, emphasized that the employer sector must be “very creative” to propose solutions minimizing discussion progress on the labor reform, which has been ongoing for over two years.
- Economic Impact on Businesses: Companies will face economic consequences from this reduction. Some may invest in technology to reduce workforce, not just large manufacturing firms but also service sector companies.
- Cost Transfer to Consumers: Some individuals or businesses might transfer the cost reduction burden to end consumers through product price adjustments.
- Reduced Profits: Others may opt to lower their profits or utility amounts to maintain prices and avoid layoffs.
- Mixed Approaches: A fourth group seeks a combination of the above strategies.
Additional Considerations
De la Vega and Sales Boyoli also mentioned that some businesses might request an increase in the workweek to offset higher hourly extra pay, further complicating labor reform discussions.
